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What’s next for YouTube (s GOOG)? Branded entertainment, or when a sponsor pays creators to make something that will bring its brand to their audience.
YouTube is extremely bullish on branded entertainment, Kevin Yen, director of strategic partnerships for the site, said on a panel I moderated a few days ago. Expect a lot of branded projects to hit YouTube “in the coming quarters and months,” Yen said. But he added that the site is still evaluating the questions, “How do you scale it?” and “Can it be a $100 or $200 million a year business?”
Branded entertainment isn’t simple like Google AdWords; it would be hard to set up a product that automated these deals. YouTube is undergoing an “adjustment period” in which it learns how to moderate the various creative and controlling forces involved in commissioning sponsored videos from its users, Yen said. For instance, it connected Carl’s Jr. with nine YouTube stars earlier this year and coordinated their simultaneous launch of videos sponsored by the fast food chain to their 3.8 million combined subscribers (see the one from Nigahiga embedded above).
I asked Yen what about the overexposure of these YouTube stars for so many random brand experiments. It seems that the same group of 20 or so people that showed up in Weezer’s Pork and Beans video are pulled for just about every sponsored content initiative. Yen replied that UGC stars know the value of the audience they’ve built, and are highly sensitive to the concept of selling out. He contended that the core group of stars gets a ton of offers and they are very selective.
But what about deals that YouTube talent strike on their own to include brands and products in their videos? In addition to all those inbound offers, a number of services outside the purview of YouTube connect online video makers with brands, such as Hitviews, Zadby, Tadcast and Poptent.
Here’s where Yen’s comments might make some creators uneasy. He said the site relies on users’ “good behavior” to check a box that states they’ve included a brand in their video. At the moment, YouTube isn’t doing much with that information, as it wants to “foster the ecosystem,” said Yen. “But we want to track and find out what’s happening, in case we want to figure out a model later.” For background, YouTube earlier this year had gone so far as to notify some users that independent brand-integration deals in their videos could violate YouTube’s terms of service. And to be fair, YouTube is well within its rights to try to take a cut of profits other people make on its site.
We asked YouTube for further clarification of Yen’s remarks on sponsorship disclosures, and a spokesperson said that the site is “in the process of reviewing what makes the most sense in these situations.”