Woven Digital, publisher of websites for young men that feature bikini models and stories like “12 Things You Didn’t Know Were Illegal,” and Evolve Media, whose CraveOnline site offers dating advice and video game reviews, are chasing more than the same online demographic.
What they really want are ad dollars, and both companies have struck deals in the last few weeks that position them to take advantage of a significant uptick in online video advertising. It is a shift that has led them to join the rush to control their own advertising destiny – and away from the YouTube ecosystem in which companies share ad revenue with Google, the video platform’s parent.
Multichannel networks typically split about 50 percent of their ad revenue with YouTube via Google’s AdSense technology. The networks then strike individual deals with content creators to share the balance.
The splits have started to rankle some producers, who see a spike in online advertising and want a larger piece of the pie.
San Francisco’s BrightRoll, the nation’s largest video ad platform, placed 3.1 billion video ads in March for 85 of the nation’s top 100 advertisers, according to statistics released by analytics firm ComScore. That’s a 41 percent increase from the 2.2 billion ads every month BrightRoll placed the same month a year ago.
“We continue to see huge growth in the digital video category in general,” said Dan Mosher, BrightRoll’s senior vice president of business operations, adding that mobile ad placement is increasing because businesses are able to get better demographic information about mobile customers.
Shifting dynamic
That growth, and the desire for a greater share of ad revenue, was part of the motivation behind the two recent deals.
Woven, a Culver City Web publisher that operates Guyism, BroBible and Brotips, recently acquired Miami entertainment and news website Uproxx in order to expand its video library.
In late April, Web publisher Evolve signed a deal with Nielsen Corp. to be the first company to use technology developed by the New York consumer information firm to track the age range and gender of every person that clicks “play” on a video.
That deal reflects Mosher’s observation: “The ability to validate a consumer within a certain age or gender is going to drive a lot more dollars into mobile video.”
The deals follow two larger transactions: multichannel networks Maker Studios and AwesomenessTV were snapped up by Walt Disney Co. and DreamWorks Animation, respectively.
Some multichannel networks are moving away from a business model centered on relying on AdSense revenue, said Sarah Penna, co-founder and chief creative officer at Big Frame in Culver City. DreamWorks-owned AwesomenessTV bought Big Frame and its 300-plus channels in April for $15 million. The network’s lineup has garnered 39 million subscribers.
In the fourth quarter of 2013, Penna said Big Frame made, on average, $1.42 in brand deals – content created specifically for advertisers – for every $1 in AdSense revenue.
“And that ratio is climbing,” she wrote in an email to the Business Journal.
So when one of Big Frame’s stars gets enough eyeballs to their channel, advertisers are shelling out big bucks to develop content with the video stars inspired by corporate products.
Recent corporate partners include PepsiCo, Unilever and Capital One.
“The majority of our business,” Penna said in an interview, “is focused on brand integration and not AdSense.”
Principals at Woven and Evolve said they’ve made a conscious decision to steer away from uploading content to YouTube and embedding the Google-owned company’s video player on their sites in order to keep a greater piece of the advertising pie.
“We do everything from soup to nuts,” said new Woven President Colin Digiaro, a co-founder of Myspace. Already a member of Woven’s board, the company announced Digiaro’s appointment at the same time as the Uproxx deal.
Digiaro described YouTube as a “super interesting” distribution option, but added that “it kind of makes us cringe a little. We would never go all in on one platform.”
Google representatives did not return a request for comment.
Brian Fitzgerald, a co-founder and president of Ladera Heights-based Evolve, said his company follows a similar business model when distributing its videos.
“We put very little of our content on YouTube,” he said. “Why would we want to?”
Marketing expert Ira Kalb agrees that digital advertising is growing due to improving audience analytics, specifically in the mobile realm, but said television broadcasters have access to those measurement tools, too. That’s led some critics to argue that television ad buys will continue to outpace digital spends over the next five years.
But Kalb, an assistant professor of clinical marketing at USC’s Marshall School of Business, said digital is probably growing faster than TV because it offers more access points for consumers.
“You want to reach people wherever they are and you can’t do that through TV,” Kalb said, “at least not in real time.”
The Online Campaign Ratings technology developed by Nielsen and used by Evolve is one such tool. Its mobile measurement feature will be active early this summer. Evolve is integrating OCR into its Springboard Video platform, which already tracks a variety of valuable data, such as geographic information and whether a video was played from a Web page or social media post.
Blurring lines
Another distinction between content seen on broadcast television and online is the deepening involvement by advertisers in the creation of material for digital platforms.
For Woven and other publishers, video appearing on their sites generally takes two forms. Branded videos are paid for by advertisers and developed with varying amounts of input from a publisher’s marketing team. These videos, typically located on brand-specific pages, generally run free of advertising.
The second type features original content developed by the publisher to run on editorial pages with ads at the beginning, end and sometimes in the middle of the video.
Woven and Evolve even own production studios where marketers can record the ads that wind up on their sites.
Chris Rooke, senior vice president of strategy and operations at Long Beach native advertising firm Nativo, agreed that video is driving revenue increases across the Web, particularly when it’s accessed on editorial sites such as those offered by Woven and Evolve and surrounded by other forms of native advertising, including images, related lists and perhaps even an article.
Rooke said Nativo licenses its native advertising platform to Woven.
“The conversation has become somewhat layered,” he said, noting that marketers are beginning to think more like publishers in that they’re concerned with the way campaigns are packaged.
“Margins are higher, price points are higher, performance is higher,” he said.
