Ex-aQuantives Aim For Old Time Sponsorship Model For Video Talent Competition

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When online video first started catching fire with viewers and advertisers, a number of companies were vying for something of a “new TV” experience. Most have fallen short. But as users get more acclimated to viewing all screens equally, video startups have a greater chance than ever before of creating a scalable business with web-based content.

One company that’s appeared to have made some strides is Seattle-based King of the Web, which has been operating for less than two years as an amateur-hour style entertainment game show where users vote up contestants. The site is the brainchild of a number of former aQuantives, including CEO Maggie Finch and current Acxiom CEO Scott Howe (early aQuantive backer Nick Hanauer is an investor here as well). The site already giving out $75,000 to amateurs in its first big competition. We checked in with Finch to see how her ad background led her to online video, variety programming.

AdExchanger: How is King of the Web different from any other video distribution company? The programming model is kind of based on American Idol, correct?

Maggie Finch: Yes, you're definitely on the right track.  I would say, if you use a TV analogy, we're best described more as America’s Got Talent for the web since it's a bit of a variety show. On television, you would typically see singing and dancing and juggling and things of that nature. On the internet, you see things like vlogging, gaming and beauty tutorials and so the talents, while still of the variety nature, really are talents that have been mass promoted and shared on the web versus on stage.

Your background is in advertising. How did you make the move to programming?

It's a bit of departure from my background, but I have spent most of my career in digital media. I started a small agency in the ‘90s with a couple of guys called iBalls – we thought was very clever back then when no one was using the I for everything, and eventually that little company merged with another slightly larger company in Seattle called Avenue A, which ultimately became aQuantive. For many years I was the head of media for aQuantive. I then transitioned a bit to helping launch some other businesses like Drive, which was an ad network up until we were acquired by Microsoft. At that point, I flip-flopped more towards publisher activities and ran the publisher tools division at Microsoft.

Did handling publishing and advertising made you feel prepared to start up an online entertainment venture?

I managed all the technologies that Microsoft had built or acquired throughout the years to help publishers manage inventory and squeeze more money out of the CPM, etc. until I departed Microsoft after about two and a half, maybe, years there. After I left Microsoft, I thought I might take a short break but got a phone call from my friend Nick Hanauer, who was the original investor in aQuantive, and he said, “Hey, let’s do something fun and wacky. Rich Barton and I have some ideas about all the social clout that people are generating online, and it would be fun to let people demonstrate that digital influence that they have in a contest-like setting.”  We just started brainstorming from there, and King of the Web was born.

King of the Web has only been around for less than two years? How’s it doing?

We've got over a million registered users, and over a million people typically visit the site in a given month. We're probably getting pretty close to 80 million votes cast total since we started.

One of the first things we discovered was the power of tapping into people I would call “uber digital influencers” on social media. We featured entertainers who were able to cross over from being someone with social clout to someone who’s an online celebrity. They built up an enormous fan base through some sort of distinct talent or gift for gab or what have you online, and really fueled primarily by the growth of digital video and digital video editing tools.

So we found ourselves immersed very quickly, even though set out to build sort of a fun, quirky competition for anyone to play. We found ourselves immersed in a world of online celebrities who, for the most part, were coming off of YouTube, Facebook, and they come from Twitter and Tumblr and JustinTV and TwitchTV, and all the platforms that allow people to broadcast themselves and entertain or inspire an audience.

Was King of the Web’s audience is purely driven by social? No other substantive marketing was involved?

We've really not done the sort of viral trickery that a lot of businesses have done when it comes to taking advantage of Facebook and other social networks. We didn’t want to pay to have consumers’ timelines populated with stuff from us. We wanted to organically attract people because they truly found value in what was happening at King of the Web.

It turned out to be pretty easy to do since these entertainers, or these online celebrities, have such genuine relationships with their fan bases that when those entertainers said, “Hey, go up to King of the Web and check me out, I'm competing, I'm excited.” It was really very easy for them to move large numbers of people off of YouTube, or Facebook, or wherever they were over to kingofweb.com to participate. Then when they get there, what tends to happen is they start to discover other entertainers, and they start swing-voting, and time and time again, we see a sort of rather unknown emerging entertainer turn into a very well-known, large one at the end of a conversation.

Well, that kind of growth is impressive. But is the business itself scalable? Variety shows have a certain kind of production value and while King of the Web isn’t necessarily primetime in style, it must cost a lot to run, no?

None of the content costs us much, with the exception of a small weekly show that we call our Campaign Update, where we have two personalities that talk a bit about what’s happening in the competition. Aside from that, which, by the way, really makes us our own independent web video creators or amateur web video creators ourselves in our office with our friends and our camera equipment that is borrowed and so on. It's really all YouTube-generated content, so we have no cost structure there.  There's no studio cost.  There are no high-production costs that have.

I think the thing that’s been so interesting to me is that as YouTube continues to evolve, the idea of what content looks and feels like for the next generation, meaning they're handing out great video-editing tools. They're helping young creators become better creators, and they're sort of redefining what reality television looks and feels like by taking what was just a bunch “baby’s first steps” clips and cat videos and “slip and falls” and turning it into really intentional content by a lot of ambitious, talented young people.

They’ve really fueled the whole new genre of content that we call independent web video that is, while user-generated, pretty high production quality, so to your point, it's like, “Wow, this looks really good.  It looks … I can watch this.”   So I think that that’s been an interesting thing for advertisers to get their head around is while it's still classified as amateur, because, Fox isn't sending $6 million an episode to produce it, it's generating an amazing amount of engagement, and amazing number of views, and all the things that you would watch to associate your brand with.

You’ve certainly got the cost issue under control. What about the advertising strategy? How do explain your business model to advertisers?

There are two pieces to our business model. One is advertising, and that is on a sponsorship basis. Because we're a contest, it's a lot like stadium sponsorship, but highly social. For example, a sponsor can host a custom election if they want to and ask people to submit videos about their favorite use of their product or something that’s related to their business. They can give away prize value. We can skin an entire site with their logos and their art, and we can really make the whole thing really feel like a “brought to you by” plus a lot of social engagement with their products and services.

As we grow, the video libraries created as a result of people talking about the products and sharing their ideas about the products. The sponsorship model is very rich. It takes the old concept of the anchor tenant sponsor and makes it social, adds video, puts contents and leader boards into the equation, etc.

Then the other part of our business is virtual bids. Typically, most entertainment companies that set out to “gamify” their products have failed, mostly because the audience already has the established way that they interact with that content. For the sake of an example, let's say that the Wall Street Journal is going to offer you a badge for reading the most number of articles. Say for ten articles read today, “You're the super consumer--congratulations!”  I think the general reaction to that would be, “Huh?”

When we started, we thought, “Well, how can you take content and actually put it in an organically competitive environment?”

We did that for two reasons: One, because we didn’t want to carry the content.  We wanted to, like, wisdom of the masses decides what people want to see and consume.

What can you say about the data you collect from the use of virtual currency? How do you make that information valuable to sponsors?

In the modern media world we live in, it is every advertiser’s responsibility to really pinpoint their key influencers. It starts with understanding digital influencers, period, and what they look like.  A digital influencer could be very specific to a brand, so people who influence the adoption of certain products look different than people who influence the adoption of other products, but when you dig into it, there really aren’t that many true digital influencers out there.

Sure, in my small circle, I may be able to say to my friends, “Here, I really think you should get this new Crest toothpaste,” and maybe I'll motivate one or two of my friends to do that. In the world of true digital influencers, they may go out and say, “You should buy this Crest toothpaste, and 10,000 people will go buy that toothpaste, or in the case of gaming, Total Biscuit may go out and say, “This game is not worth buying” or “This game is worth buying,” and 10,000 people will buy it or not buy it.

In terms of using the data we receive, we take a new look at what digital influence looks like by paying attention to a contestant’s ability to move people to vote for them. If someone is able to get someone to say, “Purchase Kingmaker passes,” or send a social sentiment gift, you know, that says, “Here’s your vote!  Good luck in the competition!” odds are this person is highly influential. So we're starting to understand what influence actually looks like and who those key influencers are, and helping brands understand how valuable that can be to them.

Like a lot of video sites, you naturally have a YouTube channel. Does that produce any revenue for King of the Web?

No, we really don’t make any money off YouTube. Most of our monetization happens at our site versus our YouTube channel or on a pre-roll basis. All the pre-rolls are important, though and there is some value to it. But mostly, the sponsors are where the revenue comes from.

An advertiser can run their video unit on our site through a YouTube upload, but what’s important is the viewing of that video asset and not necessarily that that video asset on YouTube is generating so many views that either we or the advertiser are going to make some money off of it.  So really, we're more focused on the idea that video means deeper engagement, and it means a better understanding of the products and service, but the display advertising that involves is actually just as important.

Do you have much of a sales team working on sponsorships? Any plans to build out sales?

We don’t sell our much of own advertising. We're currently represented by demand media, because they sell branded sponsorships on King.

Just like the talent that supplies their own stage, Demand handles the cost of your ad sales. How did that arrangement come about?

It actually started with my email to Joanna Bradford, saying, “Hey, you guys do an awesome job understanding millennial and branded sponsorship.” They made an acquisition of a company called IndieClick and that seemed to fit our model just fine. You know, we're about sponsorship or about young people, and it was just a really great match, so she put me in touch with the folks at IndieClick, and off we went, which has only just started.  We've only just kick-started that relationship.

Do you plan to take ad sales in-house at some point? What would that take?

There comes a time in every business’s life where they need to sort of face the fact that selling your own inventory can be a much better thing for you. But we're not at that point yet where we would hold that in-house. I think that we’d be irresponsible if we didn’t have that conversation. All my years being on the other side of the table and buying media on behalf of all my friends, I know that there is great value in a salesperson that is selling a specific brand as a team, but the nice thing about demand is, they spent a lot of time focusing on understanding--or IndieClick has demanded--that they focus us and our brand. They're going in and doing their best to represent that as if it was their own, so I think we made a good choice for the near term.

Scott Howe, the CEO of data management company Acxiom, was an associate of yours at aQuantive and Microsoft. What’s his relationship to King of the Web?

Scott and I kick-started King, We both got in our car on a Saturday morning and went to IKEA and bought furniture and brought it back to the office

At the moment, Scott is still involved, even though he's running a ginormous data business, but obviously, not on a day-to-day basis. He was highly involved in the very beginnings of King, in those first formative six to twelve months. Since then, you know, as he's been brought in by Acxiom, and so his role is more of an investor and an advisor. I can call him on the weekend and tell him he better call me back. And he certainly does.

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