Originally published June 2013
Simon Applebaum collaborated on this report.
Once upon the first decade of television, every primetime program came with a sponsor attached. The Upfront was created for networks to present program concepts and pilots to advertisers, and if no sponsor stepped up, the idea was shelved. Even today, when you visit the offices of Hollywood agents and packagers, you see shelves piled high with never-produced scripts often dating back to the 50s. WhetherThe Colgate Comedy Hour,General Electric Theater (with host Ronald Reagan),Philco Playhouse,Texaco Star Theater with Milton Berle,Camel News Caravan,Goodyear Television Playhouse,The Alcoa Houror Armstrong Circle Theater, the series would be on the air with a single advertiser's backing and often, that single advertiser would have a significant influence over what would be presented on the air.
Back in the day--late 1940s to late 1950s--that was the only way TV operated, until an ABC-TV executive faced with too few sponsors cleverly introduced the concept of multiple sponsorships, and within two years the industry was turned upside down. But guess what, according to a new study released last week by DailyMail.com, the 1950s model is once again flourishing, only now it's online and under a new term: branded content. The core differential between the original model and today's early forms of branded content is that marketers are mostly seeking to underwrite content that directly relates to their brand message and product relevance. An exception is GE, which has underwritten the Focus Forward Films* series of short films that is being recognized as one of the most successful branded content campaigns of the past several years.
Whether brand-centric or not, an emerging model for video or multimedia programming is single advertiser funding – and in some cases single-advertising agency underwriting. Group M Entertainment and Publicis' SMV have been at the forefront of this movement, and as witnessed at the Digitas/IAB Newfront last month, the model appears to be on steroids. Programming is either produced with agency oversight or directly by the advertiser. In the case of Focus Forward Films, Morgan Spurlock's cinelan* conceived and oversaw the full project working directly with GE and with dozens of well-known documentary directors. Another early-stage company, Touchstorm, is working with several marketers and agencies, providing fully turn-key capabilities including content concept development, production, distribution and social media integration.*
Mail Online is the U.S. division of British-based Daily Mail and in cooperation with trade publication Digiday, they conducted a survey of sponsor, agency and content producers to get a fix on the evolution of the current generation of branded content. More than 600 people participated in the survey--47 percent from agencies, 36 percent from content developers and the rest from advertisers.
More than 70 percent of the agency execs surveyed declared their clients have participated in branded content projects over the last year, and one-third of their clients included those projects in their media mix. On the advertiser side, 83 percent of those responding officials say they've undertaken branded Web projects, and in two-thirds of those cases, they've teamed up with content providers to create content, and then syndicated that content via multiple online and mobile distribution resources, heavily weighted toward You Tube.
Many agency survey takers believe branded Web content is as or more effective in building consumer relationships than other media. More than 70 percent of those respondents say their clients will increase their participation and spending on branded content over the next year. Among the brand community surveyed, 69 percent predict their branded content budgets will increase over that time span, and 57 percent of people associated with brands not involved in this media play will get involved by next spring.
"Advertisers are finding that this is a great way to entertain and connect people to their brands," Mail Online global director Sean O'Neal noted during a Webinar last week aimed at dissecting and analyzing the results. "Consumers lower their guard on resistance to advertising when they find informative or entertaining content, not plugging."
RedBull (a supplier of branded TV content on Outside Television and other networks), Pepsi, Kraft, Coca-Cola, American Express and Nike were among a group of advertisers mentioned by survey participants as tops in this strategy. For O'Neal, consistently great branded campaigns happen when advertisers "deliver more value to consumers than either advertisers or content developers would get on their own."
Also important: consumers have the choice to engage with the campaign as deeply as they wish, and get additional value through social media and commerce. "These campaigns don't oversell or get inappropriate. They stand out on their own because they are so informative or entertaining," said O'Neal.
Then why are many advertisers or agencies holding back on participation? For some survey participants, the big hurdle is identifying resources that can create consistently good Web material within the brand brief. With others, the hurdle is defined the cost efficiency of branded content within traditional television ratings audience reach models. The declining costs and growing availability of third-party produced digital video content makes it more challenging to justify the increased costs and risks of branded content production and distribution.
Proving the effectiveness of these campaigns is an uncertain science and marketers are working with companies such as Marketshare, MMA and others to define techniques based on sales, consumer click-through, reach among target audience or demographics, the number of times specific content is watched, and brand lift. Not mentioned in the study report, but on the mind of many marketers is the potential to own a share of back-end revenue rights for the content they underwrite. If a hit series emerges, for example, it could be picked up by network TV, sold for international distribution, generate commerce-based revenues, provide the foundation for gaming applications, offer integrated promotional opportunities, etc. In the rare instance back-end revenues materialize, the marketers would like to own a share. In the mid-1990s, Television Production Partners * was funded by a consortium of marketers led by General Motors with a goal of building a studio for development and production of prime time programming.
O'Neal anticipates many advertisers or agencies holding out right now will wade into branded content on an experimental basis within the next six to 12 months. Here's our prediction: branded content developed for online and mobile will be integrated for presentation on smart TVs as the penetration, capacity and capabilities of those sets grow. Viewers will adjust to watching their favorite Web sites--not just Web videos--on TV. They will control their sets with their voice and gestures, and smartphones/tablets will function as remote control devices with integrated second screen functionality and advertiser-supplied/underwritten content. However this market evolves, advertisers and agencies will be dealing with a new set of opportunities and challenges for engaging with consumers.
Companies like Samsung, LG, Amazon, Apple and others will join with You Tube to collaborate directly with marketers and agencies by co-funding original fully sponsored content development. The networks will ultimately follow suit and the model on which TV was built will have an Internet-age encore.
*Jack Myers is a partner in cinelan and initiated the Focus Forward program.
Jack Myers and David Houle were funded by the consortium of marketers and successfully produced a slate of programming over a five year period.
Jack Myers is an advisor to Touchstorm