As a joint venture between Universal Music Group and Sony Entertainment, Vevo owns the sales and distribution rights to 350,000 music videos from the world’s top artists.
Vevo has always had a large distribution partnership with YouTube, but over the past year it’s shut down its owned-and-operated properties to exclusively partner on third-party distribution – and pivot to the TV screen.
“[Our O&O properties] weren’t generating a tremendous amount of viewership and had large costs associated with them,” said Kevin McGurn, president of sales and distribution at Vevo.
In the aftermath, Vevo faced negative press and questions about the future of its business. But with 30 million people now watching Vevo on TV screens across providers, the risk was worth the reward.
“We are the consolidator and representative of music TV in the marketplace for advertisers,” McGurn said. “It’s been a really good story to tell.”
While Vevo is expanding its distribution partnerships to virtual MVPDs, OTT devices and video-on-demand apps, most of its viewership still comes through YouTube. Vevo has reaped the benefits of YouTube’s explosive growth on OTT, which has expanded its own OTT revenues by 50% in two years. Users watch Vevo on TV screens for 65-minute sessions on average.
McGurn spoke with AdExchanger.
AdExchanger: Has shutting down your O&O made you even more reliant on YouTube for distribution?
KEVIN MCGURN: YouTube on the connected TV is a huge part of our inventory. We're the largest reseller and partner of YouTube exclusively representing [our] content. We complement that through other distribution points.
We had such a long history with YouTube, it didn’t make sense to pull people away to an O&O. The brands we represent are the artists and the songs they write and perform. The brand is not necessarily Vevo. Our vision is even for the most popular video, we’ll be one of the first things that you see. That’s the best experience we can offer and what led us down this path.
We wanted to isolate [ourselves] a little bit, honestly, because there are some negatives that go along with YouTube. There’s a lot of content on its platform. That’s the power of it, but our content needs to be treated a little bit differently. The production value and the pricing is higher. We want to make sure people can buy it specifically.
Does YouTube treat your content fairly, given the high production value?
Short-form content needs to have a higher production value for people to watch it over longer periods of time. That’s a hard thing to do. Not everything that’s popular is premium, and you have to spend money to get that premium content to places people want to watch in large volumes. The production value on a music video can be $1 million for four minutes. That’s a super high-quality bar that isn’t replicated in digitally-native content.
How has your sales strategy changed for OTT?
We weren’t sure what our scale was on OTT. It's a lot larger than we thought and it’s pervasive in terms of growth. That raised our eyebrows that we should treat it in a special way.
We looked at all of our CTV impressions, compared that to other services and measured, packaged and priced it to take to the upfront. We have very ample supply that’s premium and brand safe. We use television ratings on behalf of advertisers. We can guarantee and deliver against all demos. We represent efficiencies over TV, because TV has aged and fragmented so dramatically. It’s hard to find large audiences at a younger demo.
The demand has risen so quickly for OTT, but advertisers and agencies are having a hard time buying it efficiently. The only place you can get reach is the platforms. Those are relatively small buckets of inventory over opaque channel and show lists. We represent a big audience against a very well-defined category of content they can buy in one place and get wherever it runs.
Do you sell programmatically?
We have a programmatic practice. That’s a minority of our inventory. We sell most of it direct on an audience basis and we cut it up into categories, like national and local. You can buy local DMA-targeted advertising against music videos in Mediaocean. We sell multicultural advertising, which we’ve more than doubled in the last year. Local has more than doubled in the last year as well.
The demand in those pockets is so high. That creates a lot of pressure on supply. It’s hard for marketers to buy and we represent a very big amount of inventory in each one of those disciplines.
What can you measure through YouTube and other distributors?
Centralizing measurement is a big opportunity for us. The technology and services don't really exist yet to measure apples to apples across devices. The closest thing we’re getting is still Nielsen, which is starting to be more available in the Rokus and [Amazon Echo]s of the world.
YouTube is getting better in the living room. We have a firm grasp on our unique viewership, impressions and geography. It’s just a massive amount of pressure. Some is technical. There are multiple versions of the YouTube app on legacy systems and platforms. But it’s also an openness thing. They have to be open to [measurement], and they’re starting to get there. They realize how valuable the living room is.
How do you deal with being so reliant on YouTube, which can often make changes without notice that impact your business?
It’s what the labels pay us to do. We are their YouTube experts. It’s their platform and they can do whatever they want. We don't have a say in that. But as a business, Vevo is here to maximize and optimize the opportunity on that service.
We don't agree with everything they do and we’re not shy about saying that. Any other content owner would say the same. We represent a lot of inventory and revenue for YouTube, but we are just a part of their business. So part of the strategy is to have other partnerships that surround the inventory on YouTube.
This interview has been edited for clarity.