AdExhanger: When Tastemade started, how did it approach monetization?
OREN KATZEFF: Early on, we had a belief in two things. One: that dollars would aggressively shift from TV to digital. Two: that brands would get more involved in content and content creation, but that content creation is really hard. If you’re a brand, it behooves you to work with great storytellers.
In our first year, year and a half, I was closing deals with folks like Grey Goose, Anheuser-Busch, Hyundai, Chase Sapphire, Kraft, American Express and General Mills – endemic and nonendemic brands. We had a two-pronged solution for brands. We were creating high-quality shows. And then we were doing Tastemaker activations, like creators going camping with REI and chronicling their adventure for the weekend.
How do brands measure success of campaigns?
When you can look at content we have created, it passes the sniff test of being beautiful, an amazing story. But we also know the content has to show real value for brands. We’ve done handfuls of Nielsen studies comparing our content to a brand’s TV ads and pre-roll campaigns. Across the board, the results with brand recall, affinity, perception – and especially purchase intent – Tastemade content outshines each of the brand’s TV spots and digital pre-roll.
The “hands-only” videos have been widely copied. How are you responding to this flood of social-optimized food content?
From a copying standpoint, what we should be concerned about is not BuzzFeed and the Food Network, but the folks that aren’t really in the food space. They are just doing it because they see it as a form that performs, but it’s totally out of their range.
While hands-on recipes are a part of what we do and perform very well, it’s one of the many content types in Tastemade’s repertoire. We don’t bank on just the one format that for right now seems to be the belle of the ball. We are constantly coming up with new ideas, new content.
What format is the belle of the ball at the moment?
Some of the best-performing content on Snapchat, which performs better than hands-only recipes, is with the talent we work with – Jen, Julie, Frankie. You get to feel this bond with someone spending three to four minutes with you making a dish. They’re creating cool dishes and making it feel very easy to duplicate at home.
Tastemade has raised $80 million to date, including $40 million last year. How are those investors looking at the future of your business?
You have a number of different factors that are making a company and a brand likeTastemade very interesting and appealing. The bet we placed early on was that videos are the best way to tell a story, and that’s how we can amass an audience.
Advertising dollars are shifting from TV to digital at a very rapid rate, and that’s squarely the space we are in. We are rapidly closing more brand deals that value the content and expertise we bring in.
Second, there is a real demand in general for high-quality content and a young audience. About 80% of our audience is 18 to 34, which is a desirable demographic. We are not doing that by gaming the system or feverishly trying to figure out video, like publishers shifting from articles and text to video.
Are you profitable? Or focused on growth?
We are focusing on growth and profitability. Our goal is to create a long-lasting consumer brand. We are focused for sure on continued audience growth, and continued distribution of content.
What lessons did the Tastemade founders learn from their experience at Demand Media?
At Demand, we were trying to be everything to everyone, and that’s difficult to do. We had Livestrong, eHow, Cracked, Type F and about 50 other sites across a bunch of different verticals. It’s very hard to stand out in the crowd when you are spread so thin.
It was important for us to truly carve out a vertical to build an audience and brand. That’s why we started with food and expanded to travel. Travel and food go hand in hand – it’s not like we did food and then karate. Two, I truly believe that Tastemade is the formation of art and science. Demand Media was a bit more science than art. Tastemade places a premium on high-quality content.
Demand Media depended on search for distribution. Tastemade is dependent – though diversified – on social media. How do you hedge that risk of platform algorithm changes?
One way we do it is diversify, as you said. Simultaneous to what we did on Facebook, we are amassing an audience on other platforms. We are growing our owned-and-operated channels, and the numbers look good there as well.
On one hand these platforms have massive audiences, which is a huge upside. There are certain tweaks that can reduce traffic, and it’s incumbent on us to diversify. And if we are smart about deals and our brand partners, even a slight impact on our traffic doesn’t need to have a material impact on revenue or band deals.
How does programmatic affect you?
As of right now, we don’t do programmatic. Tastemade.com is ad-free for the time being. We are considering various options for that experience. The jury is still out on programmatic. If you are smart about how you do it, you can optimize it in a way that’s fruitful for you. We see a profound impact when you create this amazing video-driven experience that’s not pre-roll and not something people can turn away from.
What’s your prediction for 2017?
A lot of folks today are trying to get into video. For some, it’s a stretch. When I ran Demand Media’s Cracked, we built a massive audience originally on the strength of our articles. One of the toughest transitions was moving to a video-watching audience. You think people will watch your stuff, but your video-consuming audience isn’t exactly the same as your article-watching audience. As time goes on, folks who have a strong business model and case for making video will continue to excel. And the ones that weren’t as well-equipped may not be in it for the long haul.
This is part of an interview series with media leaders about the future of digital advertising. Check out previous interviews with The Atlantic, Business Insider, Bloomberg Media, Brit + Co, BuzzFeed, Evolve Media, E.W. Scripps, Forbes, Imgur, Mic, The New York Times,Purch, Refinery29, Thought Catalog, Time Inc., The Washington Post and Ziff Davis – and more to come.
This interview has been condensed and edited.