Los Angeles Business Journal

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INTERNET: Website publishers picture themselves breaking from YouTube and pulling in more money from online video ads. By Omar Shamout Monday, May 5, 2014

Some multichannel networks are moving away from a business model centered on relying on AdSense revenue, said Sarah Penna, co-founder and chief creative officer at Big Frame in Culver City. DreamWorks-owned AwesomenessTV bought Big Frame and its 300-plus channels in April for $15 million. The network’s lineup has garnered 39 million subscribers.

In the fourth quarter of 2013, Penna said Big Frame made, on average, $1.42 in brand deals – content created specifically for advertisers – for every $1 in AdSense revenue.

“And that ratio is climbing,” she wrote in an email to the Business Journal.

So when one of Big Frame’s stars gets enough eyeballs to their channel, advertisers are shelling out big bucks to develop content with the video stars inspired by corporate products.

Recent corporate partners include PepsiCo, Unilever and Capital One.

“The majority of our business,” Penna said in an interview, “is focused on brand integration and not AdSense.”

Principals at Woven and Evolve said they’ve made a conscious decision to steer away from uploading content to YouTube and embedding the Google-owned company’s video player on their sites in order to keep a greater piece of the advertising pie.

“We do everything from soup to nuts,” said new Woven President Colin Digiaro, a co-founder of Myspace. Already a member of Woven’s board, the company announced Digiaro’s appointment at the same time as the Uproxx deal.

Digiaro described YouTube as a “super interesting” distribution option, but added that “it kind of makes us cringe a little. We would never go all in on one platform.”

Google representatives did not return a request for comment.

Brian Fitzgerald, a co-founder and president of Ladera Heights-based Evolve, said his company follows a similar business model when distributing its videos.

“We put very little of our content on YouTube,” he said. “Why would we want to?”

Marketing expert Ira Kalb agrees that digital advertising is growing due to improving audience analytics, specifically in the mobile realm, but said television broadcasters have access to those measurement tools, too. That’s led some critics to argue that television ad buys will continue to outpace digital spends over the next five years.

But Kalb, an assistant professor of clinical marketing at USC’s Marshall School of Business, said digital is probably growing faster than TV because it offers more access points for consumers.

“You want to reach people wherever they are and you can’t do that through TV,” Kalb said, “at least not in real time.”

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