How Defy Media defies the 'built-if-sold' video programming model

If video publishers take the incentive to finance their own programming, instead of relying on advertisers to underwrite the cost, advertisers will take notice, according to Defy Media.

Take the publisher’s Clevver News YouTube channel, the second-biggest YouTube channel for sponsor content. It did 23.5 million views across 111 videos featuring a brand mention or integration in the last 90 days, according to Tubular Labs. Overall, the six Clevver channels did 176 million views on YouTube in December 2015, up from 122 million the previous December. The publisher has notched a 250 percent growth in sponsored videos — ranging from quick mentions to custom content — it has produced across all of its properties since 2014.

“The [digital video] industry didn’t do itself any favors by saying, ‘Come sponsor our content, and if you do, we’ll make it,’” said Andy Tu, evp of marketing at Defy Media. “Advertisers don’t want to deficit-finance your programming. The marketing side is wrapping their heads around it and buying in, because it’s like TV.”

Not engaging in the “built-if-sold” model to producing original video series was the main theme of Defy’s NewFronts presentation last May. The publisher currently has 44 weekly shows in production across all of its channels, and none of them are produced only because an advertiser has bought in.

The built-if-sold model remains a bulwark of digital video networks. Defy competitors including Tastemade, Maker Studios, Time Inc. and PopSugar engage in the practice to varying degrees of success.

Advertisers remain wary of publishers that engage fully in the built-if-sold model, stating that this shows a lack of confidence in the content and its ability to find an audience.

“The reason why we love video is for its scale and impact, but getting scale online is particularly difficult,” said Ben Winkler, chief digital officer at OMD, which generally passes on shows pitched under the built-if-sold model. “Handcuffing the content by saying ‘Oh, we’re not going to do this unless the advertiser pays for it’ — it’s pretty much a death sentence as far as scale goes.”

That doesn’t mean the model is going away anytime soon. “It will continue to be an economic necessity for some publishers,” said Winkler. “You’ll see the pendulum swing back and forth, even with the same publisher, because it’s very expensive to create great video content. You only need a couple of flops to swing back to built-if-sold.”

Tu said Defy’s ad business is about evenly split between traditional ad buys, brand integrations and custom content. Advertisers across its portfolio have included Snickers, Sony and Hulu, among others.

The publisher said it has been successful at selling custom content opportunities for brands within its existing slate of programming. Take, for instance, its “Man at Arms” YouTube series, which airs on the Awe Me channel, with nearly 3.9 million subscribers. The show has brought in 213 million views for the channel since launch and averages 3.5 million views per episode, according to Tubular Labs. Here, Defy sold a custom integration to Smith & Forge Hard Cider.

“This kind of integration wouldn’t exist if we didn’t have ‘Man at Arms,’ but it’s also the kind of thing they couldn’t accomplish by sending us a [30-second pre-roll],” said Tu. “The historical gripe has been that brands have to roll the dice twice: first to see if [the publisher] will even do it and second to see if people are even going to see it. We’re doing our job if we can offer opportunities inside our existing slate of programming.”