Where Hollywood Meets Reality

The Web was supposed to lead the way in brand-funded content. Why hasn't it happened?

June 15, 2009

-By Brian Morrissey

Jordan Levin, CEO of Generate

NEW YORK Back in 2001, BMW Films debuted. The eight Internet videos brought together top-notch creative talent, married it with a brand and showed how the Internet could be a distribution platform for a new kind of content. Eight years later, branded content is still struggling to find its footing.

The branded-content story is a typical Internet tale: Technology threatens to revolutionize an industry, wresting power from the current gatekeepers. In this case, content creators and brands would work directly together, building new forms of entertainment and the advertising to pay for it. The idea fueled hype, rounds of venture capital investment and a flurry of activity. And yet, branded content has yet to take off.

At an Onfront gathering here last week, intended to bring together brands and producers in the manner of the upfronts, the somber tone was set in the keynote address. Jordan Levin, CEO of Generate, a production firm, skipped the usual hype for a dire warning that the entire branded-content ecosystem was at risk.

"It's being compromised by the constrained ad dollars," he later told Adweek. "It takes a lot of different pieces to make this go. It takes the creative community, the tech community, the VC community, but also the brand community. The advertisers haven't made an investment of some degree of parity to catalyze this space."

Not surprisingly, the typical bugaboos have stalled progress: an oversupply of content for what is now a trickle of advertising dollars, the recession, a lack of metrics and a fragmented market.

To be sure, brands such as Microsoft, Starburst and Burger King have found success in branded content. But by all accounts, the nascent industry is facing severe growing pains. Levin pins the blame on risk-averse advertisers who complain of TV networks holding them hostage and are at the same time unwilling to try new approaches.

This is a typical maturation process, slowed by the recession, according to Mark Beeching, CCO at Digitas, which created a dedicated unit to produce branded content called The Third Act. Advertisers, he said, have lurched from strategies that relied too heavily on destination sites to a love affair with viral videos to a tendency to create content overwhelmed by brand messages. "The biggest problem of most branded content is the brand," he said. "So much branded entertainment is trying to make advertising entertaining."

Uncertain metrics don't help. When an advertiser buys time on a TV show, it knows more or less what it's getting. For branded content, while producers have developed distribution networks that will promise views, the audience composition is uncertain. There's no ratings body to validate programming.

"Many times they don't know who they're getting," said Mike Siegenthaler, director of branded entertainment at MSN. "People are seeing [the content], but is it the right group of people for their brand? It isn't enough to say we had X number of video streams."



The market is also fragmented. At the Onfront, 20 producers showcased their programming, most purporting large audiences. While a diversity of suppliers is nice for agencies, said Doug Scott, president at OgilvyEntertainment, it means lots of legwork. "The biggest challenge is the total number of producers and creators coming to meet with us," he said. That and the fact that many are simply selling ad space and product placement. He recalled one producer who wanted to integrate laptops from Ogilvy client IBM. The problem: IBM sold its laptop division to Lenovo more than four years ago. Branded content is "not [about] using the product as prop," Scott told attendees. "It's understanding the essence of the brand."

There are branded-content success stories. Microsoft guarantees views on MSN and uses editorial headlines on the site to drive traffic to programming along with Dynamic Logic surveys to make sure brands are delivering their key messages. That's helped it work on over 70 branded-content projects in the last two years, according to Siegenthaler, with the level holding steady. And Procter & Gamble has signed up for a third season of "Style Studio" on MSN Lifestyles. "We have eight years of data that backs up we're out of the experimental phase," he said.

Other successes show the need for tight collaboration and predictable distribution. Burger King's integration with "Seth MacFarlane's Cavalcade of Cartoon Comedy" did well thanks to BK working early on with the studio, Media Rights Capital, behind the Webisodes, while Google provided potent distribution on YouTube and through its AdSense network.

"There's not enough of that happening where everyone is coming to the table," said Brandon Berger, director of digital innovation at MDC Partners. "Right now it's like, 'We'll do the show, you'll be the brand and we'll get so many views.'"

The slow maturation of the industry has meant several digital studios have closed shop, including the much-hyped 60Frames, backed by United Talent Agency and led by former agent Brent Weinstein. It was meant to bring a stable of top-notch Hollywood talent, like Joel and Ethan Coen, to digital projects connected with brands. Several more are at risk of failing, warned Levin. "This notion that people will continue to produce content for no reward isn't realistic," he said.

‘Prom Queen’, ‘Bannen Way’ Highlight OnFrontNYC

Web Television continues to grow up - first its own awards show and now its own version of television industry’s tried and true Upfronts. The first annual OnFrontNYC went down Tuesday in New York, bringing out over twenty different web content studios to showcase their web series wares to media buyers and digital ad agencies in attendance including Ogilvy, Digitas’ The Third Act and Deep Focus.

Numerous web series, or previews of them, were screened including the trailer for season 2 of the hit drama Prom Queen (above) from Michael Eisner’s Tornante Company and the creative team at Big Fantastic. Other notable series screened were Crackle’s action web series The Bannen Way, dark comedy Hillers, a news season of Illeana Douglas’ Easy to Assemble, Revision3’s new series Film Riot, along with The Mercury Men and a look at the new season of Attention Span Media’s brand-friendly Dorm Life.

Generate’s CEO Jordan Levin keynoted the event, talking about the state of the web television industry and the entry of major brands into the medium.

..the opportunity to establish a relationship with a consumer online is not only an unparalleled opportunity, but with younger consumers increasingly shifting to a digital experience, it is a necessity. Fear of change is real and most are more comfortable maintaining the status quo than embracing change. But, change is inevitable. I think survival is dependent upon leaning into change, rather than away from it. (Jordan Levin at OnFrontNYC)

Tilzy.TV’s Josh Cohen, who was one of the organizers, wrote today about the event, noting that “by bringing together premier new media studios, major advertisers, and brand representatives, we hoped that all three parties can learn from one another on how to facilitate more ad buys in the online video space.”

Other news out of the content-packed day, web studio EQAL is moving away from its bread and butter serialized dramas—lonelygirl15, KateModern, Harper’s Globe—and into creating a new cooking series, Get Cookin’, with TV chef Paula Deen. (More on that news coming soon.)

Also announced was a new sponsorship deal for Vuguru/Tornante’s Back on Topps, which won a Streamy Award for best ad integration of current sponsor Skype. The comedy series starring the Sklar Brothers will be retiurning for a second season this summer with Dick’s Sporting Goods coming on as a sponsor.

Update: Additional ad agencies in attendance: Initiative, Horizon, Grey, Mediavest, Mediaedge, McCann, Razorfish, Mindshare, Mediacom, Carat, OMD

Online Video Advertising Model Already Broken

You don't have to be an industry insider to understand that the market for professionally produced Web videos isn't exactly thriving. The list of digital video divisions and start-ups founded with Hollywood money in the last few years now resembles a row of gravestones: Disney's Stage 9, Turner's SuperDeluxe, NBC's DotComedy, HBO and AOL's ThisJustIn and the UTA-backed 60 Frames have all gone out of business.

It's not that people aren't watching video on the Web. YouTube's and Hulu's traffic just keep going up and up and up. The problem is that there's no real business model, which means anyone spending even a few thousand dollars to produce webisodes had better not count on advertising revenue to help them turn a profit.

Despite all that, there are still plenty of true believers in the medium. Many of them gathered yesterday in New York City for the Onfronts, a play on the television Upfronts. The event is meant to bring producers and advertisers together as an opportunity for, according to the Onfronts website, "digital content-owners to showcase a vibrant new entertainment medium and present upcoming projects to press and major advertisers dedicated to high engagement entertainment opportunities."

The keynote speech was given by Jordan Levin, former CEO of the defunct WB network who now heads the management/production company Generate, which specializes in digital content. If the Onfronts were anything like the Upfronts, you might expect Levin to be hyping his latest projects. Instead, he delivered a dire message:

I have no doubt that premium content produced for the Internet will grow along with the adoption of online video consumption. What I do doubt is whether or not many of the independent producers and production companies either here today, or who want to be here, will be here next year, or the year after that, or the year after that. . . .

Current production and distribution margins simply cannot support the overhead required to produce premium online content at a scale suitable to advertising, without brands subsidizing that effort to a greater extent than currently exists.

On television today, networks get to develop the properties they think will work best and then throw them out to the world, confident that the popular ones will make money from advertisers. But the "scale suitable to advertising" that Levin mentioned is, quite frankly, a tiny scale. Standard Web ads, be they banners, pre-rolls or those nifty overlays on YouTube, simply don't make much money.

The only solution Levin sees -- and he's not the only one -- is to go back to the original television model:

In the early days of television, brands sponsored live television to create the desired program environments in which to comfortably advertise their products; shows like the Texaco Star Theater and the Colgate Comedy Hour come to mind. . . .

You can choose to only transact business, as you have done in the past, with the traditional media companies. They will push their agendas and offer Web video as primarily either an extension of their existing, on-air product or low-cost pilot development disguised as original content. Or you could also choose to seed a new generation of independent producers who are open to being true partners in the creation of a mutually beneficial ecosystem.

Levin has a profound self-interest in bringing new ad revenue to the Web, of course. But the dismal economics of online video are undeniable.

Those who complain about blatant product placement on television these days had better stay away from the Internet, it seems. The only way to save professionally produced Web video might be to go back to the old days of TV, when the show was the marketing.

-- Ben Fritz

~ INNOVATORS & START-UPS ~

Following last night's Webby Awards ceremony comes the online video advertising event OnFronts, produced by internet video connoisseurs Tilzy.tv, (not to be confused with last week's NewFronts, put on by Digitas' The Third Act.) Although the event does include a panel about bringing branded advertising to the digital space, it's more focused on presentations of content new media studios are trying to sell to, according to Tilzy.tv founders Jamison Tilsner and Joshua Cohen. "One of the things we learned putting this together is that many media planners are unaware of this space in general," said Mr. Tilsner. "There's also issues with larger firms allocating resources when trying to make smaller, more targeted buys." More than a dozen web studios will present their latest shows at ADD-compatible speed including Revision3, Deep Focus, Blip.tv, For Your Imagination and Vuguru.

The Onfronts: The Good, the Meh and the AWESOME

So. Much. Online. Content.

This week Tilzy.tv brought us the first annual Onfronts, a presentation of what the year ahead has to offer in online video. Like the oldteevee upfronts from which they get their name, the Onfronts are a way for content providers to show potential advertisers just where their money could be going, and just how many eyeballs could be taking a gander at those logos. Of course, we here at NewTeeVee Station aren’t looking to invest big bucks for big traffic; we just wanna see all the previews and judge which will be the most squee-worthy.

It’s a noble calling, really. And we do it all for you. So here’s what’s coming up.

What looks good:

New seasons of old favorites. The promo for Prom Queen: The Homecoming was full of quick cuts and short on plot points, but, much like actual prom queens, the series doesn’t need details to get us to show up. They have us at Prom Queen. Likewise, new seasons of The Legend of Neil and Wainy Days seem like they’re going to bring more of the quirky fun that hooked viewers in the first place.

Take180 presented an impressive slate — I <3 Vampires pokes a little fun at Twilight-level fandom, My Date turns viewer-submitted dating horror stories into guffaw-worthy sketches, and Electric Spoofaloo, well, spoofs stuff.

Also intriguing are The Mercury Men, which did for retro-cool in one brief preview what “Sky Captain and the World of Tomorrow” failed to do in an entire film, and Hillers, a dark comedy about a man in an ever-faster downward spiral. (Plus, there’s a mysterious and possibly evil hot chick who keeps talking to him, but where she fits in remains to be seen.)

What’s not so exciting:

Since the Onfronts are meant to lure advertisers more than viewers, a lot of content partners went for promos rather than previews — meaning faster-than-lightning quick cuts of shows and stars only the already converted would recognize, overlaid with statistics and traffic figures. Great for showing off your revenue potential, guys, but not great for those of us who are trying to get a glimpse of what to watch.

They’re slickly produced shows that spend more time looking good than selling us on story. The previews for The Bannen Way and The Fall of Kaden, for instance, look gorgeous but gloss over their own hooks. Would it really have given away too much to actually mention one of the iron-clad family rules the protagonist of The Bannen Way violates, if the consequences of his breaking those rules are the entire premise of the series? Similarly, the Kaden preview dances around its own premise with oblique narration — it looks awfully pretty, but what’s it really about? Newteevee has proven that it can compete with oldteevee when it comes to star power and production values; if you want to win over viewers, you have to do it with story, too.

What looks so awesome we can’t even stand it:

A new season of Easy to Assemble. Surreal Swedish-flavored musical numbers? Check. Celeb guest stars aplenty? Check. Illeana Douglas’ hilarious look at how famous folk might try to live “normal” lives continues to be the most fun you can have in an Ikea.

Angel of Death. Technically, this promo was not for new content, but probably meant to tie into next month’s DVD release of Season 1. But we here at NTVS will watch Zoe Bell pulverize everyone in her path until our eyes glaze over, and we’re not a bit ashamed of it. New or not, there’s just no limit to the number of times you can watch a badass female assassin with a big knife in her head.

Detention. Quicker than you can say, “Hey...this looks kinda like a Breakfast Club ripoff,” the preview gets funny all on its own terms. Plus, the series promises a level of clickable interactivity that makes us happy in our nerdy places.

Cambridge Prep. It’s a soap! At a prep school! With vampires! A vampire prep school soap opera. That is simply the maximum amount of awesomeness that web video can provide.

With all of the above going on, plus the quality standbys we’ve come to expect from regular standouts like MyDamnChannel, Atom, and Revision3, viewers have an impressive depth of online content from which to pick and choose. The message at the Onfronts seemed to be that web television is serious business now — and that serious business is translating into some seriously good entertainment.

Embedded above is a player from the Onfronts loaded with a playlist of all the videos discussed.