The Red Bull Effect: Why more brands are creating their video content in-house

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From Marriott to Pepsi, brands are turning to their own teams to produce video

If you’re a brand today, you’re in the video-production business. A July report from Google found that, collectively, the top 100 brands upload a video to YouTube every 18.5 minutes.

Views of branded video content among those top 100 brands have doubled over the last year, while subscriptions to branded YouTube channels are up 47%, according to the report.

The public’s insatiable appetite for video content has prompted some brands to create in-house video units. While Red Bull was a pioneer, creating video content in the 1990s and forming the Red Bull Media House for such production in 2007, these days several brands have in-house video production units, including Marriott, Dell and Progressive Insurance. Pepsi also launched an internal studio called Creators League last year.

Proponents of the approach argue that the need to create video, combined with the desire to control the message, makes the idea of an in-house studio a necessity. Not everyone is convinced though, some argue that partnering with existing content publishers might be a more efficient and effective way to create and distribute such content.

The economic reality of producing video
Claudia Cahill, chief content officer, Omnicom Media Group, says the issue has been a hot topic for many brands. "It’s somewhat sporadic, but there are more and more brands dabbling in this space and asking the question, ‘Should I be doing the heavy lifting and building this myself?’ "

One reason to go it alone is cost. Brands and small agencies are often able to skirt union Screen Actors Guild-American Federation of Television and Radio Artists [SAG-AFTRA] fees. Most ad agencies are SAG-AFTRA signatories, which means they have to pay SAG-AFTRA fees, which apply not just to actors, but to non-actors as well, driving up the overall costs. A current rate sheet shows that performers are required to be paid $906 a day for their work on camera, however the organization says that new media production fees are negotiable. (Reps from SAG-AFTRA could not be reached for further comment.) Small agencies are often able to shoot without paying those fees. Though SAG-AFTRA publicly shames ad agencies that don’t work with union actors (Droga5 was a recent target), the organization only goes after union actors, who face disciplinary charges when they work with non-union shops.

On the other hand, no matter how much they create in house and how cheaply they do it, brands usually lack a distribution mechanism. "We tell clients all the time, ‘Don’t go out and produce content if you haven’t figured out a distribution plan,’ " Cahill says. Just putting videos on YouTube won’t cut it, Cahill says. "You have to have a broader ecosystem." By that, Cahill means a distribution platform. 

The standard alternative is that brands work with publishers to create sponsored content.

How in-house video units work
To TV viewers, Progressive Insurance is closely linked to Flo, the company’s longtime brand spokeswoman.

However, the brand also produces a lot of videos for the web that don’t include Flo and often have a very different tone. For instance, this 60-second paean to Progressive’s Heavy Truck Repair Network is aimed at a specific segment for which a national TV buy wouldn’t make sense. This nearly 2-minute video about a small company in Canada that makes helmet sensors to make parents aware of possible concussions is also a bit of messaging that wouldn’t necessarily be a fit with Progressive’s TV work.

In 2012, Progressive began to get serious about producing such video in house and invested in better equipment and hired creative specialists. The brand now has four "creative storytellers" on staff who are skilled in video production, motion graphic design and editing, says Gabe Cotto, executive video producer at the company.

Cotto says Progressive found having such work done in house gave it more control over the process. "As the marketing landscape changed during the past five years or so, video has become a larger part of our marketing mix," he says. "At the same time, the cost for obtaining high-end professional video equipment, hardware and software was dropping due to advances in technology." Now with a team in place, Cotto says Progressive has "resources comparable to any large budget studio or agency."

Red Bull took this a step further. The brand formed its Media House unit in Salzburg, Austria, in 2007 as an independent company "with a target of sustaining its own revenue stream," a company rep says, meaning the Red Bull-branded videos make money in their own right.

Marriott’s effort is also ambitious. Created in late 2014 and led by former Disney exec David Beebe, the Marriott Content Studio has a staff of 65 and has created slick content like "Two Bellmen," a 17-minute action comedy that has garnered more than 5 million views on YouTube at this writing and "French Kiss," a 23-minute romantic comedy that has notched more than 6 million views.

A less-trod path
Despite such success, brands that create their own video units are still a rarity. Ian Schafer, CEO of agency Deep Focus, says such brands are "very unusual" and the reason is often politics. "I still don’t think brands are doing enough video, and they are still in the process of figuring out how to get their media dollars to fund more of it," he says. Part of the reason, Schafer says, is that creating video on a steady basis usually means outsourcing more work, which translates to a loss of control over the brand message.

On the other hand, brands are often reinventing the wheel by trying to be their own content studios, Cahill says. "What we always say is content is not their core business. They’re not production companies that are approving content for television programming," she says. "It’s just not what they do." As an example, Cahill points to custom segments on "The Tonight Show with Jimmy Fallon" or "Ellen," which are scripted by those show’s writers and have the potential to reach a much larger audience than a strictly brand-controlled message. "They’re writers who know their audience," she says. "They take a brief and make it fit the tone of a show."

Disrupting the disruptors
For brands dabbling with creating their own content, though, the pressure isn’t so much on maintaining control over the brand image as it is to protect the brand from competing upstarts. For example, Schafer says that Bevel, a razor product aimed at African-American men, is getting attention for its storytelling approach, which includes slickly made videos featuring interviews with grooming professionals as well as customer testimonials.

That approach could be stealing customers way from established men’s grooming brands like Gillette. That may not have happened yet, but Bevel has plans to hit some Target stores next year and has garnered $24 million in a recent funding round from Silicon Valley VC firm Andreesen Horowitz, among others.

Dollar Shave Club, another shaving brand, also catapulted itself to prominence with this witty 2012 video that has more than 21 million YouTube views at this writing.

There’s a parallel with a grander narrative in the business world right now: As established companies try to avoid being disrupted by an Uber-like upstart in their segment, some, like Nestle, have attempted to create in-house units that attempt to get executives thinking like a disruptor. With in-house video units like Marriott’s, brands are applying the same idea to their marketing and using their ability to pump out content as a weapon against their smaller competitors.


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