Startups Take on Product Placement Dealmaking
Product integration and branded content are taking over entertainment! Whether that sentence reads like an exciting opportunity or a doomsday proclamation depends on your point of view, but either way it's especially true in online video, where traditional advertising methods haven't proved to be especially lucrative. As a result, a crop of startups has emerged to help brands and content creators find each other.
Integrating a piece of content and a brand is a complicated maneuver, with no standard way of matching the two parties. Startups are trying to bring that experience out into the open, so interested brands and shows can scan through each other's offerings and cut deals. While the startups may have the same goal in mind, their business models vary from taking a listing fee to taking a piece of the transaction to providing a subscription information service.
PlaceVine takes the approach of providing a fee-based classifieds service. "The problem is not transacting—deals are getting done. The real problem is one of transparency," PlaceVine co-founder Adam Erlebacher told NewTeeVee.
Some 200 agencies, PR firms, and brands pay the company a $145-per-user-per-brand monthly fee to view listings on PlaceVine's service. Meanwhile, 300 film, TV, and Web producers—among them Fox, FreemantleMedia, A&E, Funny Or Die, and For Your Imagination—list brand-integration opportunities for their shows. By enabling each to lay out the particulars of what they're looking for in a semi-public forum, PlaceVine thinks it can bring that transparency to the marketplace and democratize the business.
PlaceVine this week raised an additional $200,000 in financing from NYCSeed, after an angel round last summer and startup money from the co-founders' business school alma mater, Wharton (all for a combined total of less than $1 million). So far the four-person company has signed barter contracts for films and "mid- to high-five-figure" deals on the digital side, none of which are public yet.
Mountain View (Calif.)-based Filmmortal last week launched a competing solution. The company, boot-strapped with $130,000 from its founders, takes an auction approach to negotiating product placement deals. Deals start at $3,000 for a product being shown, used, or spoken about by characters in a single scene, according to co-founder and Managing Director Sahil Kazi. Filmmortal takes a 10% cut.
Some other entrants with a focus on digital projects: XLNTads crowd-sources video marketing and ads to a network of thousands of video makers. Advertisers pay a base price of $25,000 per assignment, with a $7,500 usage fee. The Wynnewood (Pa.) company recently launched an off-shoot site, Poptent, for content creators seeking assignments to market their portfolios. Reston (Va.)-based Zadby brings brands such as Animal Planet and Pizza Hut to established online video creators, though we worried last year that its terms might not be as favorable to creatives as they could be.
The reality is that product integration and branded-content deals already get cut without the help of fresh-faced startups. The brand-content group at leading interactive agency Digitas, for instance, hooked up Holiday Inn Express with The Smart Show on blip.tv and Starburst's support for Next New Networks' Nite Fite. Talent agency CAA kicked off its own efforts in the online product placement space back in June 2007 by hooking up Neutrogena with "lonelygirl15." Meanwhile, content creators and studios are regularly going out there and cutting these deals themselves, such as Katalyst Media's "KatalystHQ" and Cheetos, and YouTube's "Fred" and Zipit.
One brand-content matchmaking startup we covered in the past, Trendessence, has already told us it's ditching that plan after failing to figure out how its business model could work under current economic conditions.
Still, such a variety of case-by-case approaches to matching brands with content does seem to cry out for someone to transform the market with a standardized solution. At a recent conference, prominent angel investor Ron Conway called product placement the next multibillion-dollar industry. So it's not a bad time to get started.