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In the second  article on Multichannel Networks (MCNs), Portada Digital Media Correspondent Susan Kuchinskas looks at  how MCNs gather the best of independent video programming, often being distributed via YouTube channels, and then play matchmaker between brands and individual content creators.

Steve Minichini, Assembly
Steve Minichini, Assembly

Agencies have long relied on YouTube for its huge reach. It serves a very specific purpose within the online video advertising realm, according to Steve Minichini, managing partner at  MDC Partners-owned Assembly. “At Assembly, our digital video philosophy centers around a specific approach which blends top-tier video sponsorships coupled with a mix of second- and third-tier video providers to ensure we have the right balance of targeting, reach and efficiency,” Minchini says. Right now, he adds, his agency sees YouTube as a reach play for that second- and third-tier video content.

But the MCNs aim to change that. Multichannel networks are similar to the blog ad networks of yore. They try to gather the best of independent video programming, often being distributed via YouTube channels, and then play matchmaker between brands and individual content creators, while providing varying levels of business development advice to the YouTube celebrities. Brands appreciate MCNs because they enable them to work with one business-minded point of contact.

A “frenemy” called YouTube

MCNs are looking to expand beyond the YouTube platform for a couple of reasons. First, they hope to increase profits. Google takes a reported 45 percent cut of YouTube ad revenue, although individual creators or networks may negotiate better deals. Second, there’s not enough flexibility in YouTube’s ad formats.

Today’s online video stars have huge audiences that definitely would watch a few prerolls to get the content.

Today’s online video stars have huge audiences that definitely would watch a few prerolls to get the content, says Iddo Shai, director of product marketing for Kaltura, a new end-to-end, over-the-top video platform that provides monetization, social interaction and personalization. “So the online inventory is actually very significant. On YouTube at this time, prerolls are very hard to do.” He notes that YouTube has been making some changes in order to become more flexible in what they allow the upper tiers of talent to do. “But they will never give full access — and rightfully so. They are a strong platform and want to control much of the revenue and the content,” Shai says.

xyrtec casa linda MiTuNow, MCNs are pitching custom, branded content deals, product placements, spokespeople – you name it – for the producers in their stables. New Buzz TV CEO Nicholas Buzzell points out that online distribution platforms enable things like clicking through a video ad to buy a product or download a coupon.

MiTú, an MCN targeting the Hispanic and Latin American realm,  has created a sizzle reel pitching branded entertainment, original content, programming by MiTú’s top influencers, and “influencer clip seeding.” As an example of branded content, a demonstration of flower arranging on the YouTube channel Casa Linda is sponsored by allergy medicine brand Zyrtec and includes a shot of the product on-set.

You can’t buy a YouTube channel, but you can buy the networks that manage them.

Acquisition targets

There’s also huge demand for MCNs on the part of established entertainment companies. You can’t buy a YouTube channel, but you can buy the networks that manage them. The same week that New Buzz launched, AT&T and The Chernin Group announced that their subsidiary, Otter Media, would buy Fullscreen, the not-quite-four-year-old MCN that manages more than 50,000 content creators with a collective range of 450 million subscribers and 4 billion monthly views. The Chernin Group also has invested in MiTú. Last year, Dreamworks bought AwesomenessTV, and earlier this year, Disney acquired Maker Studios, while Warner Bros. made a strategic investment in Machinima.

These companies are buying access to eyeballs and talent, according to Shai – at least for now. Down the road, he thinks Disney et alia could take an MCN star’s shtick and spin it off into a TV series or feature film. He says, “Once you’re in business with a guy who has 30 million followers, you can really do something with it.”

Amy Pham of Maker
Amy Pham of Maker

It remains to be seen, he adds, how the very independent YouTube sensations will take to working with a control-freaking behemoth like Disney. “This different breed of talent who are used to doing whatever they want to do, and turning down a deal if they don’t feel it’s right for them … how will they fit into a huge entity like Disney?”

Multichannel networks are similar to the blog ad networks of yore. They try to gather the best of independent video programming, often being distributed via YouTube channels, and then play matchmaker between brands and individual content creators.

That’s where the MCNs can prove that those multi-million-dollar acquisitions were worthwhile. Meanwhile, Shai thinks the MCNs will try to build their own brands away from YouTube. While video personalities have a fair number of what he calls “soft fans” who probably only would watch on YouTube, there’s definitely a significant chunk of those 30 or whatever millions of fans who will pay to get more access to their favorite talent. He thinks Maker will slowly but surely start to promote its own brand, build some apps and eventually have its own channel on Roku or other connected TV platforms. Shai says, “They will definitely have a strong enough distribution platform that they fully control, keep all the ad revenue and can do sponsorships. They can do more than what YouTube gives them.”

In a world where cable and the web are fragmented, we would become a tile in this digital universe.

This is the vision that Buzzell of NBTV Studios shares. He says, “The MCN model we’re seeing today is the first iteration of what this space will become.” Ultimately, he sees New Buzz being an equal player with NBC or Fox and accessible from any device. He says, “In a world where cable and the web are fragmented, we would become a tile in this digital universe.”

This is the second of two articles exploring how Multichannel Networks (MCNs) work and their role in the emerging online video ecosystem. The first article is “Are Multichannel Networks the future of TV?”

Analysis Analysis: Online video  is getting huge in the Hispanic market. Major general market players including Videology, Tremor Video,  AdapTV, Yume, Tube Mogul and video entertainment network Machinima now have dedicated units exclusively targeting the U.S. Hispanic market. Many of these companies focus on video ad delivery across multiple screens (connected TV’s, mobile, tablets and desktops) to target precise consumer segments—at scale—by demographics, psychographics and behavioral segments. But, in the midst of all this sophistication, what about the creative to use in online video ads ? Can TV spots just be repurposed?  Below what several advertising experts think.

One trend is clear and it is that major buying agencies increasingly see video as a channel agnostic vehicle.”We have many online video campaigns live right now. As we wind down the upfront buying season, video was front and center across screens from TV to desktop to tablet to mobile. More than ever before we are approaching video buying with a screen neutral mindset to align with how Hispanics consume and overconsume video across screens and devices,” Marla Skiko, SVP Digital Innovations at SMG Multicultural tells Portada. But should’nt video ads be adapted to the characteristics of the different channels they are used in?

Online video may be a media buy, but at heart it is a creative piece.

The “No way, Do not repurpose School”

Mobile videos
Mobile videos

Xavier Mantilla,  Partner at IPG MediaBrands in Miami notes that  “online video may be a media buy, but at heart it is a creative piece. If media agencies got more together  with creative agencies , these would be much more successful. When we look at video campaigns that have had higher click-through rates we realize that the creative had a very big part, as well as where it was running, so this fusion of art and science needs to grow.  But then, we need to invest in this and not just repurpose videos.” Marla Lopez Knowles, CMO at  Pulpo Media, has a similar view: “I, personally, believe that developing online video ads will drive greater engagement than the mere repurposing of TV broadcast content.  Again, driving more personalized communications drives greater engagement and brand affinity.  We all want advertisers to recognize us as unique. The more they can speak to a consumer as a unique individual, informed by deep knowledge and insights about the individual/audience, the greater the engagement. It’s more than just reach; it’s reach and touch.  TV broadcast content, by its very nature, is meant for more mass consumption and broad reach.”

On the web we can finally spread our wings and practice “storytelling” like never before.

John Trainor, publisher of Hoy Chicago, also appeals to the different characteristics of the channel where the online video ad is shown: “On the web there are no time constraints or space restrictions like there are for TV or print. There are no 2-minute per segment or 700 word limits, meaning that we can finally spread our wings and practice “storytelling” like never before. It is not about adapting TV content for the web nor is it about adapting print content for the web, it is about telling the story in the best possible way, leveraging all the new tools available to our generation. Regarding the question that always comes up on whether ” size matters” we have learned that it’s not about the length of the video, its what’s in the video what matters, therefore we focus on creating engaging content rather than content you can squeeze within limited space constraints.” Trainor sees the biggest opportunity in branded content and cross-channel sponsored opportunities. As an example he cites a branded content series Hoy Chicago did for Loya Insurance which consisted of a series of 4 videos for “auto enthusiasts” which combined print and digital-video.

The “One Creative across screens School”

Make no mistake, for major Hispanic broacasters such as Univision and Telemundo, online video advertising revenues are still small compared to the billions they yearly get out of traditional Spanish-language  TV and cable advertising. However, it is very important to mention that Spanish-dominant Hispanics spend substantially more time (50% more!) than English – dominant Hispanics watching online video content.
The economic power of traditional TV and cable advertising may be a reason for the  one size fits all approach in which the TV creative is  used on all online video channels.

I can not think of a single occasion when the broadcast repurpose does not work for us.

“We use online video in almost every online ad program because we have found it to be three to fours times more effective in un-aided recall. I can not think of a single occasion when the broadcast repurpose does not work for us,” says Robert L. McNeil. President & CEO  of IMAGES USA in Atlanta, where he creates campaigns for the  Center for Disease Control, Nickelodeon and  Brown Foreman. Todd Wilson, until recently SVP Managing Director at Starcom Mediavest Group Latin America  in Miami (he now is SVP Managing Director, P&G Asia at Starcom Mediavest Group China)  says that Starcom has been running Latin American campaigns for P&G and Samsung and that he tends not to differentiate online video usage by campaign, rather seeing online video as another screen for all client products we would normally target across broadcast and cable.

 

The “It depends School”

Hispanic TV MarketOf course, the characteristics of every brand, the campaign objective, the timing and the channel used  are different. So, it may make sense not to have a clear answer on whether repurposing TV spots or not is the way to go.
SMG’s Skiko notes that “using TV spots for online video creative, is still quite common. We always advocate for messaging that is relevant and will resonate. As we keep planning video across screens it very well may make sense to have the same spot regardless of which screen it is on. That said, we need to be mindful of how behaviors change in digital areas vs. TV and consider how to best utilize TV spots. For instance, if a :30 and :15 are available we would likely suggest use of the :15 online. It is also important to try to capitalize on the nuances of digital and the vast array of creative units and options that exist to match the message format and functionality best to the screen and content in play.
“Ideally, we try not to re-purpose broadcast video for use in digital platforms,” Brett Dennis,  Chief Media Communications Officer at Conill, asserts. Dennis adds that, “while there are certainly production efficiencies that can be gained from using similar assets, we work closely with our creative teams to tailor video content to the medium. We do this for two primary reasons. First, we want to create an emotional connection with people based on the environment they are consuming our message. That might mean different creative approaches, not necessarily different campaign approaches. Second, to drive different behavior based on the channel of video being consumed. We expect a different action from somebody watching video on their big screen TV in the living room versus somebody watching video on their mobile phone while riding the train to work.” According to Dennis, a multi-screen video approach is a consistent part of most campaigns he deploys for clients. “Our current efforts for T-Mobile and Toyota’s Corolla, Camry and Highlander all include video elements across TV.Internet, mobile and social channels. The types of video elements we select are driven by the consumer journey for each brand, the role each media channel plays within that journey and the behavior we want to elicit from consumers.

 

 

What: Machinima has a second round of layoffs in nine months, now letting go 10 percent of its current staff.
Why is it important: This may raise some questions about the viability of the multi-channel networks’ business model.

Several sources (AllThingsD, TubeFilter, PandoDaily) report that yesterday, gaming and media streaming website Machinima announced it will let go 22 of its 206 employees (10 percent of its staff), as a part of its growth plan, and in order to make “an increased commitment to premium programming, its’ YouTube affiliate network, and multi-platform distribution”, as the company’s official statement read.

This is the second time in nine months that Machinima shortens its staff (last December, 23 of then 200 employees, mostly from the company’s editorial, programming, and productions departments were cut off).

The company is planning to invest more heavily in original content and build up revenue sources outside of Google’s website. Cutting off 22 positions will allow it reallocate resources towards new ventures.

It was also reported that, as a part of its efforts to raise funds, since last spring Machinima has been talking to potential “strategic” investors, like film studios (Warner Bros. and Paramount, the CBS TV network, private equity firm Guggenheim Digital Media, and publisher Adweek, among others), and it may be contemplating a sale, as well, although this has not been officially acknowledged by the company. Machinima –as well as other content aggregators– has struggled to monetize its meaningful success in terms of content and audience (over 2.2 billion monthly video views and 200 million monthly unique viewers as of June, says PandoDaily’s Michael Carney), so actually it hasn’t got any substantial ROI.

Carney also says that this may be due to the low value of online video advertising rates, compared to those of TV, and YouTube’s less than favorable revenue sharing terms (it is said that the Google-owned video network keeps 45 percent of all ad revenue), so the answer might be to invest in owned and operated websites and original programming. Therefore, YouTube would act as an audience-acquisition funnel, but multi-channel networks and content creators would have to look for alternative ways to generate income.

Machinima’s statement also said that “over the next several months, [it] will announce new programming and distribution initiatives that will advance the next phase of this strategic plan.”

We would like to mention that Machinima’s Seth Bardelas will speak at Portada’s 7th Annual Hispanic Advertising and Media Conference in NYC, next Thursday.

Join us at PORTADA Mexico!

What: There’s an opportunity for online video to drive Hispanic media, as, on average, Hispanics watch more online videos compared to the U.S. consumer. Cisco forecasts that by 2016 two-thirds of mobile traffic will be video viewing, and approximately 70% of advertising spending targeting Hispanics is spent in television.
Why it matters: There’s such high growth potential in online video – they’re the highest CPM in digital advertising – and Facebook seeks between US $1-2.4 million a day for its in-feed video ad feature. For online video to become a revenue driver for Hispanic media, the content should not be recycled and repurposed – rather, the content needs to be creative in its own way.

The strong growth of online video usage and advertising has interesting implications for the Hispanic market. On average, each U.S. Hispanic person watched 1,176.2 minutes (over 19 hours) of online video in March of this year, according to ComScore data. As importantly, Hispanics watch more online videos per viewer than the average U.S. consumer (270 per month vs. 243 for the U.S. consumer). Mobile communications, so pervasive among Hispanics, are also being driven by video consumption. In fact, Cisco forecasts that by 2016 two-thirds of mobile traffic will be video viewing. Online video offers digital extensions of Hispanic radio, print media and pure play digital properties a chance to level the playing field in the traditionally broadcast advertising oriented Hispanic market. Approximately 70% of advertising expenditures targeting Hispanics goes into TV.

Online Video Advertising Offers Non TV Media a Chance in the Broadcast TV Oriented Hispanic Ad Market.

Online Video CPMs (cost per thousand viewers) are the highest in digital advertising, usually three to four times as high as display advertising CPM’s. This explains why Facebook is seeking between US $1 million and US $2.4 million a day for its new in-feed video ad feature. Because of the high growth prospects of online video advertising, a whole new ecosystem of video advertising placement firms, which also provide comprehensive audience data insights and RTB (Real-Time Bidding) and video content producers, has emerged. It includes companies such as Vevo, Hulu, Google’s YouTube, Machinima, Videology, TubeMogul and Adap.tv.

For online video really to become a revenue driver for Hispanic media properties it is crucial that it does not just become a way to repurpose broadcast content. The key is to invest in creative that is native to the digital medium. “As clients are not investing in creative, but just repurposing video, I believe there is a lost opportunity to make better ads, to connect better with the audience and tell better stories as we are not limited to smaller spots,” says Xavier Mantilla, Partner and Client Manager at UM in Miami.

We Need to Invest in This and Not Just Repurpose Videos.

According to Mantilla, while online video may be a media buy, at heart, it is a creative piece. If media agencies got more together with creative agencies, these would be much more successful. He adds that, “when we look at video campaigns that have had higher click-through rates we realize that the creative played a very big role, as well as where it was running, so this fusion of art and science needs to grow. The next big opportunity is to generate localized video advertising to speak to an audience from its natural point of view.” The local nature of newspapers and radio can make them a particularly good fit for a new wave of localized online video ads. But as Mantilla concludes, “We need to invest in this and not just repurpose videos.”

 

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