The fragmented world of traditional advertising combined with the growing maturity of digital media is forcing brands, media owners and agencies to seek alternative ways of engaging the consumer. As consumers become less receptive to traditional marketing messages, so more of these communications are taking the form of advertiser-funded content (AFC).
Ad-funded programming on TV has been slow to develop due to regulatory restraints and a reluctance by broadcasters to stray from traditional advertising models. On digital platforms, however, AFC is thriving across web TV, branded mobile applications, podcasts and blogs.
Much of its growth is being driven by an explosion in consumer use of digital platforms. As these move to the mainstream, brands have become keen to experiment with the additional media touchpoints available to them.
The cost savings offered by some AFC models are also contributing to its popularity among budget-savvy marketers. The production costs of a three-minute film for the web, for example, are far lower than those incurred in making a 30-second TV ad, while circulating it on YouTube or GoogleVideo is cheaper than broadcasting it on television and potentially attracts an even bigger audience.
'It could be a lot more cost-efficient for brands to start contacting audiences without using TV,' says Mark Cullen, chief executive of branded-TV content agency Enteraction tv (etv).
Digital platforms are also starting to play a bigger role in sponsorship ties. For example, Orange recently signed a deal with Emap to extend the association between the two beyond the 'Orange Wednesdays' BOGOF cinema-ticket initiative to run short films across a range of media under the publisher's Empire film-magazine brand. The work will be shown on Emap's digital TV channels and online, while Orange will offer the films via mobile download and through its 3G content portal, Orange World.
Due to the lack of regulations for non-TV programming, web and mobile films can be more risque than TV versions, according to Joseph Evea, head of branded content at Emap Advertising. He adds that he expects ad-funded content to be a significant part of ad deals in the years to come. 'It is creating a more relevant environment for brands and allows us to use various platforms,' he says.
Consumers are becoming more receptive to AFC because of the widespread adoption of broadband and a change in their online behaviour, according to Julian Smith, insight and research director at MEC Interaction, the digital arm of Mediaedge:cia.
'They are becoming more empowered and controlling through their ability to access and sift through information via search engines. They are increasingly savvy and from a marketing perspective are far more informed about the products and services that they are buying,' he says. 'It is no longer good enough just to provide the basic features, such as the size and use of the product that you are trying to sell.'
Web TV is one form of digital AFC that has proved popular because it is a dynamic, on-demand medium. Brands including Dunlop and Thomas Cook have already begun to exploit this area. The growing penetration of broadband means delivering rich media such as video content, music or animation is smooth and fast, and more likely to be watched online.
Brands are not just repurposing TV content for the web, they are also investing in creating bespoke content for distribution online. Tourism body Visit London launched a branded broadband TV station earlier this year, which is available via the internet and IPTV service Homechoice. The station, developed by etv, was originally aired on Sky, but shifted to the web once Visit London realised that the majority of its viewers were foreign businessmen and tourists.
It carries short-form programming offering advice about what to see and do in London and forms one of Visit London's key marketing platforms; etv estimates it reaches more than 40m people a year.
Digital ad-funded content is not limited to audio-visual material; it includes games, applications, paid editorial or downloadable audio in the form of podcasts.
The AA's online RouteFinder application, for example, is a branded piece of content that enables drivers to enter their location and eventual destination. It then recommends a route that avoids major motorways, based on the driver's preferences.
Other brands, such as Lynx, Mazda and Dr Martens, have tried to cash in on the fad for user-generated content by developing branded platforms which encourage consumers to share their own content.
Land Rover, for instance, has developed an online community that encourages users to access and upload car-related content, under the 'Go beyond' banner. The activity is intended to build on its status as an adventurous brand. The campaign, developed by Harrison Troughton Wunderman, has now been extended across all the marque's digital marketing activity.
Tapping into consumer passions such as music or sport can be particularly valuable for advertisers looking to create their own content segments. In May, Wrigley, which had never done any online activity before, partnered with Yahoo! to launch Extra Venue - an online channel giving users access to exclusive music content.
The channel, based on Wrigley's Extra brand, has five segments. These include All Back to Mine, which takes fans to the hometowns of music stars, and Live and Up Close, offering live performances from top talent. It launched with bespoke content from Corinne Bailey Rae and Fightstar.
The deal was one of the first of its kind and while projects such as this are work-intensive, Extra Venue has successfully established itself on the Yahoo! music service, according to Ben Richards, European marketing and sales manager at Yahoo! 'That channel alone is bigger than some of our competitors' entire sites,' he says.
While the internet is regarded as the main channel for AFC, mobile is the least developed of the other digital platforms. This is due to many factors, not least the personal nature of handsets, which instils caution among brands for fear of annoying consumers. There is also a lack of high-profile case studies proving its effectiveness.
Technical and price limitations are also restricting the development of mobile content. Accessing the content is still quite expensive for users, and download times are slow. Put simply, mobile is where the internet was three years ago.
However, fuelled by the roll-out of mobile TV services from most of the major operators including 3, Orange and Vodafone, this is starting to change.
3 has sought to lead the way on mobile content; as well as having a number of dedicated channels, its services include a user-generated content offering, SeeMe TV, which attracts thousands of users and video clips weekly. It has also persuaded major brands such as Canon and Budweiser to take the plunge into mobile sponsorship; both agreed to support the operator's mobile World Cup service by advertising around it as part of an extension of their sponsorship of the tournament.
Although the sponsorship of portals and digital services has been allowed because of a lack of regulation, not many brands have so far been willing to take the plunge online.
However, a cross-media sponsorship proposition is compelling and, now that Ofcom has announced sweeping changes to its sponsorship regulation, giving the green lights to brands wanting to sponsor TV channels or a broadcaster's entire TV output, it is one that media owners will no doubt be selling next year. The Wrigley's Extra Venue shows just how valuable 'owning' an online area can be for a brand, providing it is relevant and in sync with its audience.
As the response rates to banner ads fall and audio-visual content on digital devices proliferates, the prospects for AFC are bright. Soon, it will be an essential part of the media schedule for any advertiser serious about trying to keep in touch with consumers who can no longer be reached through mainstream TV channels.
CASE STUDY - PEPSI MAX
Pepsi wanted to reinforce its 'No sugar' proposition among 16- to 24-year-olds, and turned to radio stations Kiss, the Galaxy Network, the Vibe network, Beat 106 and Kerrang! to do so.
All carried out a series of wind-ups on listeners during their breakfast shows, with listeners able to nominate their friends as a target via a bespoke microsite.
The best examples were edited into a series of eight-minute branded podcasts, which listeners could download.
According to the radio stations, the content was downloaded more than 20,000 times during the four-week campaign.
'The internet offers a unique radio application in podcasting and new opportunities for branded content,' says Andrew Harrison, chief executive of the RadioCentre, the industry body for commercial radio in the UK. 'This is of particular interest and value for advertisers. It offers a more targeted way of reaching specific audiences, because the audience has demonstrated real interest and downloaded the content, rather than hearing it by chance within traditional on-air spot ads.'
CASE STUDY - DUNLOP
Dunlop launched a web TV initiative through Agency Republic, after the tyre brand admitted to 'drifting' in the UK. Called Injection.tv, the portal is subtly branded and invites motoring enthusiasts to 'thrill' or 'chill'.
The content is focused on driving great cars, fast. When Agency Republic was developing the strategy, it found that most motoring websites were taking the form of online versions of magazines. It identified a space for dynamic content for driving enthusiasts online.
Results from the agency showed that the average site visit lasted just under five minutes, exceeding expectations by two minutes, while the number of visitors to the channel passed expectations by 40%.
'Consumers exposed to the site are more than six times more likely to consider Dunlop Tyres as brand of choice compared with those who have not seen the site,' stated a report from the agency. 'This is without any mention of any product in the site whatsoever. Consideration of competitors also actually went down in similar increments.;
According to a study commissioned by Dunlop, a six-fold increase was registered in the brand attributes it had been aiming to change.