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YouTube Expects Boom in Branded Entertainment

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.”

14 Responses to “YouTube Expects Boom in Branded Entertainment”

  1. Funny. I had some correspondence with the CEO of Poptent and he was the most arrogant and insulting professional I have ever witnessed. He was very condescending and disrespectful towards his own clients. We caught Poptent advertising Contract Job ads, and then redirected all the applicants to their sign-up promotion. Just beware of where you upload your content.

  2. Samantha —

    I agree with you on the fact that there are an abundance of so-called branded entertainment ‘experts’ peddling a misnomer, but agencies didn’t invent branded entertainment… the soap companies did more than 50 years ago.

    They figured out that to peddle home products to women they should build some entertainment around it that appealed to that audience, so arguably branded entertainment existed long before the first ‘commercial’ as we know it even aired. In fact, one might even go as far to say that the earliest forms of radio and TV entertainment were funded — if not wholly created — by brands.

    So, this concept is not new at all, and in most cases, what people call branded entertainment IS nothing more than an ad. But that doesn’t mitigate the fact that technology has spawned opportunities to revive the model of bringing sponsored entertainment to the masses that a) give brands a meaningful way to connect with consumers in an oversaturated space, b) give talented content creators an opportunity to fund their series and bring their creative to life and c) give viewers quality, well funded, on demand entertainment that they crave.

    Just because most don’t execute it well doesn’t make it any less compelling of a value proposition when done well, and rooted in a sound strategy. And if you’re a ‘Guild’ fan, you can thank Microsoft for Season 3 or the funds may have run out for Felicia Day et al to keep producing it independently.

    Gennefer

    • @gennefer — I think your line:

      “…revive the model of bringing sponsored entertainment to the masses…”

      Is what goes to the core issue here. Will Brands “revive” this in any meaningful way? You are right, “Soaps” were brand driven, just as American Idol was created by a beverage manufacturer (some claim). But, Soaps and traditional television had a very large reach. They were not niche. The costs of production and distribution reach made economic sense.

      Applying this model and format to internet television under a “revive” hope overlooks the economic disconnect between cost of production and size of audience inherent to trying to get branded entertainment to become a standard of some sorts in this space.

      It is difficult to fathom it becoming revived to a degree it takes on the same significance to production companies, agencies and audiences. Sure, there will be bits and pieces that are done, there have already been about three years of work along these exact lines, but, as production budgets continue to decrease, there will be less and less incentive for any professionals to work in the field.

      It’s easier to see this spiral downward and collapse on itself rather than revive an old format. Basing a career on a very small handful of projects, a very small audience and declining budgets? Sounds suicidal.

      • Exactly. There are no “masses” to revive this to.

        It will be a business and a few will make a go of it. But, for most, it’s not worth pursuing the handful of deals that have any real money attached to them. It costs more to land one of these deals than the fees you can pull from them.

      • Mared —

        Thanks for your comment. I want to preface my response with the fact that ‘branded entertainment’ is only a small part of my business, and typically part of a broader brand strategy for a client that augments a fully integrated media mix.

        My statement around reviving a sponsored entertainment model was merely to demonstrate that this is an age-old concept while many emerging branded entertainment companies are peddling at as something new and innovative. It’s not.

        It’s Marketing 101, actually — connect with the emotional triggers of those who buy your products. It appeals to the psychology of purchasing behavior. Emotion drives action/consumption, and there’s no better way to connect on that level than through entertainment. That’s why commercials over the years have sought to entertain as much as advertise. It’s just difficult to execute on both — you end up serving neither well.

        That said, regarding your stance around the viability of smaller target markets, I have always asserted that niche markets are often the most fruitful in the long-term because they are comprised of rabid fans and loyalists who consume and champion all content/products that are available. The mass market is fickle, and tends to latch onto whatever the latest buzz is, so if you want to talk sound economics, laser-focused messaging and reach is by far the strongest. Not to mention the fact that it’s infinitely more cost effective to focus efforts on an audience pre-disposed to your brand/message than trying to penetrate the mainstream market via expensive broadcast methods.

        Additionally, those ‘declining budgets’ you referenced make finely-targeted branded entertainment a much nore viable option, and sponsoring a niche web series or creating branded vignettes is typically a fraction of the cost of TV or other traditional forms of advertising, or even a Hulu media buy these days. So, I’d contend it’s anything but a ‘suicidal’ endeavor. And as I pointed out to George, many of the most successful, ROI-generating branded entertainment campaigns you’ve likely never heard of because you weren’t the target audience. But I can assure you that there are brands whose businesses are flourishing under this concept… they’re just not high profile like Maybelline’s sponsorship of Candace Bushnell’s ‘The Broadroom’ or Mountain Dew and Paramount’s ‘Circle of Eight’ to enter your purview. If anything, I’d assert that those investments aren’t likely to yield a significant ROI. There’s a lot of overly-produced campaigns out there that under-deliver, but that doesn’t mitigate the viability of the concept as a whole.

        There have been a ton of failed social media campaigns. Does that mean the entire concept is flawed? No, it was likely the execution or a poor overarching strategy. So, let’s not toss out the baby with the bath water.

        A number of successful models fall under the rubric of branded entertainment, and many are even much cheaper to produce than elaborate :30-second spots that consumers are just fast-forwarding through via DVR anyway. If you want to hold someone’s attention, entertain them. That’s a basic principle that’s going away any time soon.

        Gennefer

  3. samantha m.

    “Branded Entertainment” is merely a desperate plea for overpriced video productions companies to remain relevant.

    They are seeking out work where there is very little to go around and “experts” at Branded Entertainment are hawking straw-into-gold schemes, that, truth be told, are projects they’d like to pay the bills, go on their resume, while they secretly hope for a real television or film deal.

    Ad agencies have been doing “branded entertainment” for Years – no new experts are needed. In fact, Agency’s :60 second format is a lot closer to a Viewer’s attention span than people who came out of producing :30 minute or :60 minute shows.

    Sorry, it just seems like a load of crap to push a few dollars around while there is rarely any value to the Viewer — When was the last time someone said, “Wow, I can’t wait for another Carl’s Junior Branded Entertainment clip.” Or, even, I can’t wait for another web series with product placement? It’s a zero-demand business that satisfies nothing. At best, it’s rock stars who make no music.

    Let an ad be an ad, be an ad, and call it an ad. Let a show be a show, with some ads around it. Blurring the line creates garbage.

  4. Hey George —

    Thanks for the clarification. I have no doubt that some YouTube views converted to sales, but let’s keep in mind that there were other promotional tactics running concurrently in support of the launch. While the campaign was absolutely a viral success, if a statistically significant percentage of 9MM had actually taken action, I suspect they wouldn’t have been able to keep portobello mushroom burgers on the burners long enough to meet the demand!

    That said, it was a breakthrough effort that harnessed the power of online communities to create user-generated messages, and one of the few whose attempts gained positive traction. So, I’m not denying that aspect whatsoever, and applaud brands who are willing to take the leap into web video, which I believe is the most powerful behavior-driving medium. My point is simply whether brands (and the content distributors selling them impressions buys) place too much emphasis on views in lieu of action, and it still seems to me that a highly targeted campaign with less views (and less investment) could have achieved the same, if not better, ROI.

    Zacuto’s branded web series, ‘Film Fellas,’ for example, has been a big success for them, but chances are, a majority of consumers haven’t heard of it. Why? Because they’re probably not in the market for high end filmmaking equipment. Zacuto opted to go after their niche market, and are already seeing a good return on their investment. Viral buzz not required.

    Thanks again for the insight… good food for thought as I seek to fine-tune video campaigns and metrics for my clients.

    Gennefer

  5. I struggle with the tangible value back to the brands in these types of initiatives. Using YouTube’s web celebs as spokespeople for brands will get them exposure and some viral trajectory through the interwebs, but will those views drive action? I say no.

    Case in point being the very campaign you spotlighted where, while Carl’s Jr. had millions of impressions for the videos, did not report any significant uptick in sales of the Portobello Mushroom burger as a result. So while some may call that a ‘viral hit,’ I contend it had little brand value for the reach YouTube garnered them, demonstrating once again that views alone is not an accurate metric for success, lest of all in a media-saturated space where top-of-mind brand awareness has become all but a misnomer, continually replaced by the latest buzz sensation with no conversion beyond a quick click of the play button (or worse, an auto play).

    Perhaps there’s a better way to deliver branded content via YouTube, where it filters dissemination by the wealth of demo/psychographic data Google has for each user, and drives some meaningful call-to-action resonant to the audience it’s reaching. Of course, then YouTube wouldn’t be able to charge as much for CPMs because it would essentially be reaching a smaller, more targeted group. So that could bring us to some type of revenue-sharing based on actions resulting from a YouTube click-through over another disribution portal, but it still seems like the wrong venue for branded initiatives attempting to engage in a substantive viewer interaction over just a few seconds of fleeting attention.

    Ultimately, I see these types of engagements benefitting YouTube more than a brand partner, and think it’s a tricky balance for them to go down a path that is essentially antithetical to the user-generated positioning on which YouTube was built. It’s one thing for users to traverse through thousands of user-submitted videos; it’s quite another to force them to sift through ‘sponsored noise.’

    http://twitter.com/Gennefer

    • I just want to clarify that the Carl’s Jr. example being discussed here did in fact drive sales. In addition to generating about 9MM views on YouTube, per-store sales of the featured burger doubled from the period before launch. I generally agree with your comment – particularly the need to drive real action – but this should be cited as one of the good examples. It’s probably why the campaign won the 2009 OMMA Best in Show Award.

  6. What fascinates me about this question is whether we’re going to run into a conflict between series that have their branding set up ahead of time and series and stars who work with YouTube on the branding initiative. Because if YouTube starts getting more involved with branding, will they stop being a viable distribution platform for content coming from companies like, say, NextNewNetworks?

    • Thanks for mentioning us! It’s probably worth pointing out that branded content has been part of the YouTube landscape for a long time, and the best partners are collaborating and working closely with YouTube on all of this. We’ve done a number of branded campaigns that had a big presence on YouTube, and our partners at YouTube have also connected us with sponsors and brands.

      With all respect to everyone doing things in the space, YouTube’s a huge ecosystem of content and advertising at this point, and no one model is going to edge out all the others. I think in the coming year you’re going to see greater diversification of the ways people make money in partnership with YouTube — there’s room for a lot of models in the landscape, from brand integration, to sponsorships and media sales, to e-commerce and premium content. Media companies like Next New Networks, the record labels, and new indie studios are going to embrace different elements in a mix that works best with their content and audiences.