What do telcos and YouTube talent have in common? Not a lot right now, but that will change once video and TV ad budgets converge.
Consider the YouTube multichannel network (MCN), Google content partners that are responsible for both production and audience monetization and which get 55% of banner and pre-roll ad revenue. The digital audiences MCNs attract is, in turn, attracting telcos and broadcast media companies who wish to grow their addressable audience.
With YouTube generating 300 hours of content uploads every 60 seconds, “there’s clearly a lot of video inventory out there just on YouTube,” said Rich Raddon, a cofounder of video ads platform ZEFR and Movieclips.com. “As dollars shift from broadcast to online video, you want it to happen in a way that you can charge for the value of reaching that audience.”
AT&T’s Digital Video Dreams
Otter Media, a joint venture of media holding company Chernin Group and AT&T, bought in late September a 60% stake in Fullscreen, an online media company and YouTube MCN (WPP remains a strategic shareholder). Fullscreen is valued at roughly $250 million.
This deal preceded German entertainment and media giant RTL Group’s purchase of YouTube network StyleHaul for $151 million. And last spring, Disney acquired Maker Studios for $500 million – a sum that could increase to $950 million if Maker hits certain performance targets.
In acquiring a majority stake in Fullscreen, Otter Media gained 50,000 content creators, 450 million subscribers and more than four billion monthly video views as part of the first wave of an ongoing $500 million investment in over-the-top (OTT) video services.
Mike Welch, president of AT&T AdWorks, alluded to this acquisition and to AT&T’s intent to buy DirecTV during an Advanced Advertising presentation at New York City Television Week. He anticipated more acquisitions down the road to enable “true, cross-screen targeting at scale.”
Welch told AdExchanger that AT&T AdWorks has steadily pushed away from its origins as an ad network, expanding both data and agency relationships, and partnering with multichannel video programming distributors for its TV BluePrint product. AT&T also restructured AdWorks after a botched attempt at developing a mobile ad network and renewed its focus on TV, which “we realize is quickly moving out of the living room,” Welch said.
Connecting Content To Programmatic Pipes
Like AT&T’s investment in Otter Media, RTL Group’s investment in StyleHaul foreshadows video investments to come. RTL cited plans to invest $300 million in “rapidly growing digital businesses” in a Q3 update Thursday.
Should RTL follow through, this would be its highest dollar-value commitment to mergers and acquisitions since 2005. “With the recent acquisitions of SpotXchange and StyleHaul, we have made strategically important progress to make RTL Group a global force in online video and online video advertising,” the company said.
Time will tell, however, whether this “strategically important progress” will yield better business results. It’s also unclear how or whether SpotXchange will affect StyleHaul and other RTL assets, since SpotXchange’s supply-side video platform operates independently from RTL’s greater media business.
If RTL were to merge new assets from StyleHaul with SpotXchange, that could potentially create more supply for demand partners like video demand-side platform TubeMogul, said company CEO Brett Wilson in an interview Thursday, but that is a big “if.”
RTL Group wanted to make sure its technology was on board to meet the demands of the programmatic buying environment, said RTL’s VP of business development Rhys Noelke in an earlier interview. He cited investment in multichannel networks (including YouTube MCN BroadBandTV), original and branded content, as well as “young audiences using platforms in real-time” as fueling the company’s video investments.
