Grab Networks is relatively unknown in the search marketing space. They started out life as a video transcoding company with a bespoke online video publishing network. Unless you had a huge video library of content you needed to get on the web, it's unlikely you would have run into them.
In my experience, companies that have two strings to their bow are often in an unusual situation -- it means they are forward-looking but maintaining a rear-guard, the latter of which is normally focused on traditional revenue streams. The key to success is to use the traditional business to bootstrap the costs of innovation and make sure the new revenue channel is able to quickly reach scale.
This year Grab Networks sold the transcoding portion of their business, which suggests that the innovative portion of their business, the video content network, has really started to take off.
We're seeing advertising networks buying into video content to capitalize on the core trend in online video -- 180 million users are watching three minute video "snacks" every month.
Two Competing Theories to Online Video/TV Content Business
Recognizing that TV is moving to the web, the savvy stations have begun to address the need to generate audiences online. However, traditional broadcast media has a completely different business model that isn't easily replayed over the web.
Most broadcast companies make money via content licensing to other channels or enabling local affiliate stations -- which is a kind of franchise approach. The pureplay online company to most closely facilitate the traditional media model is Hulu, which licenses content from the main stations (in the same way as local TV stations) and broadcasts it free over the web, to be monetized with advertisements and premium content.
You could say Hulu is like your local broadcasting station for the web. Consequently Hulu has to focus on being a destination site, and continually maintain and grow visibility in every access point, be that via consoles, mobile apps, or web conntected TV set top boxes (like Google TV or Roku).
However, as many search marketers and digital media planners probably know, it's folly to consider only the mainstream online channels for content distribution, because it's tantamount to ignoring a massive proportion of the available audience. The splintered and fractured nature of online audiences means that, like search keywords, there is a long tail of channels that need to be reached.
Just as portal search (i.e., on Google or Bing) only accounts for 60 percent of all online search activity in the U.S., the same goes for video views. Essentially the measurable online action, which is "watching a video online," takes place in the hundreds of millions and while much of that takes place on well-known channels like YouTube, Vevo, Hulu, and AOL, a significant proportion of the total audience is consuming video on millions of small blogs with a committed fan base.
So, just like web developers would say that to get maximum reach you have to build websites that are compatible on all browsers, and search marketers would never recommend only bidding on high traffic keywords and forgetting the long tail, Grab Networks' proposition to brand advertisers using video is: why focus solely on video portals when video is being embedded and watched all over the web?
Reconstituting the Traditional TV Broadcaster as Online Video Network
Where Grab Networks fits into the search industry is through their video indexing technology. And where they fit into the content and advertising networks is neatly in the middle -- via relationships facilitated by that same technology. Put simply, search gives them an edge.
What makes Grab Networks cooler than your average video encoding company is that they've built a system for mainstream media companies to easily transition all their content online.
Using a core technology and semantic methodology, the Grab Networks platform can "listen" to the broadcast media stream, transcode it into web content, and immediately make sense of the whole program by "reading" the video transcription, TV ticker tape, and transition slides.
As few people watch more than three minute chunks of video online, and due to the fact that video still really isn't searchable, Grab Networks goes the extra step of segmenting the entire broadcast into meaningful chunks. It then goes further to append meta data to those chunks to make it even more easily found on video sharing sites like YouTube, and also match it to partners in their content network.
Given that these companies produce hundreds of hours worth of content every week, in the form of news broadcasts, local news stories, and features, their businesses are streamlined for high quality content production. They aren't able to focus on discovering web audiences, let alone equipped to easily transition to online. Grab Networks puts this possibility directly into that industry workflow.
Furthermore, the airwaves to digital "listening" and automated video SEO component is pivotal to how Grab Networks completes the circle for broadcast companies and advertisers. Combined with an ad exchange-type platform that can manage payments and transactions between every partner in the chain, the newly tagged and chopped video "snacks" can be fed to partners in their content network.
The payoff for broadcaster, partner website, and advertiser is:
- Broadcaster gets to reach new online audiences and monetize plays online.
- Partner gets high quality video without license fees and a share of the ad revenue.
- Advertiser gets content in the right context to the "brand-safe" sites.
The Infomercial Is Dead, Long Live the Infomercial
TV channels in the U.S. have grown from three in 1975, to five in 1985, to thousands of channels nationwide in 2010. This fragmentation is only going to become more extreme online.
While there will surely be a race to be the top online video site and we'll continue to see display ad networks buying up as much video inventory as they can now (in order to stay relevant to their customers in the future), it's actually the long tail of video channels that most threatens to disrupt television programming and cause the most innovation.
Being able to target video content to millions of niche web publishers will have a dramatic effect on what video ads can be created for targeting audiences -- which will in turn have an impact on the channels themselves as they find it easier to monetize.
Branded content could emerge as a winning advertising model, as online video mirrors the trend of blogging and as small businesses have become publishers, so too is it likely that "products" will become content creators.
Initially, as the two industries of broadcast TV and online video collide, we may see the rise of infomercials. However, the relationship has the potential to evolve into something truly symbiotic because these types of products have strict brand guidelines and can't advertise on run-of-the-mill display ad networks (in case their products appear against unsuitable content). So, in return for solid placements, the product can invest more in high quality content to produce something more informative.
While branded content might be synonymous with product placement and all the artistic faux-pas associated with it, the need for niche publishers to publish new high-quality content is such that mini TV shows and branded content video "initiatives" can find an audience. As quality improves, so does incentive to embed the content and generate returns for the publisher.
Grab has already delivered such a campaign concept for for a major consumer group manufacturing baby products. The campaign featured a couple participating in a "reality TV"-style series of "webisodes" about coping with a newborn baby. Other successful campaigns conducted have also been for consumer-packaged goods -- Bounce is currently telling moms how to survive the holiday season and Oil of Olay recently interviewed leading fashion experts.
Current winners on Grab Networks' publishing side have been "Mommy-blogger" type sites that already have a huge following of highly engaged users. However, it's only a matter of time before cool brands realize the potential -- just recently in Europe, production company Intruders launched a branded entertainment channel with Diesel Fragrance, which followed the European music festival scene.
Build It and They Will Come
Further adoption of branded entertainment will come as a consequence of in-store video being delivered via the web -- but that's another discussion. Suffice to say that as the video distribution network increases, we might see another role reversal, where the ad network creates demand for the content -- bloggers may start hosting these shows.
The strategic change to get your head around is that branded entertainment can start to participate in super niches and current events (whether that be holiday shopping, music festival seasons, or even royal weddings) because companies like Grab Networks that sit in between distribution and advertising mean products can generate the reach required to make such investments worth while.
And a key aspect to note, regarding the video content industry in general, is that Hollywood became 'Hollywood' because of its scale and ability to distribute film content -- not because it was inherently better at movie making. The latter followed demand to work there as its reach was so wide.
As media channels become even more fragmented across devices, let alone channels, it may be the companies who can dominate video distribution on web, or in-store, or purely on mobile devices that become the new in-demand production houses that actors and script-writers want to work for. If Grab Networks can scale rapidly now, they may eventually attract the beauty, brains, and brawn that has been synonymous with Hollywood.
Introducing... ClickZ Live!
SES Conference & Expo has merged with ClickZ to bring you ClickZ Live! The new global conference series takes on the identity of the industry's premier digital marketing publication, ClickZ.com, and kicks off March 31-April 3 in New York City. Join the industry's leading tech-advertisers in the advertising capital of the world! Find out more ››
*Super Saver Rates expire Jan 24.