Risk & Compliance

Web Spinners

Webcasting corporate news is starting to catch on.
Yasmin GhahremaniMay 8, 2002

Last December wasn’t the most popular month for an IPO. Still, the time was right for Hong Kong-based Eco-Teck Holdings. The environmental equipment maker went public with a US$6.3 million share offering on Hong Kong’s Growth Enterprise Market on December 5 and did so successfully — thanks in part to its adoption of webcasting, the latest wrinkle in corporate communications technology.

It happened like this. One of the company’s lead underwriters, a young Hong Kong-based investment bank, SBI E2-Capital, decided to use the Internet to help sell the placement to investors outside the region. The bank contracted its partner, webcasting firm OpenIBN Technologies, to shoot a video of Eco-Teck’s presentation luncheon in Hong Kong. It then invited 55 institutional and individual investors in London and Paris to view the video online any time within the next three days.

Fifty-four did so, following up with questions via E-mail or phone calls to the bank’s sales representatives. The gambit worked. The offer was 60 times oversubscribed and, helped by the strong international demand, Eco-Teck’s share price rose from its initial HK$0.25 (US$0.03) to 62 cents (US$0.79) by the end of January. Even better, the webcast raised awareness of Eco-Teck among European investors at a fraction of the normal cost. “It’s a very efficient way to reach people,” says Ronald To, SBI E2-Capital’s vice-president of investment banking. “You save all that time and money you’d otherwise have to spend travelling to meet them face-to-face.”

The Virtual Road Show

More and more companies like Eco-Teck are catching on to the value of webcasts as a cost-effective tool for communicating. Webcasts involve audio and video delivered over the Internet either as live footage or as a file that can be archived and played later. They’re being used for everything from internal announcements and training to external marketing. But there are still limitations to what webcasts can achieve. They aren’t television over the Internet. Using them effectively means setting reasonable objectives.

Here’s how a webcast is born. The audio and video are recorded, then digitally encoded in Internet form for any or all of the three main media players used for viewing webcasts: RealPlayer, Windows Media Player or QuickTime. PowerPoint presentations can be included too. Generally, if a webcasting company handles the production it will also host the content on its servers. It can also customize the webcast for users logging on at various data transfer speeds.

The cost depends partly on whether the event is webcast live or taped for later viewing. Live webcasts are more expensive because they have to be mixed, encoded and uplinked onsite. Singapore’s B2Bcast, a company that specializes in business-to-business streaming media productions, says its prices for live webcasts start at US$8,000. Archived video-on-demand can be as low as US$3,200 for 30 minutes. As the number of concurrent users increases, so does the amount of bandwidth consumed, driving costs up. One way to lower those costs is by using a content distribution network, which places content on servers in the countries where the most viewers are expected. That way, you take advantage of local connections, which are cheaper than international ones.

Not surprisingly, investment banks are at the forefront of corporate webcasting. Many multinational institutions now consider online roadshows a standard marketing tool for share offerings. Salomon Smith Barney’s Hong Kong office, however, has steered clear of video in the webcasts it arranges for clients, simply delivering audio with a PowerPoint presentation instead. The sales team alerts potential investors about the online roadshow and distributes the necessary passwords. Investors have the option of watching the slides while listening to a conference call as well. At about US$10,000, the production costs are reasonable. “It can cost up to US$100,000 to send a team of ten people on the road for three weeks,” says Kirsty Mactaggart, managing director of Salomon Smith Barney in Hong Kong. “So it’s a small cost in the scheme of the bigger roadshow expenses.”

Conference organizers are also discovering the appeal of webcasts. When Nokia’s Singapore office held a conference for the third-party developers that are crucial to its business, it enlisted US portal Yahoo to put the event on the Internet. Marketing was a joint effort, with both companies posting notices on their Web sites. Nokia also emailed news of the webcast to developers in its database. Some 500 people showed up at the conference in person, but more than double that amount logged into the online version within the three-month period it was available. “This is a way for us to reach people who couldn’t otherwise travel to make it to the show,” says Nokia’s business development manager Sirta Ikola. “It’s definitely worth the money for us.”

It’s Got to Be Free

Making cold, hard cash from online events, however, is much tougher. Business Week, which webcasts many of the 15 to 20 conferences it hosts every year, tried charging for the online version of its Fifth Annual CEO Forum, held in Hong Kong last year. It got less than 100 takers in the three-month viewing period. Business Week marketing director Emma Fung thinks that at US$295 for a one-month pass, or US$49.50 for a two-day trial, the price tag for the webcast may have been too high. “We were a bit disappointed with the numbers,” says Fung. “I don’t think we’ll be doing fee-based online conferences any time soon,” she says.

Even free webcasts can fail if users lack adequate bandwidth for viewing the presentation comfortably. At 56 kbps, video can take ages to load, and then it will run in fits and starts. Hewlett-Packard’s (HP) Asia Pacific division last year created a 60-second video demonstration of a new scanner for distributors and consumers and put it on the HP Web site. It hoped for 10,000 hits but only got 1,500. “The file was too heavy and intensive for the bandwidth,” says Simon Johnstone, online channel manager at HP in Singapore. “From now on we would probably use animated GIFs or Shockwave for that kind of an application. Or it would have to be tied to some sort of promotion, rather than just increasing general awareness,” he says.

Cheaper technology options are emerging. Microsoft has included software with its Office XP suite of business programs intended for do-it-yourself webcasts. You supply your own digital video and audio, which for simple talking-head presentations can even be recorded with a US$50 Webcam and a PC microphone. You can then combine them with PowerPoint slides and use the Microsoft Producer PowerPoint 2002 software to put them online. “Producer tries to do for webcasting what FrontPage did for Web pages,” says group manager for marketing at Microsoft, Jason Reindorp in the US, referring to the user-friendly program that helped popularize amateur Web sites. For marketing or external communications applications, it’s still probably better to have the video professionally shot. But the basic technology for uploading it is now much more accessible. And that can only mean corporate use of webcasts will continue to rise in the future.

Yasmin Ghahremani is a freelance writer based in Hong Kong.

Cheap Connections

Videoconferencing has come a long way in recent years. The technology, which allows users to see and hear each other onscreen in real time, was once the sole preserve of big-budget companies. But it’s now easy and cheap enough for even smaller firms to use as a cost-effective alternative to travel. US consultancy Frost & Sullivan estimates global videoconferencing equipment sales increased 15 to 17 percent last year, with Asia being the world’s fastest-growing market.

The reason? Picture quality has improved and costs have drastically lowered. Heidi Lorenzen, Asia Pacific marketing director for videoconferencing equipment maker Polycom says that before 1998 a system would cost US$50,000. “Today you can get an entry level system for US$4,000,” she says. And they’re about as easy to use as a VCR. There are two types of systems: cheaper desktop versions that deliver video to a PC through an Internet connection; and set-top boxes that connect to television monitors, usually via leased lines. Both can include presentation materials.

An even cheaper solution is to use a Webcam and microphone, along with Microsoft’s free NetMeeting program or the newer videoconferencing software included with Windows XP. But the quality is far from perfect. “We’ve found it’s better to just turn off the audio and make a phone call while you’ve got the video and slides on screen,” says Russell Yeomans, regional director for recruitment company TMP Worldwide, which uses NetMeeting internally. For interviewing candidates TMP uses a set-top box system that delivers higher quality. Still, Yeomans does not recommend that a client make a high-level appointment without meeting the candidate. For all its advantages, videoconferencing will never replace the handshake. —YG