Add AOL to the list of publishers that have gone from selling ads to making ads.
AOL has created an internal division called Partner Studio that is charged with creating content for advertisers. Both the name and type of work may sound familiar. AOL-owned Huffington Post has its own in-house creative shop called HuffPost Partner Studio that does the same thing for brands, as do an increasing number of publishers including BuzzFeed, Vox Media, The New York Times, Vice, Politico, CNN, Tumblr, The Guardian -- the list goes on.
And there's one big reason all of these publishers are constructing their own creative shops: that's where the money is starting to flow. Advertisers in the U.S. are expected to spend $4.3 billion this year on so-called "native" ads that emphasize an ad's editorial-like content and, in some cases, disguise the spots to look like unpaid placements, according to eMarketer. That's a 34% increase from what brands are projected to have spent on native ads last year.
These branded-content teams are also a way for publishers to improve their relationships with advertisers, exactly the kind of cozying-up that could keep brands' wallets open. "Not only are these kinds of studios the price of entry at this point for anyone in the content and media space, I think the best thing that can happen is it begins to shift the conversation from being transactional to being a true partnership," said DigitasLBi's chief content officer Scott Donaton.
"We do believe the middle things that are not programmatic or are not this are going to die soon. We see this as that next high-growth sector in the industry," said AOL's CMO Allie Kline. AOL's Partner Studio consists of roughly 60 employees, including those people who worked for HuffPost Partner Studio, which has been folded into the new Partner Studio.
Partner Studio is part of AOL's so-called "barbell strategy" that prioritizes high-quality, content-heavy ads on one end and easy, automated ad-buying on the other. By that logic, AOL's Partner Studio is the polar twin to its ad-tech arm One. Both programs want to serve as a one-stop shops for brands but for different needs. Partner Studio is there to produce fancy so-called "premium" ads, like custom banners and branded videos and put them on AOL's top sites; One is there to run regular ads and sometimes the premium ones across a bunch of other companies' sites.
AOL thinks its branded content division is different from other publishers' in-house agencies because it isn't only producing content for brands. "There seems to be a lot of these studios popping up all over the place. Our philosophy is the creation part is table stakes," said Brad Elders, AOL's senior VP of Partner Studio.
Partner Studio works in two main ways. Its team of dedicated editors and AOL's video production staff will work with brands to create content like banner ads or so-called branded videos that will incorporate a brand but are filmed to not look like a normal commercial. For that creative work, AOL will use its in-house technologies and audience data to figure out what kind of creative or topics would appeal to a brand's intended audience.
The other part is distribution. Like every other publisher with a branded content team, AOL can sell brands on distributing that content to its audience, which includes AOL.com, its video services AOL On and AOL Be On and Huffington Post Media Group and which the company claims to span 200 million people in the U.S. each month. That reach will expand once Verizon's acquisition of AOL closes, which will let AOL's ad-tech tools match the cookies they drop on people's browsers to track their browsing behavior with Verizon customers' device IDs in order to aim these ads at those people no matter whether they're on a phone, tablet, laptop or even TV.
While content creation may be table stakes for a publisher's branded content team, it's an important selling point for advertisers and helped to secure Partner Studio's first deal.
Georgia-Pacific is "moving away from a heavy emphasis on TV ads only to a more holistic approach including the digital space having more always-on content and content that strengthens and emphasizes the main idea of the campaign," said Douwe Bergsma, CMO of Georgia-Pacific's consumer business.
In anticipation of rolling out campaigns this year for all of its brands, Georgia-Pacific asked its media agency ZenithOptimedia to look for deals to help produce content for those campaigns. The agency and AOL's Partner Studio team came up with some campaign ideas and brought them back to Mr. Bergsma and his staff. Now those ideas are about to go live.
Georgia-Pacific is using AOL's branded content arm to promote six of its brands, including Angel Soft, Brawny and Dixie, over the span of eight months. That work will span new advertorial-like "native" ads; AOL's so-called "premium" display ads that are banners customized to the publisher's sites; and branded videos that will air on AOL's own video service, as well as its video syndication service that distributes clips to 40,000 other publishers.
AOL is also still determining who will own the content produced by its Partner Studio team and a brand and how it will answer questions like whether a brand can take a Partner Studio-produced ad and run it on another publisher's site and whether it would have to pay AOL for the privilege. "We don't have a fully formed answer other than to say we intend to be an open ecosystem and let content flow in and out of there," Mr. Elders said.
Content ownership is "very important to clients. Not only ownership in the sense of [intellectual property], but in terms of the ability for a brand to truly be the only one to present that content," Mr. Donaton said. He added that he's had conversations with a handful of media companies in the past month that are no longer being possessive over the content they create with brands.
Georgia-Pacific has "a variety of agreements [with AOL] in terms of how we're leasing or owning content outright," said Kate Metzinger, senior marketing manager for communication strategy, innovation and planning at Georgia-Pacific. She wouldn't go into specifics but said that all of the content Partner Studio produces for the marketer can run on the marketer's own sites or social accounts.
AOL's work with Georgia-Pacific isn't limited to churning out new creative. The publisher applied its own "Shoptimizer" technology that tweaks who the campaign is targeted to based on the people that have purchased a brand's or its rivals' products in the past week. "The more recent nature of that [Shoptimizer] data versus some other purchasing data alternatives was attractive from an experimentation perspective," said Ms. Metzinger.
AOL isn't selling Partner Studio as a fixed-rate package to marketers. In fact the pricing model is pretty fluid. "A lot of it depends on, ultimately, what we're doing and how they buy," said Mr. Elders. He added that the content-production and media-buying costs will "more often than not" be bundled together into one fee.
Mr. Bergsma declined to say how much Georgia-Pacific is spending on its work with AOL's Partner Studio, but described the investment as on par with how much the marketer spends on national campaigns to promote a product launch.