In a story last year, Ad Age detailed how two marketers collaborated to create long-form vignettes that ran during commercial breaks of a network TV show. But once the piece was posted online, the advertisers raised an objection to our characterization of the spots as "commercials." Instead, they argued, they were content.
In reality, they were both—and the concept is hotter than ever. Everyone from agencies to former custom publishers, production studios and media owners seem to be rethinking their strategies (or even restructuring) to capitalize on content by carefully fitting their marketing message into a new framework of the medium surrounding the ad.
According to an Ad Age survey, content marketing attracted 12% of marketers' budgets in 2012 and more than half of marketers plan to spend even more on it this year. Like the early days of digital and social media, when a variety of offerings popped up and marketers were left to sort through to determine the best options, the race is on to see who can cash in on content.
"It's a new space, and it's clear that everyone is trying to get a piece of it," said Shane Snow, chief creative officer at Contently, a technology company that offers publishing tools for brands, as well as a database of vetted journalists. "Everyone is coming up with a reason why their business model makes sense and why they're the most appropriate way for a brand to tell their story."
That presents a conundrum for marketers trying to figure out which players and models are best for their content-marketing strategy.
"We take a lot of meetings with various folks to know what they're working on. It may not yield any immediate project," said Tony Pace, chief marketing officer at Subway, which works with Content & Co. on the "4 to 9ers," an online comedy series that's been a hit on Hulu. "Our belief is you're much better off if you're there at the moment of inception or shortly thereafter and can find a way to collaborate with the creative and production community."
Production companies are wired to generate high-quality content through connections with famous producers and directors, meaning they're not necessarily positioned to optimize that content in real time. And while they know how to create the kind of content that people want to watch, they're not as tuned in to brand strategy and marketing as other types of shops.
"At what point does Procter & Gamble produce a "Mad Men" episode as opposed to a circuitous route of shooting a commercial that ends up on a TV show where the budget of the commercial might be half of what an episode costs? That's what fascinates us," said Michael Sagol, a partner at Los Angeles-based production company Caviar.
As demand grows for talented directors and feature-film-like content (marketer-funded and -branded webisodes or documentaries, for example) studios are gaining direct access to brands and bringing in more freelance creative strategists. "Clients welcome [producers] and they know how to sell ideas," said Mike Wiese, director-original and branded content at WPP's JWT.
Talent houses like CAA take production one step further. They have the connections, creative minds and celebrities needed to create buzz around videos and large events. Referencing Chipotle's "Back to the Start" film, Jae Goodman, chief creative officer and co-head of CAA's marketing group said, "We can walk down the hall, talk to Willie Nelson's agent and say, "I have a crazy idea. Let's get Willie Nelson to cover Coldplay in a video about a farmer.' He then picks up the phone and is on with Willie Nelson."
Content-creation specialists like this have an advantage in terms of the kinds of investments they can make, according to Stuart McLean, CEO of Content & Co., which operates as a production studio. "Very few media agencies would probably spend the investment levels we did to build out this team, because they're built on a retainer-model business," he said. "We're not hamstrung by that."
Agency networks might disagree. WPP's Group M Entertainment operates separately from the media shops within GroupM and consists of 15 global staffers who are not funded by clients. "We absorb the cost and partner with rights holders and media platforms so that by doing so we could become potential stakeholders in properties and also give our clients an advantage," said Group M Entertainment CEO Peter Tortorici. "We'll invest cash; we'll frequently obtain some form of media value back for our cash to deleverage our risk and make money if the property is useful. If we're co-producers, we make money on fees."
Media agencies are also trying to break through on the creative front, which has not always been their strength. The 25-person Content Collective group within Omnicom Media Group earlier this month held its first "Final Front" idea-generating event (a play on the upfronts and NewFronts). Working with Dreamworks, the agency invited networks, independent producers and digital platforms to pitch content ideas to its clients and ink immediate deals while at the event. (See related story, P.36)
In some ways, media shops have a bigger stake in the content game, since their core strength is distribution. Media agencies have "a greater ability" to come up with a creative idea that will work in various media settings and then measure the impact, said Mr. Wiese of JWT. "They also have their own units that sell in creative ideas based on more access to the media channels." He added: "We're trying to be more creative when it comes to ideas and more cognizant of media through earned and owned channels."
Brands like Pepsi have embraced the flexibility of working with a partner like Funny of Die, which earlier this year quickly produced an online video poking fun at rival Coke's Super Bowl campaign.
Others, like Adobe, have in-house departments that split up and distribute content briefs to different agencies. Maria Poveromo, senior director of social media, analyst relations and PR at Adobe, said the company divides its content work between its PR and social agency Edelman and its creative shop Goodby Silverstein & Partners. "We demarcated the roles and boundaries so it doesn't get confusing," Ms. Poveromo said. "What was appealing was the idea of timely content."
Edelman's content service, which Adobe tapped as a pilot last year, consists of physical newsroom spaces in seven offices across the U.S. and London, as well as a dedicated staff of at least 150 executives working on real-time or planned content -- videos, graphics or events -- that it often amplifies with paid media. The shop has already spent more than $4 million on newsroom talent alone, hiring executives with experience in media buying and journalism, said Mark Hass, president-CEO of Edelman U.S. Most clients working with the newsroom commit to a flat fee, much like a subscription, he said. It's a departure from standard compensation through billable hours.
While it might be too early for Edelman to gauge its newsroom's return, the subscription-based model has paid off for digital agencies like Deep Focus. In a year-and-a-half, the shop's Moment Studio group has seen a boost in subscriptions, which now account for about 17% of the company's revenue, said Deep Focus CEO Ian Schafer.
With all these different companies competing for the same budgets, there's bound to be some friendly -- and not-so-friendly -- competition.
"Clients are talking to producers in Hollywood, and PR, media and creative agencies are pitching content. It's a jumpball every time a client needs something," said Mr. Wiese.
Indeed, companies like Pace Communications and McMurry TMG that have roots in custom publishing have found that what they've always done -- produce custom content -- is now a desirable revenue stream for a number of sudden rivals.
"In the last 12 months, we would play very happily in the sandbox with digital agencies and traditional advertising agencies, and they would all look at us quizzically and say, "What do you guys do again?" said Craig Waller, president at Pace Communications. "Now there's a competitive nature to it. They're looking at what we do and seeing it as a path to growth."
He's concerned, however, that those rivals could poison the well. "Native advertising is the latest trick in the book for the agency world. That kind of shallow thinking might get the whole category in trouble," Mr. Waller added. "People all piling into it destroys the category of people who have built a long-term strategy to engage people."
Still, it's clear content marketing is only going to continue growing; producing and contributing to quality content, whether in the form of a 30-second TV ad, product placement or an original series, isn't going away. And marketers increasingly will be forced to zero in on the model that best suits their short-term and long-term marketing goals.
"We are right on the cusp of content-marketing agency of record," said Mr. Waller. "The need for constant content to feed the social machine, to pop up on organic search and to establish media channels means [marketers] now have a constant need for fresh content. Some clients are looking internally for that and some are looking externally."
To purchase the Advertising Age Research Report, "Going Native: Content Marketing Strategies," go to this order page.