July 2013
Volume 33 No. 5

May 2013
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Sponsored Content Programs All the
Rage with Young (and Gullible) People

By Dom Serafini

At first glance, it looks as though advertisers are now doing away with media, having themselves become media. Plus, some advertisers are now all the rage among young people totally taken by their sponsored content masquerading as “cool stuff.” Finally, not only are some companies avoiding paying to have their commercials broadcast, they are actually making money from TV outlets by selling branded content.

Sponsored content is not a new concept. In fact, the first record of advertisers creating content that looks like editorial content dates back to 1895 with Furrow magazine, which was devoted to farming and promoted John Deere tractors.

Sponsored, or branded, content evolved in the early days of radio and television with detergent companies financing the production of soap operas. However, in those days the sponsor paid for the content and the media outlet produced and broadcasted it.

Uniquely Italian was the TV broadcast of “Carosello,” starting in 1957, when sponsored content consisted of 2.15-minute shows in which the sponsoring brand could only occupy the last 30 seconds. Those elaborate mini shows were directed and acted in by famous talent and were very popular.

Nowadays, with the advancement of production techniques, digital media, and streaming in particular, advertisers often produce and distribute their own high-quality sponsored content with a sophisticated execution.

This strategy can involve “verticals,” when the brand targets the same demographic; and/or “horizontals,” when it reaches a cross-section of the audience. The reach is not casual, since it is achieved through “barker shows,” or advertisements that will draw traffic to the sponsored content. In addition, this new strategy utilizes “native advertising” by displaying it on one platform: Individual ads that are unique to the environment (e.g., Facebook, Twitter, etc.).
In this advertising setting, the strategy that has lost its luster is “sponsorship,” which is viewed merely as placing a company logo on something.

A florid independent production and distribution business has developed around the sponsored content industry. Take, for instance, the Brooklyn, NY-based Vice Media, which produced and distributed for sports attire company The North Face, Far Out, a series of videos profiling people living in remote regions of the world.

However, it is interesting to note that despite the aggressive ascent of new advertising models, the recently concluded Upfronts in New York City demonstrate how the traditional TV broadcast model still delivers the critical mass audience that advertisers crave for efficiency. It should also be noted that Internet video services, such as YouTube, have not as yet disrupted much of traditional television, which is now leveraging new technology - such as the second screen - to regain that portion of the audience lost to new media.

According to Robert Friedman, a former president of @Radical Media and a sponsored content specialist, with media becoming more fragmented, TV networks that continue to deliver that critical mass will become more valuable.

Even though companies continue to invest in marketing with traditional television, they are nevertheless embracing old and new media with several forms of sponsored content. These include advertorials - which for print date back to the mid-1940s and for TV, the 1960s - that are advertisements in the form of editorial and print media, with publications such as the Red Bulletin, published by the Austrian-based Red Bull GmbH, the energy drink company; or American Express's Departures. But today the field has become more complex and sponsored content that mimics Furrow magazine, or the Michelin Guide, is now defined as, “content marketing.”

Online magazines, such as Qualcomm Spark, put out by the semiconductor company, are also increasingly being developed.

But the big challenge in advertising emerged with the dusting off of sponsored content, and this time with videos cleverly and artfully masquerading as pure content, often with outrageous themes that would repel adults, but attract young viewers. These new videos of sponsored content show little of the sponsoring brand (see Up There for Stella Artois beer), while with “branded content,” the brand is right in viewers' faces.

On an intellectual level, sponsored content utilizes metanarrative techniques, where a story is told to justify another story or to look at a story beyond the story (e.g., a story about the lost art of creating a mural for Stella Artois as in the case of Up There). However, while postmodernists have shown incredulity and mistrust towards metanarratives for their hidden agendas, others find them to be honest because they let the reader (i.e., the viewer) decide whether they are getting played.

On a business level, during a seminar at the recent MIP-TV in Cannes, Red Bull Media House's CCO Alexander Koppel explained that his division produces 600 hours of content a year split into sports, lifestyle, nature and science. Koppel also mentioned that the Red Bull Stratos (space diving project) was distributed to 77 broadcasters around the world.

However, the company, through a spokesperson, declined to reveal its business model or strategy, while marketing manager Marco Raab focused on the fact that Red Bull has purchased the ORF natural history unit, Terra Mater. Similarly, VideoAge's calls to interview Vice's Alex Detrick and/or Andrew Creighton were not returned.

Distribution is an important part of sponsored content and producers try to reach all available traditional and new media, using their own and clients' websites, YouTube-style video-sharing and social media. A growing area, especially in territories drastically affected by economic downturns, is the sale of high-quality sponsored content at reduced license fees to cable and broadcast TV stations. These programs are defined by Ireland's RTE as “part-advertiser funded.” Giorgio Giovetti of Italy's Mediaset, reported that they did not pay for Red Bull Stratos, which they broadcast live, and in any case he did not expect that show to go for more than $1,000. Giovetti also wondered how Red Bull Media is going to post-brand Terra Mater's library.
A different situation could develop with branded content such as, for example, American Idol, which, even though it's heavily peppered with items from Coke and Ford, is sold to Canada with no price break.

Robert Friedman pointed out that, with program budgets for original programming decreasing, companies like Red Bull that can offer high-quality, original content, can actually sell, if only at reduced rates, their sponsored content.

According to Lori Rosen, executive director of Custom Content Council (CCC), a New York City-based organization founded in 1998, 25 percent of North American companies now produce or use indie production companies to create some form of sponsored content. However, in the view of David Goddess of Spark NYC, a sponsored content independent producer and a CCC member, there are very few companies that do what Red Bull Media does.

Italian boutique ad man Lorenzo Marini said that another company with extensive video production capabilities is Swedish-based home furniture retailer IKEA, which has Fix This Kitchen, a 30-minute show on A&E starring designer Nicole Facciuto and celebrity chef Eric Greenspan.

Andrew Canter of London's marketing service Experience also named Diageo (Smirnoff, Bailey, Johnnie Walker, etc.), energy drink Monster and Coca Cola as companies that invest heavily in branded content. Friedman added that, nowadays, “advertisers are insisting on participating in the development of content.”

For example, Mexico's regional office of Coca-Cola fully sponsored Wake Up With No Make Up, a 26-episode teen series produced by Argentina's Onceloops and distributed internationally by Silvana D'Angelo of Buenos Aires-based Smilehood. Considering that the hour-long series will feature music from Warner Bros.'s Chappell and will utilize production facilities from Frame Zero, costs were not a concern.

According to D'Angelo, the series will not be branded, however it will have all the colors and style of Coca-Cola. “The only requirement,” said D'Angelo, “is that Coca-Cola will have the first window on their web channel, Coca-Cola TV.”

Asked if such a strategy could reduce the pool of international buyers, D'Angelo acknowledged that “better results for both Coca-Cola and her company could be obtained by giving buyers the first window, but the sponsor thought otherwise.”
However, if sold outside the Spanish-language block, the dubbing in other languages will make the series more appealing to buyers.

Rosen, who defined “Custom Content” as videos produced by or for a brand, also estimated that in 2012 custom content spending on production and distribution in North America rose to $43.9 billion from $40.2 billion in 2011, with print claiming the lion's share of dollars spent. However, Rosen added, “video has been the fastest growing medium for content marketing,” and “62 percent of respondents [to a CCC survey] reported using [branded] video in their content marketing.”

To further complicate matters, Experience's Canter, also a founding member of the 10-year-old London-based Branded Content Marketing Association (BCMA), made a distinction between branded and sponsored content: “An event brings in a sponsor to be associated with the content that already exists. Branded content is created specifically for brands. This can sometimes be confusing for brands, which is what the BCMA looks to clarify.”