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Publishers and Advertisers “Grab” Onto Online Video Syndication Models

Janet Stilson - Media Business

To understand the promise of online video distribution companies, one need only look at three trends that have been mushrooming for quite some time. First, TV viewers are increasingly turning to DVR-like experiences online, as they seek to watch quality programming at their own pace. That gravitational pull is strengthened by the habits of a maturing Internet generation who are increasingly turning to attractive viewing options like Hulu, HBOGo, Netflix, TV.com and ABC.com and also integrating second screen experiences into their viewing behavior.

Second, leading online publishers are selling-out the commercial inventory on their own sites and are building ad networks by syndicating their proprietary content to approved advertiser-friendly sites that reach relevant targeted audiences. As these trends gather momentum, a third movement has already passed a tipping point. Most marketers now realize that it’s impossible to depend on their own micro sites to reach a targeted audience efficiently with their branded content. “Those days are long over,” says Alvin Bowles, CEO of Grab Media. His company has developed a business model aimed squarely at these three developments.

Since taking the reins at Grab about 18 months ago after executive roles at AOL, Viacom and Time Warner, Bowles has flipped the company on its proverbial head. Online video syndication of professionally produced video content and advertising are front-and-center in its marketing mission, although the company’s core technology underpinnings remain a unique feature. Grab syndicates content from professional producers of news and information video content including Martha Stewart, the Associated Press, Reuters and NBC/Universal. It also offers up branded entertainment from advertisers. Both forms of content are distributed to Web publishers in need of videos to expand their offerings and serve their audiences’ interests. For many of these sites, Grab provides the video platform as well as the content they deliver.

In addition to enabling publishers to increase their views and available video inventory for their sales networks, Grab sells ad avails on much of the content it distributes, sharing revenues with the publishers and content creators. According to comScore Video Metrix data, Grab had nearly 35 million unique viewers during August. That’s up from 23 million in April, a 52% gain. That makes it “the fastest growing video property on the Web,” claims Bowles.

Grab has also won support from some noteworthy agency executives. “Grab has recorded a significant gain in unique viewers over the past year. That’s very impressive,” says Greg Kahn, EVP and business development director at Optimedia. “There’s value to what they’re doing; Grab is reaching viewers where and when they’re watching online video.

Grab is not the only player in the online video syndication space. Among its closest competitors is AOL On Network (formerly 5 Min), which aggregates both original and syndicated content in the news, lifestyle and entertainment categories. There’s also the News Distribution Network (NDN), which focuses on news; the teen-focused Alloy, and episodic-oriented Blip.tv.

However, Grab distinguishes itself through the use of the metadata technology that is at the core of the company. “We’re leveraging data and technology to [determine] which content should be placed where – and what advertising adjacencies are most appropriate for that content stream,” Bowles explains. The specificity of metadata is key to finding the most appropriate clients for the vast amount of programming in Grab’s archives. It has around 200 different content suppliers. And at any one time, there are 800,000 to 900,000 pieces of content available for use. Advertisers typically pay only for views and the Grab platform appears almost exclusively in “above the fold” positions on partner websites.

“The goal for us is to ensure that editors of mid-tail sites who are focused on passion points – like bestmom.com – can grab content based on their editorial voice. We try to add contextual relevance,” Bowles says. By closely matching the right content to the right site, Grab is able to provide advertisers with “click-through and view-through rates that are higher than what you would expect from industry standards,” says Bowles. ”

Grab certainly has made some important progress, but it has challenges as well. Kahn explains: “There are a number of competitors in the space. But Grab did relatively well in the Newfront/Upfront period, and it’s something we’re taking a look at for our clients.” Bowles says that during the Newfront earlier this year, Grab raked in some seven-figure deals with agencies. All told, its total business was in the eight-figure arena, garnering three to four times more revenue during the ’12 Newfront compared with Newfront 2011.

Despite that notable success, Bowles says he had hoped that the Newfront would drive better CPM and volume growth for the digital video industry overall. “What we saw was media companies bundling video inventory from a multiplatform perspective along with their traditional media. There wasn’t as large a shift into the online video ecosystem as many expected, but it’s clearly a growing priority for marketers and their agencies,” Bowles says. “Grab is a little further down on the daisy chain than we should be, given our size. But agency and advertiser executives we’re speaking with are saying, ‘Yes I want to spend more on online video, but I’m not sure how much of an Upfront commitment I can make.’”

Bowles believes there’s a fair amount of education that still needs to take place among agencies and clients, and the responsibility falls on Grab and its competitors. “But it would also be really helpful if comScore and Nielsen would educate agencies and advertisers with a score card around this ecosystem to which everybody can subscribe,” Bowles says. It all boils down to figuring out what metric is the best yardstick for measuring success. Is it impressions, click-through rates or something else? Agency executives have differing opinions about what’s optimal. To have a measure for online video viewing that is as definitive as Nielsen ratings are for the TV space would better define the buying and selling process for Web video, Bowles believes.

Jack Myers serves as a member of the board of directors of Grab Media. Janet Stilson independently researched and wrote this article.