The future of multi-channel networks

It's easy to be optimistic about the future of multi-channel networks, considering the buzz around the online video industry. With respect to advertising, technology innovation, and roles that MCNs play in the market, it's hard not to notice the near limitless capabilities of the space. The industry has been on a rapid incline since its inception, and it remains diverse and exciting by nature. It's growing at a pace that is unique in the entertainment sphere -- and in many ways we've just hit the tip of the iceberg.

The value behind variety

The surface definition of an MCN is fairly easy to capture, and many think of the players as new-age counterparts to the TV networks of old: CBS, NBC, RTL Group, and others. More recently, we've been seeing even more niche networks akin to TechTV, The Food Network, and TSN. So what differentiates the model? Traditional TV channels have only 24 hours a day of programming, but recent numbers show that more than 100 hours of content is uploaded to YouTube every minute. That's a lot of potential ad space and multi-channel networks are necessary variables in that equation. The opportunities are only increasing.

With such a broad variety of players, and with broadly-scoped MCNs jumping into niche spaces, advertising has entered an entirely new era. Gaming, for example, has massive representation on YouTube because it is an ideal mix of high-to-medium quality content, huge viewership, and a demographic that represents intriguing spending power.

The opportunities for creative advertising strategies in a space like this are continuing to grow, considering that campaigns can be customized right down to product placement and more with a wider and more customizable reach than ever. Online video ad campaigns have already gone viral, bringing in some of the most appealing ROI an advertiser could ask for. MCNs, being closest to the content, having deep relationships with the content creators, and providing needed expertise in packing and integrating the brand within the content, play a vital role in helping marketers achieve this goal.

Profitability: Is it a question of focus?

There are two routes that MCNs can follow: a content-driven model, or technology-intensive model that focuses on providing cutting edge tools that drive meaningful results. MCNs that have been built upon the latter have leveraged this approach to drive profitable growth in the space for years. Even more heartening is the variety of investments that have gone through in the sphere for both models by various media-savvy corporations looking to enter the booming industry. Investments such as these are, from many angles, an indication of strong confidence by influencers that know the entertainment industry inside and out.

Continuing with the theme of choice, content creators also have a tough decision to make when they choose an MCN to join. Should they go with one that is leading with a content value proposition or a technology platform that can drive increased results?

Each model appeals to different partners, but it's also important that content creators pick a partner that is going to stand the test of time and be a sustainable player years downstream. In order to pick the most sustainable partner, one really needs to ask questions about business model viability, profitability and staying power. It's our job as a profitable MCN to get that information out there so partners can make informed choices.

Content creators also need to focus on the players who are doing it right. For tech-oriented MCNs, "right" means two primary things:

  • Providing a framework for content owners, creators, and advertisers to become more successful in the new online entertainment space.
  • Innovating technologies that genuinely tackle the diverse needs of that ecosystem.

The key to longevity here is to be adaptable and pre-emptive, and technology based innovation is the driving force behind those values. By supporting every side of the industry with tech-driven innovations, we aren't simply latching onto the various successes of creators and owners, we're fostering and scaling the growth of the ecosystem and advancing the online video revolution. It's not just about helping a creator monetize their videos, or managing and claiming rights and revenue for a content owner, it's about constantly offering the solutions that will help them advance once they've joined the network. That's the engine. This means increasing searchability through optimization, streamlining the deployment and curation of content, and helping partners make decisions with intuitive insights that they can actually act upon. We're giving them the tools to be more successful.

For marketers and advertisers, this engine builds a variety of appealing channels and a targeted reach as more of them actually show positive growth across the board. Premium and near-premium content options become more abundant, and reach extends even further. More options lead to higher customization potential, better engagement, and more successful campaigns.

In with the new

According to a number of analyst reports, online video ad spend is expected to jump significantly in 2014 and beyond. That supports a pretty positive future, and mobile is a massive part of that equation as well. I'm not alone when I argue that targeted mobile marketing in the online video arena is poised to explode in the next couple of years, now that the technology is ready to support it. Beyond CPMs and other vital measurements, this means that the reach of video advertising extends well beyond the living room and into the pocket. It's exciting, and the bulk of it is ahead of us.

Speaking of the living room and CPMs, premium advertising online is now reaching similar CPMs to traditional TV in some territories, and the trend is only improving. As the trend of high-quality premium content continues here in North America and internationally, we'll see the gap continue to close. The new generation is opting for streamed content as well as the cable-box, and both spaces have become even more viable. This brings forward a new era for advertising, and it sports a bright future for MCNs as facilitators to the process.

Multi-channel networks have an undeniably relevant future in the space connecting advertisers to content creators in targeted and meaningful ways. Like I mentioned before, we've just reached the tip of the iceberg when it comes to online video advertising, and MCNs are a vital part of doing it "right" with powerful technology innovations providing the foundation for growth and success.

Shahrzad Rafati is the founder and CEO at Broadband TV Corp.

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