Why So Many YouTube Networks Are Hosting Their Own NewFronts Events

Collective Digital Studio, Fullscreen, StyleHaul to Make Their NewFronts Debuts

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Companies like Fullscreen and StyleHaul that manage some of YouTube's biggest stars are hosting their own NewFronts presentations this year.
Companies like Fullscreen and StyleHaul that manage some of YouTube's biggest stars are hosting their own NewFronts presentations this year.

Don't be surprised if a lot of YouTube networks kick off their NewFronts presentations with the Jay-Z song that opens "Allow me to re-introduce myself."

Commonly called YouTube networks -- or multichannel networks (MCNs) in industry parlance -- online video companies like Collective Digital Studio, Fullscreen, Machinima, StyleHaul and Whistle Sports have decided to host their own NewFronts presentations for the first time this year as a way to get advertisers up to speed on their businesses.

The first thing you should know: they can no longer be simply categorized as "YouTube networks."

"There's a been a lot of evolution in the MCN landscape over the last few years as MCNs have vocally said the definition no longer really encompasses all of our businesses," said StyleHaul CEO Stephanie Horbaczewski, who described her company's presentation as a "rebranding and redefining of who we are as a company and what we do."

These online video companies still manage large numbers of YouTube channels, but their businesses are more oriented around the stars behind those channels whose audiences also span Facebook, Twitter, Vine, Instagram and Snapchat. For example, Collective Digital Studio's presentation will feature YouTube stars Rhett & Link and Harley Morenstein; Vine stars Logan Paul and Princess Lauren; and Snapchat star Shaun McBride.

"The average online content creator today is typically nurturing their presence on at least five platforms in the social web," said Fullscreen CEO George Strompolos.

That has forced these online video networks to evolve their business models beyond ordinary ad sales. These companies started as ad networks of sorts. They signed deals with bunches of YouTube stars to package their channels together into bigger bundles to sell to advertisers, who wanted to buy ads on YouTube but were wary of those ads running alongside a video of someone's cat. The videos these creators were posting to YouTube had become the new TV shows for young audiences, and aggregating those channels made these companies the new TV networks.

"Google has some crazy number of partners on YouTube. The reality is they need companies like ours to organize that, to separate it and bring a marketing strategy around brands' top priorities. That's why we exist," said Reza Izad, CEO of Collective Digital Studio.

But selling YouTube ads isn't a booming business. YouTube typically takes a 45% cut of these channels' ad revenue, with the remainder divided between the creator and the online video network that represents the creator. So these online video companies began looking for other ways to make money, such as having creators shoot videos for brands. The money from those so-called influencer programs usually didn't have to be split with YouTube, and the campaigns were able to take advantage of the creators' fan bases outside of the Google-owned video service. And more recently these companies have waded into original programming, developing more TV-like shows starring these YouTube creators.

As a result, some online video ad networks have eschewed traditional ad sales. StyleHaul and Machinima rely on Google's teams to sell the pre-roll spots running before their creators' YouTube videos, while the networks' own sales staffs focus on signing advertisers to bigger packages like series sponsorships or deals for the companies' creators to shoot videos for a brand that will be distributed across all of the creators' social accounts.

"This is more than just YouTube. This is about multiple ways to engage on multiple platforms, so brands are in the middle of the conversation our creators and their fans are having all the time," said Brian Selander, executive VP at Whistle Sports, which is home to trick-shot masters Dude Perfect who have been featured on NBC's "Today" show.

During its NewFront presentation Fullscreen plans to detail its multiyear deal with GE that has included a creator-in-residence program. As part of that program, a biologist-turned-creator named Sally Le Page -- "she wants to become the next Bill Nye," Mr. Strompolos said -- has become a creator-in-residence for the brand, visiting the company's factories and meeting with its scientists. That has resulted in one-off videos but has also evolved into an original series breaking down the science, or pseudo-science, of movies.

"We didn't pitch the [series] idea to GE. It came up in an organic way by understanding their needs, identifying Sally as a creator and together developing the format," Mr. Strompolos said.

Other online video networks are looking to use their NewFronts presentations to secure similar deals that extend beyond the standard ad buy.

"We will be lifting the curtain on new shows that will be part of our content strategy this year. It's not just here's an amazing creator doing amazing things and the brand is well served. It's here's the creator and here's what we're doing in a serialized way over months that's more than just a brand integration," Mr. Selander said.

Machinima wants its NewFronts presentation to result in advertisers considering them when they're drafting campaign ideas and are soliciting pitches as well as advertisers being interested in the original shows Machinima is producing. "The deals we want to strike are both inbound and outbound," Machinima's chief revenue officer Jamie Weissenborn.

But some media buyers are skeptical as to why they would need to attend one of these online video networks' NewFronts presentation in order to strike such a deal.

"We are in contact with all of these guys -- Maker, Fullscreen, Machinima -- all the time. If there's a project or something being pitched to them that's right for one of our brands, I can assure you they are not waiting until April to bring it to us," said UM's chief investment officer David Cohen in a recent interview.

Mr. Cohen may be well-connected in the online video ecosystem, but many marketers still aren't, including TV advertisers who have yet to bring their budgets online. Last year YouTube was able to find 30 parent-level brands -- large companies that own multiple brands with their own ad budgets -- who had never before advertised on YouTube to buy into its Google Preferred program, which packages the top 5% of YouTube channels into multiple content categories.

Advertisers are buying into the online video phenomenon because it's one of the few ways to find audiences that may not be watching as much TV. According to a YouTube-commissioned research conducted by Compete, nearly 10% of the people who watch Google Preferred channels on desktop don't watch traditional linear TV, and 90% don't check out Hulu's, ABC's, CBS's, Fox's or NBC's desktop sites to watch TV online.

That audience is what these online video networks are selling with their NewFronts pitches. Collective Digital Studio operates 200 of the channels within Google Preferred, which equate to 60% to 70% of the network's monthly audience, according to Mr. Izad.

As brands get a better grasp on the audiences available online, they're still wrapping their heads around the best ways to market to those viewers. That's another reason why many of the online video networks presenting this year plan to spend a lot of time literally walking them through the details, as opposed to putting up PowerPoint slides.

StyleHaul's presentation "will be very interactive. We're actually going to literally show the audience what it is exactly that we do," Ms. Horbaczewski said. The company plans to record a live campaign during its NewFronts presentation to give advertisers in the audience a clearer idea of how they can work with the company. "It's very complicated what we're all doing … sometimes it's a little bit difficult to conceptualize how to use us, and with this you'll actually get to live through the experience while we talk about what we do," she added.

"We have a two-hour block available. A fraction of that will be a formal presentation of our slate, creators and shows and other opportunities. The rest is a chance [for advertisers] to get up to speed and understand directly from the creators what's available to them," Mr. Selander said.

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