April 30, 2014
By Mike Shields
As YouTube heads into its NewFront on Wednesday night (or the Brandcast, as the company calls it), a question hangs over the company and its ecosystem. Does it want to extend its ad business into branded entertainment in a bigger way?
Right now, YouTube takes 45% of ad revenue generated on its platform via pre-roll ads (like those 30-second spots often seen prior to videos). But it has deliberately left branded entertainment deals — either paid brand mentions in videos or product placements or videos shot explicitly for brands — to YouTube program creators like Maker Studios, which Walt Disney Co. is in the process of acquiring.
The only exception is that YouTube caters to the biggest brands on the site with its in-house creative team, The Zoo, doing some branded deals for big events like the Oscars.
Is that a big problem? Well, according to eMarketer
,YouTube netted $1.96 billion in global ad revenue last year, up 66% from 2012. But this figure doesn’t include money that goes directly to YouTube program creators. And as more and more advertisers look to such deals, hoping to harness the social media power of the video platform, those dollars may start becoming significant, and something Google
might want a piece of.
During a presentation held by Seventeen magazine and the YouTube network AwesomenessTV on Tuesday, for instance, several top YouTube creators talked both about how much demand there is among brands for Web video integrations, and how custom they can be.
, of the YouTube channel Meghanrosette, she hears pitches from brands all the time, though the number of advertisers she agrees to work with is “miniscule. It has to be organic and something I believe in,” Mr. Rienks said.
Other examples: the YouTube network Stylehaul focuses most of its business on branded entertainment deals, almost treating YouTube’s video ad inventory as secondary. Similarly Maker Studios has built an in-house branded entertainment team, and presumably, Disney is looking to nab Maker Studios for its perceived expertise in this realm: for example, the Maker-repped a Capella star Mike Tompkins produced this baseball themed clip for Pepsi
“This issue is on everybody’s radar right now,” said one person close to the YouTube space. “The YouTube sales team has basically been selling programmatic pre-roll, which cuts across channels. And MCNs [multi channel networks like Maker] want to sell their own inventory.”
To help alleviate any potential channel conflict, YouTube has recently pitched many of the top MCNs about co-selling together. In a presentation which CMO Today has seen, YouTube emphasized that marketers want advertising on YouTube to be more efficient. One way of making it more efficient is for YouTube to work with MCNs, rather than independently of each other, YouTube’s presentation suggested.
“Google sales focus is audience and scale,” reads the presentation. “Partner sales focus is content and customization.”
Is this another way of YouTube saying it wants a piece of the branded entertainment deals that MCNs are getting? Certainly some are wondering whether Google might eventually want to build it’s own branded entertainment practice, exerting better control of the YouTube ad market. “I definitely think that’s a logical next step for them,” said one publishing executive who’s worked with multiple YouTube creators.
YouTube executives declined to comment, but a representative emphasized that YouTube has always been supportive of networks built on its platform.
MCNs, for their part, don’t see Google getting more involved in branded entertainment.
“I don’t think they could ever do what we do,” said Stephanie Horbaczewski, president, CEO and co-founder of StyleHaul. CEO George Strompolos, CEO of FullScreen, concurred.
For one thing, branded entertainment deals are high touch, often labor intensive deals. They are very un-Google, noted many observers, since getting YouTube creators to produce singalongs for Pepsi can’t be scaled using automated software.
YouTube creators emphasize that branded entertainment isn’t the kind of ad deal that can be done in an automated way.
“Brands have to understand it’s an integration,” added Arden Rose,
a creator who’s worked on YouTube since 2008. “The best case is when they give us creative control,” Ms. Rose said. “It’s not a commercial. We say to brands, ‘Let us help you figure out how YouTube works.’”
Ms. Rose added: “YouTube’s a weird format.”