If it's a Thursday, some publisher somewhere is probably organizing a team to make ads for brands. On this Thursday that publisher is digital video network Kin Community.
Kin Community has formed Kin Studios, a 20-person team that will work with marketers and Kin's creators to produce videos for brands. Kin Studios has already signed deals to produce content for Procter & Gamble, Beiersdorf and Wilton.
Kin Community is far from the first publisher or digital video network to set up a branded-content shop. BuzzFeed, AOL, Maker Studios, Fullscreen, Vox Media, Vice, CNN and The New York Times are only a fraction of the publishers that have rolled out in-house agencies to make ads for brands.
These publisher-run branded-content arms are all the rage because of all the money to be made. 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. Then -- in the case of Kin Studios -- combine that with the $7.77 billion that eMarketer estimates brands will spend on digital video advertising in the U.S. this year.
Branded content can be particularly lucrative for YouTube-heavy digital video networks whose ad revenue can be weighed down by the revenue cut -- often 45% -- they have to give the Google-owned video service for ads run against their channels. Networks such as StyleHaul have gone almost all-in on branded content as their primary revenue stream, with traditional ads like pre-roll spots providing supplementary revenue. And Kin Community's business is similarly oriented around branded content.
"The majority of our revenue is driven by branded-content solutions. There's still a large part of our revenue [that comes from standard ad buys], but those media dollars for the most part are tied to branded-content executions ," said Kin Community CEO Michael Wayne.
Kin Studios will primarily make money from the production costs associated with the brand videos. Brands will be encouraged to run those videos as ads on Kin's creators' channels, which will bring in more money for the company, but those media buys are not required for a brand to work with Kin Studios, said Kin Community's VP-sales Lauren Merriam.
The company's creators had already been making videos for brands, but Kin Community decided to formalize the practice after receiving more requests from marketers for branded-content deals within the first six months of 2015 than it did during all of 2014, according to Mr. Wayne.
"Right now with things moving so quickly it's important that both the content and sales side of the business communicate effectively," Mr. Wayne said. That's why Kin Studios will be jointly run by Ms. Merriam and Kin's VP-programming Beth Le Manach.
The division's 20 employees will split between 12 employees on the sales side -- stationed in New York, Chicago, Los Angeles and Toronto, as well as a client services team based at the company's Santa Monica headquarters -- and eight employees on the production side, which includes producers, editors and graphic designers.
However it's Kin's creators and the audiences they attract that the company hopes will set its branded-content arm apart from others clamoring for marketers' budgets. Kin Community's network of 100-plus digital video stars spans more than 100 million followers across social networks including Facebook, Twitter and Instagram, as well as 42 million YouTube subscribers -- to total 435 million video views per month -- and 78% of the network's audience is female.
"The females and creators in the Kin network are really the new role models for women as they transition through life. Whether that be graduating college and moving into their first apartment or buying a car, getting engaged, having a baby, et cetera, these creators have enormous built-in audiences, and they can really help an advertiser drive brand loyalty, affinity and sales," said Ms. Merriam.
One of Kin Community's biggest stars Rosanna Pansino has already been producing how-to videos for cake-decoration brand Wilton as part of a year-long deal. Those videos are cross-posted to Ms. Pansino's channel, which counts 4.2 million subscribers, as well as Wilton's channel, which has 183,000 subscribers. The first six videos that Ms. Pansino has produced and Wilton has uploaded to its YouTube channel have combined to notch more than 1.4 million views.