May 27th, 2008

Viral Video: Cashing In or Selling Out?

By Jennifer Hollett
Globe and Mail (Canada)

If you look closely – and the trick is to look closely – the media landscape is littered with product placement, from films to music videos, videos games to rap lyrics. And with the explosion of online video, viral video producers are cashing in or selling out, depending on whom you ask.

YouTuber Nalts saw it coming. In the video “ Viral Video Broker,” Kevin “Nalts” Nalty masquerades as an obnoxious viral video advertising exec trying to recruit some of YouTubes favourite personalities to shill for popular brands. “Judson, how you doing sir? It’s Kevin,” says Nalts, speaking into the phone.

“Who?” replies Judson Laipply, creator of “ Evolution of Dance.”

“I have got a $50,000 cheque with your name on it from McDonalds,” says Nalts. “All they’re asking is that you do the history of dance dressed as Ronald McDonald. You interested?”

“No,” deadpans Mr. Laipply.

“Ahhh, would you settle for Grimace?” says Nalts.

Product placement is a paid advertisement that integrates a commercial product into a media setting. One of the earliest and most popular examples is from E.T.: The Extra-Terrestrial , where the stranded alien follows a trail of Reese’s Pieces into Elliott’s back yard; the most blatant, Harold & Kumar Go to White Castle.

Montreal’s Brandfame is a YouTube product placement agency. The startup uses their brandfame.com website to bring together producers and advertisers for product integration at video sharing websites, such as YouTube, Dailymotion, and AOL Video.

“We try to connect producers of online videos and provide them with a way to make money different from other video advertising networks,” explains Nadim Elgarhy, founder of Brandfame. Mr. Elgarhy says a lot of his clients are big brands, but he can’t say which ones because of non-disclosure agreements. He can say that Brandfame has a lot of the big YouTube producers on board, plus popular independent websites.

Advertisers at the site are able to request the type of video they want, set traffic expectations, and negotiate the integration of the product.

Launched in May 2007, the service is currently free while the agency tries to grow its business. Mr. Elgarhy says they’re considering a membership fee for website use or a transaction fee. Yet despite the growth of online video, Mr. Elgarhy admits, YouTube product placement is quite small. But it’s the potential that excites him.

Nalts, one of the ten most subscribed to comedians on YouTube, doesn’t shy away from the idea of product placement. In his video “ Mentos Movie Smuggling” he tries to sneak a six-foot Mentos roll into the movie theatre. The clip is clearly sponsored by Mentos.

He thinks product placement is a good thing. “It can help creators derive revenue, and therefore the quality of videos should improve. I think it’s great for brands because they can now access the audience in different ways than a pre-roll or a banner.”

Kalle Lasn, editor in chief of Adbusters magazine and author of Culture Jam, feels product placement on YouTube is a sad development. Mr. Lasn says there are already between 3,000 – 5,000 marketing messages coming into the average North American brain everyday.

“I don’t think we really need 5001,” he says.

The going rate for product placement can range from $1,000 to $5,000 depending on complexity of the shoot according to Nalts in his blog willvideoforfood.com. “The trick, of course, is to be transparent.”

There are also unmarked commercials, such as “ Guys backflip into jeans.” The popular video was created by Levi’s and features several men taking turns jumping off swings or flipping from a handstand on top of a car into their jeans.

Since online video is known for it’s free-for-all spirit, could product placement kill the viral star?

“If the content’s good enough, the viewer will put up with a lot,” says Nalts. He created a wave on YouTube as one of the first content creators to accept sponsored videos. “People saw that as selling out, and I lost some level of an audience because they thought that cheapened the community nature of YouTube.”

But overall, he says “I don’t think it has really hampered me that much.”

Mr. Elgarhy says online video is evolving, and becoming more professional, which lends itself to opportunities like product placement. “There will always be the raw video, completely independent, and non commercial. But commercial video is growing rapidly, and advertisements and commercial videos go together.”

It’s the bypassing of consumer consciousness with product placement that bothers Mr Lasn. “I find this to be a kind of immoral activity.”

He says he’s not alone, referencing the growing number of culture jammers. “I think there is a backlash forming now against marketers who are stepping over the line.”

Mr. Elgarhy disagrees. “As long as it’s part of the story line, I think it’s not as much an advertisement, but helping the producers be able to produce the video and reducing the cost. It’s win-win for everyone.”

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