Over the past decade, declaring the death of “content as king” has become quite fashionable. Andrew Odlyzko seems to have started the trend in earnest with his January 2001 First Monday article entitled, “Content is Not King”.  This week Lehman Brothers analyst Anthony DiClemente jumped on the bandwagon.  In discussing structural changes in the film and TV content businesses, DiClemente went back to the well and prophisized that “content may no longer be king in the entertainment business“.

In my opinion, these declarations are sensationalist and off the mark.

Will the tectonic changes in distribution set in motion by digital infrastructure change the economics and structure of the content business? Certainly.

Will quality content (great stories performed by great talent) still be the defining asset of the winners in this shake-out? Absolutely.

DiClemente states that “distribution giants Apple and Google seem to prove time and time again” that content is dying.  Yet 48 hours later the Wall Street Journal was reporting on the significant challenges that Google is having monetizing content on YouTube.  With reports that YouTube is only able to sell advertising against 4% of its entire universe of content, and Google sales head Tim Armstrong attempting to fix the “105 problems with YouTube’s ad sales”, all does not seem so rosy in the land of DiClemente’s heir apparents.

Our old king, Content, seems to get another boost from an upcoming study by The Diffusion Group.  As reported by NewTeeVee…

“User-generated video will account for 42 percent of streams this year, but only 4 percent of online video revenue… Conversely, professional online video will account for 58 percent of streams and 96 percent of revenue.”

Advertisers and media buyers, who in many ways hold the keys to the kingdom via ad support, seem, at least for the foreseeable future, content (no pun intended) with the current monarch.  That said, there will be no lavish feasts in the castle.  To borrow another old adage, it may no longer be “good to be king”.

The economics of the content kingdom will shrink and will be marginally more distributed.  The recent writer’s strike and current SAG negotiations are just one piece of evidence that there is strife amidst the royal family.  The ability to produce great content with lower production costs means that more great talent may able to finance and monetize content independently.  New technology means that great content may be developed in a multitude of forms and with new degrees of interactivity.

Regardless, great content is still what will attract viewers.  No amount of wrangling in the kingdom will leave viewers happy to watch poor content just because its broadcast on an IPTV or an iPhone.  Content will still be king.  It will rule more benevolently and perhaps more frugally, but it will still reign supreme. 

Here’s a short snippet from a Brandweek interview with Subway Franchisee Advertising Fund Trust CEO, Jeff Moody:

BW: Subway never used to do movie tie-ins, what happened?
JM: We did one with Happy Gilmore and Adam Sandler. Then we didn’t do as much. We recently had integration with Get Smart. We’re working on other things, but nothing that’s a done deal. It’s got be the right fit. For Get Smart, Maxwell Smart had to lose weight to become a field agent so the Subway sandwich diet fit in. The context worked for us . . . We have a great sponsorship of the NFL. We’ll continue to do that. Player wise we have a sponsorship with Chris Long, Howie Long’s kid. He was one of the top draft choices. We’re using him in some advertising . . . Brand building these days is getting more and more interesting. It is going to be a fascinating topic with the media changes. Because of the writer’s strike, it will be interesting to see if people come back next fall versus doing other stuff than watching network TV. How do you get a message up quickly when you get viewership declining as it is? With networks it is very frustrating when you have to pay more for something that’s less valuable. Less people are watching TV, but the demand to reach people has grown. There has to be a tipping point where people will say it’s worth the risk to go into non-proven media because it’s so expensive do TV. It drives us as advertisers crazy. That’s why we’re more willing to do brand integration, movie-tie-ins, and find alternative ways until the networks get their acts together.

We spent a good bit of the day yesterday at The Licensing International Expo getting a pulse of the market and the conference.  As brands becoming increasingly interested in experiential marketing and how to leverage entertainment properties, it is clear that there is vast array of opportunities both upstream, during production, and downstream, during distribution, to take advantage of.  While PlaceVine sits in the upstream world of product integration, we were interested in learning more about the dynamics of how licensing operates at the opposite end of the entertainment marketing ecosystem.

For those unfamiliar with the practice of licensing in this context, it generally refers to products, merchandise, and services that leverage the brand of an entertainment franchise (in its simplest form think action figures, logo-emblazoned school lunchboxes, etc.).  It was a great day of conversation and learning and gave us a solid appreciation for some of the opportunities available for content producers to extend the reach of their entertainment franchises.  At the same time, it opened up our thinking about the synergies that brands may be able to generate in working both upstream and downstream with entertainment companies.  Not only might a marketer push for a physical product integration during filming, but they may also seek the development of unique product lines that leverage the entertainment brand.

These holistic collaborations will require early engagement between brands and content producers and will rely on the expertise of various marketing professionals.  We think that PlaceVine is a going to be an important resource in helping marketers and producers connect earlier in their respective creative processes so that more interesting partnerships can be formed.  We’re hopeful that early interaction will lead to a host of both upstream and downstream opportunities.

According to a recent AdAge article, “[b]randed-entertainment conversations are taking precedence over large-volume prime-time bookings this upfront.” The article later continues, “Branded entertainment is an increasingly attractive solution, giving marketers more engagement with products and allowing networks to charge more for exclusive relationships.”

It only makes sense that marketers will continue to move in this direction. Clearly, the true value generated by content creators is not the 30 seconds they leave advertisers, but the compelling stories they write that can connect with audiences.

Lacey Rose over at Forbes had an interesting piece last week about the divergent strategies of ABC entertainment head Steve McPherson and NBC chief Ben Silverman in regards to product placement.  Aside from the colorful banter that the two have engaged in over the past year, Rose highlighted the different attitudes that the two have taken in regards to product placement.  Whereas Silverman has aggressively pursued product integration deals and has called for significant changes in how networks collaborate with advertisers, McPherson has taken a more guarded approach choosing to employ product integration only when it “lends itself to the creative.”

More than just salesmanship, it appears that the data strongly confirms this bias.  According to Nielsen’s Place*View data, ABC had only one Top 10 series in terms of placement occurences in Q1 2008, as opposed to three from NBC (including three of the top four). Apparently Silverman and McPherson do indeed practice what they preach.

Digitas EVP Carl Fremont, in a Silicon Alley Insider interview, points out that the major broadcast networks are leaving money on the table when it comes to digital:

What’s Fremont looking for? His advertisers want to integrate their wares into original Web shows, but he hasn’t seen anything resembling a strategy from the networks. Fremont doesn’t consider Hulu or other outlets that show digital streams of broadcast shows an option, because his advertisers want to integrate into shows rather than sponsor them or place 30-second spots.

“Just placing ads like pre-rolls are not a big interest to us, frankly,” he says. “That’s just taking the old TV model and adapting it to a new screen. We would rather work with a producer and develop custom content.”

Carl, we’re on your side. The current brand integration market is a free-for-all and agencies are doing their best by relying solely on personal relationships to generate integration opportunities for their brand clients. The problem that agencies, brands, and content creators face is one of transparency and currently, everyone loses.

The content creators must now work with each agency’s handful of brand clients, leaving content creators creatively constrained. Due to any one agency’s limited list of brand clients, brands that would have been a perfect fit for the content creator don’t show up on the content creator’s radar. This leads to bad integrations that turn viewers off. Further, content creators are leaving money on the table because they are not exposing their integration inventory to the largest possible number of buyers. Essentially, they are willingly limiting demand for their ad inventory.

Brands are in a similar position. A brand that might have loved to partner with a particular content creator will lose that opportunity unless the brand’s agency has a direct relationship with that content creator. Given the large and increasingly complex web of content creators and distributors, the odds of this match happening can be slim. As a result, you have brands integrating with the content that their agencies’ have relationships with and not the right content befitting the brand’s overall strategy.

This is the problem that PlaceVine is solving in partnership with our agency, brand, and content partners and we’ll look forward to sharing our solution soon.

Lydia Loizides, VP of New Media at Paradigm, relates an interesting, recent conversation on the TV Board blog.  She recounts an interaction with a colleague in the branded entertainment space who asserted that talent agencies were in an advantageous spot vis a vis creative and media agencies as it relates to the creation of branded entertainment.  Her conclusion:

“Rather than bemoan your perceived fate, figure out a more direct way to partner with the talent agencies. I believe the saying goes — keep your friends close and your enemies closer, no?”

It may be a slightly biased answer coming from an executive at a talent agency, but I believe it is part of a larger, correct answer.  I think that Lydia’s conclusion could be broadened to read “figure out a more direct way to partner with content creators”.  The traditional politics of access are shifting in the entertainment business and there are an increasing number of services and channels available to agencies and brands who want to be involved in entertainment.  Talent agencies most certainly sit in a strong position as they have access to content at its earliest development stage, a time when brand involvement can be most strategic, and thus they will always be a critical power broker in the business.  However, as content creators continue to look for brand sponsorship and integration, they will widen the net that they cast for potential partners.  In democratizing access to content, great ideas, dollars, and rapid execution will drive successful collaboration, not necessarily long standing relationships.  As Lydia seems to concur when stating,

“While, yes, there is a certain leverage that a talent agency could have in that it has direct access to a brand, I have to believe that somehow, someone would have the wherewithal to be able to make an independent decision.”

We certainly are proponents of open access at PlaceVine and have built a platform to specifically enable more efficient content discovery.  With increasing interest from brands and more available inventory of content, the industry cannot afford to bottleneck access to opportunities.  Onward we move toward a future with better information exchange.  Open access, more independent decisions, and better results for brands and content creators.

Adam Erlebacher, Co-Founder of PlaceVine, recently sat down with our client David Caruso, formerly of Alliance, an entertainment marketing arm of Grey Global Group, and now Founder & President of branded entertainment agency ACME Brand Content Co., and David Knox of Procter & Gamble, to discuss how content creators can collaborate with brands for mutual benefit.

We thought you might find their perspectives useful to your next project — please share your thoughts and feedback in the comments section below.

On when content creators should approach brand marketers…

Erlebacher (PlaceVine): Many of the filmmakers using PlaceVine rush to find brand support just before entering production.  At that late stage, most brands can only provide product, not financial support.  If a content creator seeks financial sponsorship and not just in-kind contributions, when should they reach out to brands and/or their agencies?

Knox (P&G): Ideally, they need to start talking to brands at the very beginning of the creative process.  Once they have an idea in their head, they need to engage brands to see how that concept could be shaped together.  The worst approach is engaging a brand after the fact and forcing an integration into the flow of content.

Caruso (ACME):   Content creators shouldn’t be looking at brands as a bank. They should be looking at them as true partners.  A brand in many cases can add to the story and the environment of the creative, because point blank, brands are an everyday part of our life.  They are a fabric of Americana, and any great creative content will need to reflect that. Brands also have something we call “share of mind”…they occupy real estate in the consumers brain, and have many more touch points in a 24 hr period with a consumer than any type of creative asset does.  From a purely business standpoint brands can help drive eyeballs to the piece of content they are associated with, and if done right a brand can weave their essence in to the creative product so that all the eyeballs they are driving are engaged in the intersection of commerce and content. 

On what turns agencies and brands off…

Erlebacher (PlaceVine): All of the content creators using PlaceVine have done incredible work but some have limited experience collaborating with brands.  What is the most common mistake you see content creators make?

Caruso (ACME): Not understanding that for the most part brands aren’t in this business for awareness.  Most of our clients have 90-95% awareness among their consumers.  They don’t need a call out in a movie to drive awareness. They need to drive relevance and a ‘cool factor’.  They need to show product usage occasions.  They need to use the creative to tell the same story their advertising does, but to do so in a more organic and real way.  That’s why my clients are looking to be in the business of brand integration…From a creative standpoint I’ve always approached this from the sense of if the brand isn’t driving value or enhancing the consumer experience than they shouldn’t be there. 

Knox (P&G): Aside from engaging brands too late in the process, the second fatal mistake is misunderstanding the goals and aspirations of marketers.  Brands are not there as simply as a source of financing.  Often, the marketers are creatively driven as well, and are just applying their sense of creativity in a different way.  Marketers are significantly invested, emotionally and financially, in the creation of a particular brand image. Content creators should respect a marketer’s brand like they would expect a marketer to respect their art. 

On the changing landscape of branded entertainment…

Erlebacher (PlaceVine): As technologists, we’ve approached the challenge of bringing efficiency to the brand integration market with a fresh set of eyes — clearly the “product placement” market has evolved.  What is different now versus 5 years ago?

Caruso (ACME): Opportunity and openness.  Years ago creatives developing long-form content looked at brands as the devil.  Then they looked at brands as open checkbooks.  Now, based on my experience, there is a true spirit and willingness to collaborate.  Everyone is realizing that in this new age of consumerism 1 + 1 = 3.

Knox (P&G):  First, there has been an emergence of numerous new vehicles for brand integration ranging from independent films to online content to videogames.  Second, as Dave just pointed out, there has been a renewed openness for brand integration that never existed — both from consumers and content producers.  Music videos, video games, independent films…these were all off-limits five years ago.  Now people are openly recruiting for them.  Finally, there has been a disruption of the gatekeepers.  When major studio productions were the only option for placement, you had to work directly with key individuals and agencies that controlled the flow of opportunities.  Placement was not always about the right brand at the right time, but more about knowing the right people at the right time.  With the emergence of digital and other new channels, these gatekeepers are, at times, on the outside looking in.

Viral video guru Kevin Nalts has a great recent post advising Marketers on tactics for leveraging online content.  Perhaps the most salient point for those engaged in the business of branded entertainment is #3… Let go.

“Step 3: Let go. Your marketing message is critical to you, but if your content is driven by an advertising objective it’s at risk of being a flop. If you want to go viral, you’ve got to entertain first and promote subtly. There are countless case studies on this, and it’s an inarguable fact. If you buy media, your ads can be boring. But if you expect people to share your video, it better be entertaining, provocative, sexy, funny, outrageous or at least interesting.”

Marketers engaged in any form of brand integration should take this lesson to heart and will need to recognize that impact is often in inverse relation to control… a tough pill to swallow and at times a leap of faith, but a valuable lesson to keep in mind.

Here is a very good article in TV Week regarding the opportunity for content creators and marketers to benefit from brand integration. Excerpt:

…Then there’s Tay Zonday, the YouTube star who rocketed to viral fame when his “Chocolate Rain” video logged more than 13 million views last year. He found a way to make money with his encore when he partnered with Cadbury Schweppes Americas Beverages to create the “Cherry Chocolate Rain” video, a sexy, hip-hop music video that features the new Cherry Chocolate Diet Dr. Pepper drink. In the song he sings that he was paid a “hefty fee” for the sponsorship. The video has generated more than 2.5 million views on YouTube.

Product placement in viral video lets advertisers reach younger demos. “The ‘Cherry Chocolate Rain’ viral video was just one part of the biggest media plan ever for Diet Dr. Pepper, which began Jan. 1 and features TV, print, online, radio and outdoor advertising,” said Jaxie Alt, director of marketing for Dr. Pepper, Cadbury Schweppes Americas Beverages. “Viral videos are another way to really engage and interact with our consumers, making our brands part of pop culture and keeping them top of mind.”