We’re living in an age of unprecedented change. We experience with Oculus Rift, invest with Acorns, consume video through Hyper, tune into Pandora and navigate with Waze.
The emergence of YouTube stars is doing more than providing a new avenue for brands to reach out to the younger consumer audience. According to two-time Emmy Award-winning producer and innovator, Seth Shapiro, it is also throwing into question the value added by large creative and media agencies.
Shapiro, a Television Academy governor and professor at the University of the South California, has launched more than 25 services online, on television and on mobile. Speaking ahead of his appearance at the X Media Lab Masterclass series, he says a battle has broken out within many brands regarding whether they should be reaching out directly to this new generation of content creators, or continuing to work through their creative agencies.
“They are paying these very high margins, and asking what exactly are they getting,” Shapiro says. “If they can go out to some YouTube kid who has hundreds of millions of viewers and cut a deal directly, or go to IPG or WPP and have them mark it up, what good are they doing?
Shapiro says many people in the filmed entertainment industry have yet to take the emergence of young YouTube content creators seriously. But this leaves them ignorant to the fact that the new generation of content consumers are the most likely to skip traditional disruptive advertising mechanisms, and have a much deeper affinity with these content providers. And this affinity can also be translated to brands.
According to Shapiro, smart brands are forging partnerships, such as Target’s partnership with YouTube game commentator, Tiffany Garcia (aka ihasCupquake), whose viewer numbers frequently run into the millions. The Target partnership involved Garcia redecorating student dorm rooms using products from Target.
“This was a really interesting way to target a brand message at a completely new audience in a really cost-effective way,” Shapiro says. “The really smart thing for brands to do is to try and find consistent talent who are aligned with the sensibility of that particular brand, and then forge a relationship.
“And it is much, much less expensive than going through a traditional agency.”
With brands working directly with content creators online, Shapiro claims the traditional motivation for working with an agency – specifically its ability to negotiate media buying deals across multiple channels – diminishes.
“If you are doing this stuff, you’re not buying 30 second spots, you can pretty much cut out a lot of that,” Shapiro says. “In Hollywood, there is this whole breed of companies - multichannel networks [MCNs] - that have the ability to go directly to these brands, and are succeeding to some extent.”
As a result, Shapiro says agencies could suffer the same fate as record labels that have shed many of the more profitable aspects of their operations.
“The agencies face a lot of the same pressure, because if you are not buying TV spots, and you can go directly to creators who do their own briefs, then you don’t necessarily need to spend a tonne of money with the agencies,” he comments.
One of the arguments in favour of MCNs is their ability to wield robust analytics to back promises of audience reach. This is causing problems for traditional free-to-air and cable networks, as highlighted in February this year when the CEO of NBCUniversal, Steve Burke, declared that TV measurement was not working, citing the fact that 70 per cent of views of NBC’s The Tonight Show occurred online and were not included in traditional TV ratings.
“There is a lot of pressure there, because basically for all of these start-ups and analytics companies, that is all they do,” Shapiro says. “The quest for data inexorably is going to drive new forms of media buys because the old ways just are not that efficient.”