1. (Mt) – case study which contains 3 questions
Individual Assignment Length: 1500 words The Case Study Case Synopsis. In 2013, Under
Armour had $2.3 billion in sales yet only $500 million came from its women’s apparel, and
the company was ready to expand into the female market segment. The “I Will What I Want”
global women’s marketing campaign was the largest Under Armour had ever run. Founder
Kevin Plank and his team launched the campaign on a multichannel platform, with social
media at its core. The campaign’s success surpassed what Plank had imagined, and he is left
wondering where to take Under Armour’s advertising and marketing next. Assignment
Questions 1. Should Under Armour continue targeting and growing the female market
segment? Or should it target a broader population to gain more traction on Nike and get
closer to the number-one spot? 2. Should Under Armour keep paying famous athletes to be
part of its advertisement campaigns or should it use more everyday people? 3. Should the
next campaign be run on multichannel platforms or should Under Armour solely focus on
one channel, such as television or online advertisement? Hint: To gain competitive
advantage Format: 1. Very brief summary about the Under Armour case (in 100 words) 2.
Answers for Q1 3. Answers for Q2 4. Answers for Q3 5. Conclusion for Q1-Q3’s results (100
words) UVA-M-0910 This document is authorized for use only by Haydn Northover at
UNSW Sydney. Please do not copy or redistribute. Contact
permissions@dardenbusinesspublishing.com for questions or additional permissions. Rev.
Jul. 27, 2016 Under Armour’s Willful Digital Moves Created in 1996, Under Armour, which
first created breathable, wicking materials to replace sweaty cotton found in the shirts worn
under football pads, was a brand built on a tough-guy and football image. In less than two
decades, founder Kevin Plank took Under Armour from a business run out of his
grandmother’s basement in Washington, DC, to a global business with just less than $4
billion in sales. By 2013, Under Armour had expanded to shorts, shoes, and even hats, and
was already a success within the men’s athletic-wear market, competing with powerhouses
such as Nike and Adidas. Its marketing and advertisement had focused on targeting men by
delivering technical apparel positioned as innovative and modern. In 2013, Under Armour
had $2.3 billion in sales yet only $500 million came from its women’s apparel.1 Plank was
ready to expand into the female market segment. “I Will What I Want” Campaign In March
2013, Under Armour’s rival, Adidas, ranked number two in the U.S. sportswear market, one
spot in front of Under Armour, launched the “Unite All Originals” campaign targeting
women using original artists popular on social media.2 The ad campaign garnered only
400,000 views on YouTube, did not help boost Adidas’s sales, and was considered a failure.3
3. with Under Armour as she concentrated on a grueling boxing session and ignored the
commentary displayed on the walls.10 Negative comments, such as “Gisele is just a model,”
poured in along with positive remarks such as, “Bravo! Gisele can do anything.” Fremar
stated that the overall goal of the campaign was to celebrate women “who had the physical
and mental strength to tune out the external pressures and turn inward and chart their own
course.” 11 This goal was clearly and succinctly conveyed through the unorthodox athletes
chosen by Under Armour and the message clearly resonated with audiences, who spent an
average of four minutes on the site during the campaign’s peak.12 Success of Appealing to
Female Customers The “I Will What I Want” campaign’s success surpassed what Plank had
imagined. It produced 5 billion media impressions worldwide and a staggering $35 million
in earned media.13 Adrienne Lofton, senior vice president of global brand marketing at
Under Armour, stated, “I Will What I Want was the highest earned impressions campaign
we’d ever done, with more than 3 billion earned impressions. It was definitely a sign to
everyone here that women can definitely be the category that sets the standard for the rest
of the brand.” 14 The campaign resulted in a 28% increase in women’s sales and a 42%
increase in traffic to UA.com. 15 Targeting the female market with this viral campaign
proved to be a winning strategy for Under Armour. 6 “Misty Copeland – I Will What I Want,”
YouTube video, 1:00, posted by “Under Armour,” July 30, 2014,
https://www.youtube.com/watch?v=ZY0cdXr_1MA (accessed May 2, 2016). 7 Eliana
Dockterman, “Under Armour’s Stunning Ballerina Ad Aims to Lure Women from
Lululemon,” Time, August 5, 2014, http://time.com/3083114/misty-copeland-under-
armour-i-will-what-i-want/ (accessed May 2, 2016). 8 Minda Smiley, “Anatomy of an Ad:
Under Armour and Droga5 on Creating the ‘Very Unpolished’ Gisele Bündchen Film,” The
Drum, July 27, 2015, http://www.thedrum.com/news/2015/07/27/anatomy-ad-under-
armour-and-droga5-creating-very-unpolished-gisele-b-ndchen-film (accessed May 2, 2016).
9 “Under Armour Unveils Newest Chapter of I WILL WHAT I WANT™ Campaign Featuring
Gisele Bündchen,” Under Armour press release, September 4, 2014,
http://www.uabiz.com/releasedetail.cfm?ReleaseID=869180 (accessed May 2, 2016). 10
“Under Armour: Will Beats Noise,” Droga5, http://droga5.com/work/will-beats-noise/
(accessed May 2, 2016). 11 http://www.thedrum.com/news/2015/07/27/anatomy-ad-
under-armour-and-droga5-creating-very-unpolished-gisele-b-ndchen-film. 12 “Droga5’s
Gisele Campaign for Under Armour Scores the Cyber Grand Prix at Cannes,” AdWeek, June
14, 2015, http://www.adweek.com/news/advertising-branding/droga5s-gisele-campaign-
under-armour-scores-cyber-grand-prix-cannes-165541 (accessed May 2, 2016). 13
https://www.facebook-studio.com/gallery/submission/i-will-what-i-want. 14 Jeff Beer,
“How Under Armour Uses a Scrappy Outsider Will to Get What It Wants,” August 31, 2015,
Fast Company, http://www.fastcocreate.com/3050420/behind-the-brand/how-under-
armour-uses-a-scrappy-outsider-will-to-get-what-it-wants (accessed May 2, 2016). 15
http://www.adweek.com/news/advertising-branding/droga5s-gisele-campaign-under-
armour-scores-cyber-grand-prix-cannes-165541. Page 2 of 5 Page 3 UVA-M-0910 This
document is authorized for use only by Haydn Northover at UNSW Sydney. Please do not
copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or
additional permissions. Competitive Landscape Following the success of the “I Will What I
4. Want” campaign, Under Armour surpassed Adidas and moved from the number-three spot
in the U.S. sportswear market to the number-two spot.16 This was a significant
accomplishment for a company only 20 years old and represented just the beginning of
where Plank wanted to take Under Armour. Plank’s goal was to move Under Armour to the
number-one spot in front of Nike, but because of Nike’s strong brand awareness and
history, it would need to continue with groundbreaking advertising campaigns similar to “I
Will What I Want.” He had to consider what part of the business would focus on women and
how to keep viral momentum. Plank also needed to be aware of other power players in the
athletic-wear market such as lululemon athletica, which had 2014 revenues of $1.8 billion
and expected revenues of $1.97 billion in 2015.17 Sports Marketing Advertisement
Celebrity endorsements In the United States, celebrities were present in more than 15% of
advertisements. That number increased internationally resulting in an estimated $50 billion
invested globally in celebrity endorsements.18 A celebrity’s endorsement of a brand helped
build brand equity and increased brand awareness since consumers associated the celebrity
with the brand. Signing a famous name to a brand had been found to increase a company’s
sales by $10 million annually and increase the company’s stock returns by 0.25%.19 For
example, following Tiger Woods’s 1996 endorsement, Nike transformed its golf business
from a $120 million business in 1996 to a $500 million business in 2006.20 Tiger Woods
was also an example of the risks of a celebrity endorsement. After his 2009
maritalinfidelities scandal, Nike lost $1.4 million in profit, 136,000 customers switched from
Nike, and there were longer-term negative effects to its brand.21 Brands needed to be
cautious, because the image of the celebrity representing their brands could change
overnight. Another aspect to consider was if the price of a celebrity endorsement was worth
it. Companies signed celebrities to multi-million-dollar deals expecting a larger return on
their investment. Brands such as Dove, however, embraced the everyday person in their
advertisements instead of the hit movie star or basketball star of the moment and saved
millions of dollars on endorsement deals. By celebrating the natural beauty of the everyday
woman instead of publicizing a celebrity with a picture-perfect body, Dove increased sales
and brand awareness.22 16 Sara Germano, “Under Armour Overtakes Adidas in U.S.
Sportswear Market,” Wall Street Journal, January 8, 2015,
http://www.wsj.com/articles/under-armour-overtakes-adidas-in-u-s-sportswear-market-
1420753934 (accessed May 2, 2016). 17 Brent A. Miller, “Lululemon: Double Digit Revenue
Growth Expected in 2015,” Seeking Alpha, March 29, 2015,
http://seekingalpha.com/article/3036186-lululemon-double-digit-revenue-growth-
expected-in-2015 (accessed May 2, 2016). 18 Dean Crutchfield, “Celebrity Endorsements
Still Push Product,” AdvertisingAge, September 22, 2010,
http://adage.com/article/cmostrategy/marketing-celebrity-endorsements-push-
product/146023/ (accessed May 2, 2016). 19 Douglas Karr, “Are Celebrity Endorsements a
Viable Marketing Option?,” Marketing Tech (blog), May 6, 2015,
https://www.marketingtechblog.com/celebrity-endorsements/ (accessed May 2, 2016). 20
Kevin YC Chung, Timothy Derdenger, and Kannan Srinivasan, “Economic Value of Celebrity
Endorsements: Tiger Woods’ Impact on Sales of Nike Golf Balls,” September 12, 2011,
http://www.econ.ucla.edu/workshops/papers/io/celebrityendorsements.pdf (accessed
5. May 2, 2016). 21 Francesca Di Meglio, “Use Real People or Celebrities in Your Advertising
Campaign?,” Monster, http://www.monster.com/careeradvice/article/real-people-or-
celebrities-in-ads (accessed May 2, 2016). 22 Jennifer Flagg, “What We Can Learn from
Dove’s Marketing Strategies,” Mechtronics, August 23, 2013,
http://www.mechtron.com/blog/whatwe-can-learn-from-doves-marketing-strategies/
(accessed May 2, 2016). Page 3 of 5 Page 4 UVA-M-0910 This document is authorized for
use only by Haydn Northover at UNSW Sydney. Please do not copy or redistribute. Contact
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Word-of-mouth and viral marketing Word-of-mouth and viral marketing had gained a lot of
attention from companies that wanted to save money on their advertising and marketing
budgets and have a greater impact on their consumers. Consumers’ increased social
connectivity was rapidly making marketing easier for companies by sharing, posting, and
reposting videos until they become viral.23 For example, Volvo’s Epic Split video was
shared more than 8 million times across social networks, making it one of the most-shared
YouTube clips.24 A big reason wordof-mouth and viral marketing were so successful was
that 92% of consumers trust recommendations from friends and family over other forms of
marketing and advertisement.25 In 2014, Nike spent about $3 billion on “demand creation,”
its terminology for marketing and advertising, and that number was expected to grow.26 Of
that amount, about $56.4 million was spent on television advertisements through the end of
June 2014.27 As Nike’s demand-creation expenses increased, so did its revenues—in 2014,
it earned $27.8 billion in revenue compared to the $3 billion spent on demand creation.
Although their budgets were not as large as Nike’s, Adidas and Under Armour had
marketing expenses of approximately $1.8 billion and $333 million, respectively, and
revenues of approximately $4.1 billion and $3 billion.28 Video advertisements went viral
when they triggered a strong emotional response. Celebrities had not been proven to
influence online video advertisement sharing.29 Of the 100 most-shared video
advertisements, only 13% had celebrities in them. There was a risk, however, in focusing on
the viral nature of a video ad. Consumers tended to forget what brand the advertisement
was associated with.30 For example, only 7% of viewers could remember what brand was
associated with the 2014 Chrysler Super Bowl advertisement featuring Bob Dylan.30 A viral
video advertisement that elicited a strong emotional response did not necessarily help
consumers recall the brand. Fitness market in the United States By 2013, more than 45
million Americans belonged to a gym or fitness club and more than 25 million exercised at
home.31 In 2014, more than 54 million Americans paid for gym memberships, and the
average member visited his or her club more than 100 times.32 Niche gym memberships,
wearable fitness trackers, 23 Kimberly A. Whitler, “Why Word of Mouth Marketing is the
Most Important Social Media,” Forbes, July 17, 2014,
http://www.forbes.com/sites/kimberlywhitler/2014/07/17/why-word-of-mouth-
marketing-is-the-most-important-social-media/2/#3d50c5454a95 (accessed May 2, 2016).
24 Meg Carter, “How Volvo Trucks Pulled Off an Epic Split and a Game-Changing Campaign,”
Fast Company, June 18, 2014, http://www.fastcocreate.com/3031654/cannes/how-volvo-
trucks-pulled-off-an-epic-split-and-a-game-changing-campaign (accessed May 11, 2015). 25
http://www.forbes.com/sites/kimberlywhitler/2014/07/17/why-word-of-mouth-
6. marketing-is-the-most-important-socialmedia/#c034ce57a77c. 26 Pete Forester, “You
Won’t Believe How Much Nike Spends on ‘Demand Creation’,” Complex, July 26, 2014,
http://www.complex.com/sneakers/2014/07/nike-spends-3b-on-demand-creation,
(accessed May 11, 2016). 27 Nathalie Tadena, “Nike Dominates Shoe Sector’s TV Ad
Spending,” July 10, 2014, http://blogs.wsj.com/cmo/2014/07/10/nike-dominatesshoe-
sectors-tv-ad-spending/ (accessed May 2, 2016). 28 Nunez Enterprises, “Nike’s Demand
Creation Expense: A Slam Dunk for The Company’s Bottom Line,” Seeking Alpha, December
31, 2015, http://seekingalpha.com/article/3784346-nikes-demand-creation-expense-slam-
dunk-companys-bottom-line?page=2 (accessed May 2, 2016); “Under Armour Reports Full
Year Net Revenues Growth of 32%; Announces Creation of World’s Largest Digital Health
and Fitness Community,” Under Armour press release, February 4, 2015,
http://investor.underarmour.com/releasedetail.cfm?ReleaseID=894686 (accessed May 2,
2016); and “Adidas Group Full Year 2014 Results,” Adidas Group press release, March 5,
2015, http://www.adidas-group.com/en/media/news-
archive/pressreleases/2015/adidas-group-full-year-2014-results/ (accessed May 2, 2016).
29 Ayaz Nanji, “What Makes an Ad Go Viral Online?,” MarketingProfs, May 27, 2014,
http://www.marketingprofs.com/charts/2014/25217/whatmakes-an-ad-go-viral-online
(accessed May 2, 2016). 30 “Fitness Industry Analysis 2016 – Costs & Trends,” Franchise
Help, Gallup, https://www.franchisehelp.com/industry-reports/fitness-industryreport/
(accessed May 2, 2016). 31 Sandra Faleris, “The Exercise Market Going Strong,” Examiner,
September 3, 2013, http://www.examiner.com/article/the-exercise-marketgoing-strong
(accessed May 2, 2016); “Number of Participants in Home Gym Exercise in the United States
from 2006 to 2013 (in Millions),” Statista,
http://www.statista.com/statistics/191614/participants-in-home-gym-exercise-in-the-us-
since-2006/ (accessed May 2, 2016). 32 https://www.franchisehelp.com/industry-
reports/fitness-industry-report/. Page 4 of 5 This document is authorized for use only by
Haydn Northover at UNSW Sydney. Please do not copy or redistribute. Contact
permissions@dardenbusinesspublishing.com for questions or additional permissions. Page
5 UVA-M-0910 and mobile applications supporting high-intensity interval training grew
steadily through 2014 and 2015.33 In addition, 58.4% of males and 52.7% of females
exercised for at least 30 minutes three or more days per week.34 By 2014, the U.S. women’s
nutrition market was more than $125 billion. Health, fitness, and weight loss was a $277
billion industry.35 Globally, the health club industry was more than $78 billion in 2014, and
it grew annually by 2.2% between 2010 and 2015.36 Worldwide sports apparel and
footwear sales grew by 8% per year from 2013 to 2015, compared to 2% to 3% for general
apparel. 37 The United States accounted for 36% of those sales; this $97 billion industry
was driven by fitness and wellness but also “athleisure” wear such as running shoes for
nonrunners and yoga pants worn all day.38 As a result, specialty-apparel manufacturers
began to target specific activities, from Pilates to rock climbing, and allowed companies
such as Athleta (owned by Gap) and lululemon athletica to enter the market in unique
niches.39 Women’s apparel specifically grew 10% between 2014 and 2015.40 The
worldwide apparel market was estimated to grow to $184 billion by 2020.41 Next
Campaign? The “I Will What I Want” campaign took women’s apparel to 30% of Under
7. Armour’s sales, making Under Armour significantly more competitive with lululemon and
Nike.42 The question for Plank was, what’s next? He wondered if Under Armour should
continue targeting and growing the female market segment. Or, should the company target
a broader population to gain more traction on Nike and get closer to that numberone spot?
The successful “I Will What I Want” campaign had gone viral , but it would be a challenge for
Under Armour to continue that momentum. Plank voiced to various media outlets that he
planned to make the company a $10 billion brand by 2020, and having successful marketing
campaigns was a key part to getting there.43 He had seen success both with television and
online advertisements but wasn’t sure which route to take with the next campaign. Another
topic he grappled with: should Under Armour keep paying famous athletes to be part of its
advertisement campaigns or should it use more everyday people? 33 Rachel Bachman,
“Why a Few Minutes of Exercise Can Show Results,” Wall Street Journal, April 18, 2016,
http://www.wsj.com/articles/why-afew-minutes-of-exercise-can-show-results-
1460993589?mod=djem10point (accessed May 2, 2016). 34 Rebecca Riffkin, “So Far in
2015, More Americans Exercising More Frequently,” Gallup, July 29, 2015,
http://www.gallup.com/poll/184403/far-2015-americans-exercising-frequently.aspx
(accessed May 2, 2016). 35 Kerri Krom, “The Health & Wellness Market is the Next Trillion
Dollar Industry,” Women’s Marketing (blog), November 4, 2014,
http://www.womensmarketing.com/blog/2014/11/health-and-wellness-market/
(accessed May 2, 2016). 36 “Fitness Market in the US,” Business Scoot,
http://www.businesscoot.com/fitness-market-in-the-us-9/ (accessed May 2, 2016). 37
Bradley Seth McNew, “Can Nike Inc and Under Armour Inc Survive an Athletic Apparel
Bubble?,” Motley Fool, April 12, 2015,
http://www.fool.com/investing/general/2015/04/12/can-nike-inc-and-under-armour-
inc-survive-an-athle.aspx (accessed May 3, 2016). 38 “Athletic Lifestyles Keep Apparel Sales
Healthy,” Morgan Stanley, October 30, 2015, http://www.morganstanley.com/ideas/global-
athleticwear-geared-for-growth (accessed May 3, 2015). 39
http://www.certona.com/hitting-a-home-run-in-the-athletic-apparel-industry/; and John
Kell, “Nike Makes a Big Push into the Fast-Growing Women’s Segment,” Fortune, October 22,
2014, http://fortune.com/2014/12/25/athletic-apparel-top-performer/ (accessed May 3,
2016). 40 http://fortune.com/2014/10/22/nike-women-business/ 41 “World Sports
Apparel Market Is Estimated to Garner $184.6 Billion by 2020 – Allied Market Research,”
MarketWatch, October 8, 2010, http://www.marketwatch.com/story/world-sports-
apparel-market-is-estimated-to-garner-1846-billion-by-2020—allied-market-research-
2015-10-0882032519 (accessed May 3, 2014). 42
http://www.fastcocreate.com/3050420/behind-the-brand/how-under-armour-uses-a-
scrappy-outsider-will-to-get-what-it-wants. 43 Bruce Horovitz, “Under Armour Has Over-
the-Top 2014,” USA Today,
http://www.usatoday.com/story/money/business/2014/12/22/underarmour-sports-
apparel-sporting-goods-kevin-plank/20243203/ (accessed May 3, 2016). Page 5 of 5
Business Horizons (2016) 59, 293—302 Available online at www.sciencedirect.com
ScienceDirect www.elsevier.com/locate/bushor What’s new about new media? How multi-
channel networks work with content creators Jacob Gardner, Kevin Lehnert * Seidman
8. College of Business, Grand Valley State University, L. William Seidman Center 3116, 50
Front Avenue SW, Grand Rapids, MI 49504-6424, U.S.A. KEYWORDS Content creation;
Content creator; Multi-channel networks; New media; Consumer creation strategies
Abstract With the rise and rapid proliferation of digital and online marketing, increased
cord-cutting by consumers, and new content being created online, Internetbased
advertising is the single fastest-growing ad expenditure category, outstripping TV, radio,
and other more traditional media formats. With the rise of new media and the increased
content creation, the ability of content creators to manage and guide their brand has
become more important than ever. This article investigates one such mechanism for
managing the new media phenomenon, the Multi-Channel Network (MCN) model. An MCN
is any entity or organization which either partners with content creators or directly
produces a variety of distinctive content and works to perform business and marketing
functions on the platform in which said content is released. This article investigates the
MCN phenomena as itspecifically addresses the needs of content creators in the new
prosumptive consumer culture that helps inform and create new media content. It
highlights strategies for managing and navigating the new media and MCN domain. # 2016
Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.
1. The multi-channel network It is a good time to be a new media entrepreneur, as the talent
behind Nerdist Industries will attest. What began as a single podcast has grown into a small
empire that includes a YouTube channel, a * Corresponding author E-mail addresses:
gardjaco@mail.gvsu.edu (J. Gardner), lehnertk@gvsu.edu (K. Lehnert) network of podcasts,
and even a TV show produced and aired by BBC America. The Nerdist represents a brand
new way of looking at media and entertainment content–—a system where the audience
and consumer are as integral to the success of a brand as the content itself. With the rise
and rapid proliferation of digital and online marketing since the mid-1990s, Internet-based
advertising is the single fastest-growing ad expenditure category, outstripping TV, radio,
and other more traditional media formats (IAB/PwC, 2014). Along 0007-6813/$ — see
front matter # 2016 Kelley School of Business, Indiana University. Published by Elsevier Inc.
All rights reserved. http://dx.doi.org/10.1016/j.bushor.2016.01.009 294 with Web 2.0 and
the concept of new media, the Internet has entered a period of what has been referred to as
a ‘participatory culture,’ where the new media output is created alongside and often in
collaboration with the viewers of that output. Many diverse creators of content and the
consumers of that content have come together to form a new system of media consumption.
As Adam Rymer, president of Nerdist Industries put it, ‘‘It feels like the evolution of
television, the evolution of media’’ (Castillo, 2014). Content creators have a very intimate
connection with their audiences–—especially with the millennial generation, which has
grown up with the Internet and intuitively understands digital distribution and the value it
holds. These brand relationships are capitalized on both as part of the community and with
individual consumers (Christodoulides, 2009; Simmons, 2008). By capitalizing on this
intimacy, content creators–—and by extension, the brands they develop–—can create value
for audiences by providing them with a type of content that is more trustworthy, genuine,
and timely than that of traditional media. At the same time, these creators are showing that
they have a level of referent power over large, definable markets–—something that is very
9. attractive to advertisers. In addition to a new system of media consumption, new business
models and methods of monetizing content on the Internet have formed as well. This article
will examine one such business model–— the multi-channel network (MCN)–—and assess
its uses, structure, and revenue-generating capabilities and the wider implications it has on
new media forms and the creators who make their livelihood in new media. We will give
some recommendations to content creators and marketing professionals on facets of MCNs
and what they should consider when evaluating joining or creating an MCN. We specifically
address what the MCN can do for content creators, focusing on its role in navigating legal
and ethical challenges, building audiences, and implementing other business structures,
allowing content creators to do what they do best: create. 1.1. What are MCNs? The term
multi-channel network was first coined by YouTube, the platform used by the great
majority of these networks. An MCN is any entity or organization that partners with content
creators or directly produces a variety of distinctive content and works to perform business
and marketing functions via the platform whereby said content is released. An MCN’s
repertoire can include self-created content and J. Gardner, K. Lehnert management, broad
studio-created content, or even hubs or portals for created content. Content creators, or
online personalities, generally join an MCN in order to gain audiences, cross promote,
develop branding strategies, connect with ‘mainstream’ money and content, and utilize
digital rights management and other legal services. Effectively, any entity that produces a
wide variety of encapsulated content or otherwise serves as a hub for those who create
content can be considered an MCN. This can go beyond simply creating a lot of shows or
varying the content they create and can include providing news, blogs, or audio content. A
good example of a single company that produces content in the vein of an MCN is Monocle
(2015), a magazine and 24-hour online radio station that provides content ‘‘on global
affairs, business, culture, design and much more.’’ As a part of the larger Monocle media
brand, the online radio station (and podcasts of the station’s content) functions as a
network of individual shows that each have their own style, content, contributors, and
editors and all operate underneath one brand umbrella. 2. Advantages of the MCN 2.1.
Audience, collaboration, and branding MCNs provide a framework for what has long been
considered an amateur, unstructured, and mysterious medium. YouTube is filled with
everyday users who post vlogs, skits, video edits, and, of course, cat videos. If they attract an
audience, these content creators begin to create a social network around themselves that
can spill outside of YouTube and into other forms of online and offline interaction. One
example of such a community is the Nerdfighters. Inspired by John and Hank Green’s (a.k.a.,
the ‘Vlogbrothers’) content and message, Nerdfighters are ‘‘a community that sprung up
around our videos, and basically we just get together and try to do awesome things and
have a good time and fight against worldsuck’’ (Green & Green, 2009). The community grew
and eventually developed into a very loose organization existing in libraries, high schools,
and college campuses all over the world. This community goes beyond sharing a love of
nerdy things. Chapters of the group are involved in charitable work, artistic endeavors, and
fighting against bullying. The audience, these Nerdfighters, pushed the work of one of the
Vlogbrothers’ collaborators, John Green, into the mainstream, resulting in the creation of
the hit movies The Fault in Our Stars and Paper Towns. What’s new about new media? How
10. multi-channel networks work with content creators These examples are evidence of a
phenomenon marketers have begun calling prosumption, a portmanteau referring to ‘‘the
interrelated process of production and consumption’’ (Ritzer, 2015). Prosumption occurs
when those who are consuming and engaging in the product are also integral to the
production of the product. Prosumption goes beyond the concept of co-creation (Prahalad &
Ramaswamy, 2004). Where co-creation looks at the creation of experiences and value,
prosumption looks at both the creation of value and the mechanisms by which it is
consumed and integrated into a greater social context. Due to this extended context, new
media content creators engage with their audience, a community develops, and this
community both consumes and influences the content at the same time. Furthermore, this
community evolves and develops into a stronger social form whereby the prosumer
continues to influence and guide the overall new media product. This creates a new
problem for content creators. Not only are they responsible for creating content and
keeping their audiences interested, but now they also must try to manage the communities
that arise around their work. As the communities grow larger, more and more content
creators also face legal issues such as larger companies trying to control their copyrighted
material despite fair use laws, managing ad-based and other sources of revenue, ethical
issues about disclosure of paid promotions, and more. This is where MCNs come in (Mills,
2014): Multi-channel networks tap into specific markets, gamers, teens, etc., and generate
fan bases for ‘‘creators’’–—the people making videos. MCNs make money by selling ads that
run before their videos, and most of their talent makes money from YouTube directly and
from the advertisers who run content before their videos. Maker Studios, currently the
largest MCN on YouTube with over 11 billion video views per month among its channels, is
‘‘dedicated to developing talent, creating premium programming, and building lasting
brands with engaged audiences’’ (Maker Studios Inc., 2015). Gaining audience share is
another reason that many YouTube channels join an MCN. Each content creator who joins
an MCN begins pooling its audience with those of similar channels. George Strompolos
(2014), CEO of the MCN Fullscreen, put it like this when talking about collaborations
between channels: It’s all about audience building. . .we may have some audience overlap,
but for the most part, chances are we have different fans. And so 295 when we come
together and make a video we’re going to share audience. So there is a mutual incentive to
want to do that. This competitive collaboration speaks to the new media mindset, where the
success of one MCN contributes to the success of another while at the same time fostering
continued development and production of new content. This cross-pollination of audiences
not only helps grow the individual audiences of each channel, but also strengthens branding
efforts. It allows for the exploration of personality types and expression between
consumers, creating these participatory web cultures filled with users, consumers, and
content creators (Beer & Burrows, 2010). For example, Polaris, a sub-brand of Maker,
focuses on gaming content and general ‘nerd culture’ topics. The larger personalities within
Polaris often co-create content for its various channels. An example of content that Polaris
members collaborate on is the Co-Optional Podcast, a video and audio podcast in which
three regular personalities talk about gaming news, ethics, business strategies of game
publishers, and more. This podcast also has rotating guests who bring a fresh perspective
11. and can showcase what their own YouTube channels have to offer. The Polaris MCN gives
this type of content a reach that no individual channel or casual relationship between
content creators can achieve on its own. The implication is that by engaging in this dynamic,
creative, and constantly changing content, the MCN is able to build on not only a core
market, but also a continually changing and diverse extended market simultaneously. Even
in situations where content is produced separately but is under the umbrella of one
company, a networked approach to content distribution has value. The production studio
Rooster Teeth is the hub for extremely successful shows such as Red vs. Blue (the longest-
running web series and longest-running American sci-fi series), The Gauntlet, and
Achievement Hunter. The company has grown so large and influential that it hosts its own
annual convention called RTX in Austin, Texas (Rooster Teeth Productions, 2015). This
model is valuable because it allows outreach to diverse consumer groups under distinct
channels while maintaining a streamlined and efficient distribution mechanism. 2.2.
Business models and value creation As a business, an MCN provides support and guidance
to its constituent partners, creating value in the 296 Figure 1. J. Gardner, K. Lehnert
Distribution of ad revenue on YouTube Source: Suster (2013) form of expertise, resources,
and audience access. In return, the partner channels split ad revenue with their members,
providing a mostly stable stream of income. As highlighted in Figure 1, ad revenue on
YouTube is standardized with the channel receiving 55% of the money generated and
YouTube taking the remaining 45%. In addition, ‘‘the Google-owned video site will give
partners 100% of the revenue for ad inventory they sell that exceeds YouTube’s rate card’’
(Spangler, 2013). An MCN helps manage the placement and targeting of these ads, taking
some of the burden off of content creators. The 55% of the ad revenue that belongs to the
content creator is then split between the MCN and the owner of the channel, with the exact
nature of the split varying from channel to channel. This allows for focused strategies or
created content that can increase overall revenue and drive focused product/ branding
strategies. Revenue models for podcasters are a little behind the video-on-demand format
of YouTube, due in part to the medium’s slower growth rate and its largely audio-only focus.
Generally, podcasters make money in three ways: advertising, donations, and
merchandizing. While these mechanisms are valuable for podcasting, they can be
implemented by any content creator and facilitated by the MCN. The first mechanism for
revenue generation is advertising. There are a number of companies that heavily sponsor
podcasts and other content in exchange for an included sponsorial or short advertisement
read out by the host(s) of the program. This strategy is reminiscent of traditional sponsored
programs (e.g., Orson Welles’ classic Campbell’s Radio Playhouse) where programs are
funded by corporate patronage. For example, Audible, the leading provider of digital
audiobooks, provides podcasters in its affiliate program a $15 commission every time a
listener signs up for a free trial. Needless to say, podcasts are a perfect medium for Audible
because the majority of podcast listeners are already in the market for high quality,
entertaining audio content. A second method of revenue generation is via donations. With
easy-to-implement donation portals such as PayPal and Patreon, content creators can
simply ask for donations to help fund their work. Fans want to support their favorite
personalities. They want to give because they see these MCNs as an extension of themselves
12. (Belk & Coon, 1993) and are grateful (Gouldner, 1960) for the value they receive from them.
These MCNs provide value beyond just information and entertainment: They are a portal of
expression for the viewers, and as part of this co-creation, the viewers want to support
them (Prahalad & Ramaswamy, 2004; Ritzer & Jurgensen, 2010). This is a particularly
interesting development in MCNs and new media, and there have been recent discussions of
YouTube providing a tiered pay structure (Shaw & Womack, 2015). Finally, some content
creators are able to supplement the previous two forms of income with the sale of
merchandise. Some networks have the clout and trustworthiness to curate a shop full of
goods and services from bespoke and artisanal craftspeople, as such networks are able to
build their brand and increase revenues by creating physical products that extend the
branded message. Once an MCN’s partner base has grown large enough, it can begin to
move beyond affiliate-style programs and attract brands that are looking for ways to reach
particular audiences. The MCN can coordinate branded deals with its partners, allowing for
bigger sponsorships, product placements, feature videos, coverage of a product, and more.
Previously mentioned Monocle uses its status as a worldwide brand- and design-focused
network to promote its own store of travel products, clothing, stationery, and more. By
enabling such partnerships, an MCN can increase the value it provides to both customers
and brands by establishing a sense of lifestyle among the network, the brands and
companies it supports, and the customer. In particular, this allows networks to get a piece of
the growing bespoke and premium product markets. These brand deals offer a valuable way
for companies to engage with potential customers. Because of the personal connection,
audiences–— especially younger demographics–—can feel a level of trust in what a
YouTube personality says and the products, services, opinions, and lifestyle the YouTuber
espouses. This allows for a level of brand awareness and interest that surpasses even
celebrity endorsements. A figure who addresses consumers weekly, shares their interests
and values, and connects with them on a personal level will What’s new about new media?
How multi-channel networks work with content creators Figure 2. Comparison of
brand/product recommendation between TV/Movies & YouTube Source: Adapted from
Defy Media (2015) have more referent power than even a liked and respected celebrity. As
a result, the brands that choose to partner with the new media networks will experience
higher sales and customer engagement, and the authority and trustworthiness of the
networks will increase in the eyes of the consumers. In a DEFY Media (2015) report, 13- to
24-year-olds used the following phrases to describe YouTubers: ‘‘just like me,’’
‘‘understands me,’’ ‘‘someone I trust,’’ ‘‘has the best advice,’’ ‘‘doesn’t try to be perfect,’’
‘‘genuine,’’ ‘‘someone I feel close to,’’ and ‘‘likes the same things I do.’’ This implies that these
viewers see YouTubers and content creators similarly to celebrity endorsers. Essentially
they are celebrities within their markets, highlighting the increased trust and transferability
of product associations that comes with such celebrity (McCracken, 1989). As a result, the
stronger personal connection makes audiences much more likely to try a product or brand
recommended by a YouTuber than one advertised in a TV show or movie (DEFY Media,
2015), as Figure 2 clearly shows. In a report for REDEF (an industry-focused, curated news
website), writer Liam Boluk (2014) explains this unique connection: In many cases, videos
are simply a single YouTuber speaking directly to their followers. The intimacy of this
13. relationship makes product placements and native advertising particularly effective and
enables production decisions to be shaped by audience interests (Epic Rap Battles of
History) and tested via direct dialogue. It is this dual effect of focused market penetration
and unusually high audience engagement and trust that makes MCNs so powerful. New
media has also helped address one of the primary concerns of traditional media sources
such 297 as TV networks and music companies: that of copyright infringement. While
YouTube’s content ID system (implemented in 2010) helps protect audio and video content
from being shared and monetized by those other than the owner, there will always be a
certain amount of piracy of such content. Traditional media companies have responded in a
variety of ways. For instance, the Recording Industry Association of America (RIAA) has
engaged in over 20,000 lawsuits targeting file sharers and music pirates (Ellenberger,
2014). MCNs can help protect content creators and their brands against legal trouble like
this by networking ethical, experienced people together and creating an environment where
original content is celebrated. In the case of a questionable copyright claim, an MCN can
provide funding and support to help fight the claim. These networks not only help reduce
copyright infringement but also serve as a deterrent to the ‘patent trolls’ of the Internet. 2.3.
Connection to traditional media Traditional media and new media affect each other in a
mutually beneficial cycle. Jin Kim (2012, p. 61) states: The evolution of YouTube from an
amateurdriven medium to a professional-dominated channel coexists with the market
expansion of the TV industry into the web. Networks and cable were challenged by the new
mediascape and entered this new realm in order to protect their materials and to tame new
territory by reinforcing traditional ‘rules of the game.’ The shift from amateurish content
being uploaded as a hobby to regular, semi-professional content being uploaded by users
who consider new media to be a part- or full-time job resulted in one of the biggest changes
in traditional broadcasting rules. Now, even media companies whose products are made
primarily for other formats–—such as movie studios and television networks–—use
YouTube to promote their content through short video clips, web series, music videos, and
even full-length movies or television shows. As such, we see lucrative agreements between
traditional networks and online content providers such as Netflix, Hulu, and Amazon, and
we see networks providing content in new media outlets, such as HBO’s strategy in utilizing
YouTube to help drive viewers to its comedic news show Last Week with John Oliver. In
addition, within the new media mindset, other companies and content creators have
embraced the open and free new media culture and have begun 298 utilizing it to their
advantage. For example, the musician Macklemore–—whose hit Thrift Shop became a chart
topper without the support of a label–—stated on The Nerdist (2013) podcast: YouTube has
obviously completely replaced that. It doesn’t matter that MTV doesn’t play videos. It
matters that we have YouTube and that has been our greatest resource in terms of
connecting, having our identity, creating a brand, showing the world who we are via
YouTube. That has been our label. As such, with the growth of new media and the
technological outlet, content creators are able to protect and build their brand without
relying on the vast machinery of traditional media to create, promote, and define what that
artistic product should be. Younger audiences are certainly agreeing with Macklemore.
Millennials ages 13 to 24 watch an average of 11.3 hours of online video a week and an
14. additional 10.8 hours of paid video a week through subscription services like Netflix, Hulu,
and Amazon Instant Video (Smith, 2015). One reason that both YouTube and subscription
services do so well is that they bring the content that people–—especially younger
audiences–—want to watch and listen to onto mobile devices. Videos viewed on mobile
devices are the fastest-growing category of digital video, and thus they are the fastest-
growing category of video ad revenue as well (Hoelzel, 2014). 3. Criticisms and creator
pushback Not everyone is pleased with how MCNs have established themselves on YouTube
and in other media. There have been several ethical concerns raised about whether MCNs
really offer something of value, the level of control these networks exert over their
members, and also how the money is split among creators, YouTube, and the MCN (Gahan,
2015; Gutelle, 2012; Shields, 2015). As such, content creators need to be careful and well-
informed when it comes to selecting an MCN. MCNs do not always have the best reputations
with content creators. In one of the most public member—MCN feuds, Ray William Johnson,
a YouTuber partnered with Maker Studios, split from his MCN after disagreements over
Maker’s level of involvement in his creative process (Gutelle, 2012). This example highlights
the importance of cultivating strategic partnerships that address not just the outcomes of
the venture but also its dissolution. J. Gardner, K. Lehnert Other creators are simply
unsatisfied with the level and nature of the support that MCNs offer. Michelle Phan is one of
the most successful rising stars of YouTube, and she doesn’t like the MCN model. ‘‘I’ve never
really believed in the MCN model,’’ she said. ‘‘That never resonated with me, and they are
not well liked in the universe of creators. And I want to mentor and nurture talent, and help
them build their powerful brands’’ (Shields, 2015). Ms. Phan has gone beyond creating
content that simply exists on one channel among many and has launched her own lifestyle
network. Indeed, Michelle Phan embodies a growing realization among content creators: It
is not enough to build a YouTube channel and join an MCN. You must move beyond
producing videos on YouTube and consider the world’s largest video delivery platform as
just that: just one way among many to deliver your content. This requires that you continue
to develop and manage your brand in a larger sense. It is not enough to believe that a single
distribution channel will be sufficient, or permanent. Instead, you must diversify beyond
that delivery mechanism and explore all that is available. Many of the large MCNs have few
employees compared to the number of channels they partner with. For example, Maker has
1 employee for every 48 channels, while Fullscreen has 1 employee for every 79 channels.
Although it depends on the MCN and the level of support they claim to provide, at some
point the returns begin to diminish and smaller channels will find themselves being served
less. YouTube marketing expert Brendan Gahan (2015) says: ‘‘Smaller creators within these
networks are not getting the ad dollars for brand integrations (paid brand placements
within videos) for a reason–—it’s not profitable for the MCN.’’ He goes on to state that the
relative amount of effort an MCN has to put into securing something like a brand deal for its
creators varies little based on whether the deal is a small or big one. This leads MCNs to
only pursue brand deals with more money behind them and involve only their bigger talent,
leaving smaller channels out in the cold. One entrepreneur, Jason Calacanis, has been an
extremely vocal critic of the MCN system and the way that YouTube is being run. He
believes that there is little point to creating a business based around YouTube because in
15. the end the video platform takes too much revenue and also gains the audience that your
hard work has generated. YouTube is looking to engage your viewers as much as you are. If
it can move the viewers that you brought to the platform onto other channels, its revenue
increases while yours does not. Calacanis is a proponent of using YouTube as the ‘‘top end
of the What’s new about new media? How multi-channel networks work with content
creators funnel.’’ As the world’s second-largest search engine, YouTube is a great place to
gain customers and get them to enter the ‘funnel.’ But in order to actually make a good
profit, a content creator or business should move said customers off of the YouTube
platform and to some other platform, such as a private website, which is more profitable. 4.
The future of the MCN MCNs are changing, rebranding themselves into talent and audience
development agencies for a new, integrated media industry–—one where large media
companies utilize the creativity and nimbleness of independent creators and those same
creators leverage the resources and mass market reach of traditional media. Many in the
entertainment industry have realized this and begun to explore the possibilities of such a
synthesis. One example of an integrated media presence is Annoying Orange, a series of
short videos created by Dane Boedigheimer on YouTube thatquickly became very popular.
The show’s primary character is an anthropomorphic orange who makes jokes and
generally irks other types of anthropomorphized food in a kitchen. After joining with a
digital distribution company called The Collective Digital Studio, ‘‘Annoying Orange has
expanded laterally across YouTube and vertically across media platforms to create an
intertextualcommodity and a community that coalesces around it to provide both social and
economic value’’ (Morreale, 2014, p. 123). The show has led to a video game, merchandise, a
website, a spinoff series, and even a full 26episode run on the Cartoon Network. Similarly,
while Michelle Phan’s negative perception of MCNs might be on the harsh end, she is
another creator who has realized that in order to continue growth and profitability you
must move beyond simply creating videos for YouTube. The Nerdist Industries network is
perhaps the most progressive MCN today and the closest to realizing the value that lies at
the convergence of traditional and new media. Nerdist doesn’t look to group a large number
of partners together. Instead, it looks for already strong talent that can add value to the
organization and that can be leveraged across many platforms from digital video, podcasts,
blogs, and television (Castillo, 2014). This mirrors the acquisition strategies of other
industries and follows the resource-based view (Amit & Shoemaker, 1993) of choosing to
integrate only those firms that complement the resources and capabilities already
possessed. Nerdist, by being selective in its partnerships, maintains a lean organization with
a sharply focused goal. 299 Some MCNs focus on a niche strategy rather than the broad
appeal of Maker Studios or Fullscreen. The Nerdist is one such network, but there are
others. Tastemade is an MCN that concentrates on food, eating, and the travel lifestyle.
MCNs such as these are trying to avoid the pitfalls that come with the scale of larger
networks. By creating value for a very narrowly defined yet deep market, MCNs using this
strategy can serve their partners better and provide more value to potential sponsors. This
approach not only allows an MCN to maintain a high level of member responsiveness and
support but also helps reduce costs, makes its cost structure and revenue generation more
efficient, and differentiates the channels within the organization from each other. 4.1. MCNs:
16. An acquisition platform Converting audiences from platforms like YouTube, iTunes, or
Stitcher is a daunting proposition. Acquisition is easy on those services because they
dominate the new media marketplace. The majority of customers want to get content from
the websites and companies with which they are most familiar. Suster (2015) recommends
achieving at least a 5% to 15% conversion rate from your acquisition platform to your
owned and operated content (generally a website or store) where your content exists on a
platform that you completely control and receive all the revenue from. These customers
represent your most loyal fans, the people most likely to buy merchandise, and those willing
to make donations or purchase premium content. MCN Rooster Teeth takes this conversion
seriously. Although it produces many web series distributed primarily on YouTube, co-
founder Matt Hullum doesn’t like to rely on ad revenue alone (Jones, 2014): For example,
the weekly Rooster Teeth podcast–—where staff discuss movies, video games and
upcoming projects–—earns money through a premium subscription service for livestream
access, integrated ads that air during the show, YouTube ads when the show becomes
available there and merchandise. The podcast gets hundreds of thousands of YouTube
views and a new episode of a Rooster Teeth show often sees 1 million or more. Hullum
illustrates a great example of using an MCN to acquire an audience, bringing them to wholly
owned and operated content, and then redistributing that content back onto the same
acquisition 300 platform, creating a cycle of customer movement throughout the
organization. One example of a very successful method of conversion is the website
Twitch.tv. Acquired by Amazon.com in 2014, Twitch.tv is a live-streaming service that
allows gamers to broadcast their gameplay in real time to the audience. YouTubers have
found this to be an extremely easy transition for their existing audiences to make as well as
a method for creating videos with little editing required. Twitch.tv makes money by doing
pre-roll ads, and although its Cost per Thousand–—a measure of the cost of placing an ad–
—is lower than YouTube’s, it supplements this revenue with a $5/ month premium
subscription that gives access to a chat room and high-definition content. YouTubers
focused on gaming are easily able to convert audiences from YouTube to Twitch and vice
versa because the two platforms are very similar (Trefis Team, 2014). 5. Integrating an MCN
with your brand Although a powerful tool, the MCN model does not always guarantee
success or profitability. How can content creators determine whether joining or creating an
MCN will add value to their work, increase their exposure, or generate more revenue? How
can companies that create large amounts of varied content packaged together in one
network determine whether new products will appeal to existing customers? The first step
in utilizing an MCN relationship is to create a sustainable business model, audience, and
array of content before you even begin thinking about creating or joining a network. The
content you produce must be consistent and you need to have a sizeable audience already
established from which to grow. If your channel or podcast isn’t already making it on its
own, joining an MCN is unlikely to fix this problem. This is reflected by the hard fact that
MCNs like to partner with talent that they know can land bigger brand promotion and
advertising deals. Ultimately, MCNs are businesses, too, and must make investments that
they feel confident they can get a sizeable return on. This means constructing your content
and business model in such a way that it engages your viewers (customers) with what they
17. want and initiates their entry into activities that are created by both you and your viewers
(Ritzer & Jurgensen, 2010). These activities are the tangible evidence an MCN needs to see
that you can provide a valuable and interested audience. Keep in mind the exchange that
takes place between an MCN and a content creator. If you are J. Gardner, K. Lehnert
considering a partnership with an MCN, you need to consider many things: • Who is my
audience? What are the demographics? What value do these people see in my content? •
What value can I bring to the MCN so that they will support me with time, money, and effort
in bringing in advertising, brand deals, etc.? • What new audiences does an MCN give me
access to? Do those audiences desire a similar value proposition to what I’m offering? • Can
I use the MCN to help me move my audience to the platform where I make the most money?
The unique nature of the connection between content creators and their audience is one of
new media’s biggest strengths. Using this metric is one way to gauge the effectiveness of
your content and your reach with the audience. Creators need to watch the sales levels and
interest those advertisers and brands that sponsor them. If advertisers see a good ROI–—or
at least increased activity around their brand–—based on the ads and support they give a
channel, you know your content is having an impact on your audience. Advertisers take
notice of such successes and will value your content more highly. For example, video games
developer Dan Pearce said in reference to his game 10 Second Ninja, ‘‘As far as I’ve seen, we
haven’t had a significant spike from written press, but we have seen spikes from YouTube.
Specifically, getting covered. . .gave us a sales spike that roughly mirrored the game being on
sale for a week’’ (Rose, 2014). Another consideration with MCN integration is how
compatible the different audiences in a network are with your content. If the network does
not offer enough potential customers or is extremely lackluster in its efforts to connect
those customers with its members, then where is the value? An MCN is only helpful if it
allows you access to an audience that values your content and allows you to move that
audience past the acquisition stage and onto a more lucrative platform. Venture capitalist
Mark Suster (2013) says that YouTube ‘‘is the world’s best customer acquisition for video
consumers to get them to come to your O&O (owned and operated).’’ Owned and operated
platforms, those that you fully control and keep the bulk of the revenue from, provide a
greater share of advertising revenue and allow for much greater control and brand
development. This is why Monocle’s network of podcasts, short videos, and editorial
content does so well. What’s new about new media? How multi-channel networks work
with content creators ‘‘Monocle deploys a comprehensive blend of online/off-line ‘directly
owned’ and ‘indirect partner’ channels to communicate with and reach its global subscriber
customer segment’’ (Percy, 2011). Tyler Brûlé, the founder of Monocle, uses his podcasting
network and digital content to put a premium on the company’s magazine, forging a
successful strategy in the otherwise declining print industry. Monocle is able to get great
overlap among its readers, listeners, website visitors, and store patrons because it
understands how to move customers from an acquisition-focused platform to a profit-
focused one, and then back again, keeping them within the cycle. For a creator on a new
media platform with a large enough following and engaging content, joining an MCN might
be exactly the stepping stone needed to continue development of its brand. MCNs offer a
number of advantages ranging from production resources, help with legal issues, finding
18. valuable brand deals for their partners, and, perhaps most importantly, pooling audiences
to allow for growth. However, as valuable as they can be, MCNs are not an end to
themselves. The ad rates on YouTube, where most MCNs operate, are notoriously low and
don’t provide enough revenue to sustain a brand that exists on only one platform. In order
to achieve higher revenues, better customer relationships, and a stronger brand, content
creators must view an MCN primarily as an assistant in the audience gathering function of
whatever new media platform they are releasing their work on. Furthermore, creators must
move their audience to owned and operated platforms where they are able to get a higher
price for their ads, sell premium content, solicit donations, and sell merchandise.
Strategically, this is very comparable to a simple purchase funnel model, although there are
a couple of differences (Edwards, 2011). The products and services you could endorse or
sell may not necessarily be created by you, such as in the case of curated shops. You are
relying on your audience’s good experiences with the products of others to increase your
own positive brand associations and loyalty. A secondary function of an MCN should be to
help partners negotiate details such as brand deals and product placements. MCNs do not
always succeed in giving this kind of support to all their partners. Some analysts feel that an
MCN can grow too large and become bloated and slow, efficiently serving only their most
important partners (Gahan, 2015). Because smaller partners don’t attract a large amount of
investment and yet take a similar amount of time to manage, some MCNs are leaving money
on the table and not passing it on to the very people they are supposed to be advocating for.
301 The future of MCNs lies in specialization. The largest MCNs tried to achieve a superior
audience reach and attract large companies for brand deals, but many of the small to mid-
sized partners of these MCNs got lost in the shuffle. Now more focused, more specialized
MCNs have begun cropping up, such as Nerdist and Tastemade, which are ‘‘management
focused, and, most importantly, owning a clearly defined vertical role’’ (Gahan, 2015). While
focusing on the quality and style of content rather than the scale of the network may result
in a smaller network with less audience pooling, it could perhaps be the solution to the
issue of bad service. New media is continuing to grow and advertisers are spending more on
digital distribution platforms than ever before. MCNs attempt to capitalize on this trend by
taking the important middleman position between creators and advertisers. So far these
MCNs have been successful; however, there is a growing pushback from creators who
believe their interests are not being served by the current model. Any business model must
be willing to change or become obsolete. For creators, this means considering their personal
brand and making sure that their content exists on multiple platforms with multiple
revenue sources. And for MCNs, it means ensuring that they maintain the balance between
serving their partners and providing value to advertisers while still making a profit.
Regardless of the direction that MCNs and new media in general take, they are here to stay,
and creating sustainable, profitable business models that serve the interests of all involved
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strategy/ How I Did It… HBR.ORG Kevin Plank is the founder and CEO of Under Armour.
Under Armour’s Founder On Learning to Leverage Celebrity Endorsements Kevin Plank by
Kevin Plank PHOTOGRAPHY: GETTY IMAGES THE IDEA Celebrity endorsements used to be
fairly straightforward: a face in an ad, a logo on the TV screen. But that world is rapidly
changing, and Under Armour’s CEO is nimbly navigating it. I started Under Armour in 1996,
21. when I was 23 years old and just out of college. The idea for the product was pretty simple. I
had played football in high school and college, and I’d hated how the T-shirts I wore under
my shoulder pads became soaked with sweat. It wasn’t just uncomfortable—I really
believed the extra weight hurt an athlete’s performance. I saw the need for a shirt that
would stay dry. I looked at all sorts of fabrics and eventually settled on one that would wick
away moisture and stay light even if the wearer sweat heavily. I asked a tailor to turn the
material into a T-shirt, and I produced a bunch of prototypes. Then I set out to sell them. To
do that, I turned tomy network. I had attended St. John’s College High School, in
Washington, DC, which has a powerhouse football program. At least eight of my high school
teammates went on to play Division I football at places like Syracuse, Wake Forest, and
Virginia, and two of them made it to the NFL. After high school I spent a year at a prep
school called Fork Union Military Academy, which was another factory for athletes. Among
my Fork Union teammates, 23 signed to play Division I football in college, and one of
them—Eddie George—won the Heisman Trophy. Four years after we graduated from Fork
Union, 13 of my former teammates were drafted May 2012 Harvard Business Review 45
How I DID It into the NFL. In college I walked on to the football team at the University of
Maryland, and 20 or 25 of my teammates during my four years there went on to play
professional football. This is a piece of the Under Armour But knowing these guys didn’t
necessarily make navigating the world of celebrity endorsements any less complicated.
What began as an informal word-of-mouth brand-building strategy has evolved into a
multimillion-dollar expense item that requires elaborate negotiations and constant
attention to the return on investment. But it’s also a lot of fun. Managing Freebies Simply
getting my first products into players’ hands was challenging. This was preFacebook, and I
had to work to track down the guys I went to high school or college with. When I did reach
them, I was careful in my approach. A lot of people ask these guys for help, and I didn’t want
to sound like the obnoxious third cousin who tries to borrow $500. So I wouldn’t say, “Do
me a favor and wear this shirt.” Instead I’d say, “I have this neat product and this cool
company I’m working with—you should check it out.” If they sounded interested, I’d say,
“Hey, let me send you a couple of shirts. If you like them, wear one—and give the other one
to the guy with the locker next to yours.” It was a grassroots approach. I tried to emphasize
that if an Under Armour shirt could help these athletes improve their performance just a
little bit, they’d be able to earn even more money. I positioned wearing it as a tool to help
them rather than a favor to me. 46 harvard Business review May 2012 Among Under
Armour’s endorsers (clockwise from right): NFL quarterback Tom Brady, NBA point guard
Brandon Jennings, UEFA midfield Sheran Yeini I thought that once a few players on a team
began wearing the shirts and talking them up, the team would feel obliged to buy them for
everyone, the way it buys other equipment. That was the business model I had in mind, and
in fact, that’s what happened. Our first order came in 1996, from the Georgia State football
team, and soon after that we made big sales to the Atlanta Falcons and the New York Giants.
I was still giving free shirts to individual players in the hope that they’d spread the word,
but I made the money back with sales to teams. Then, in the summer of 1997, the
equipment manager for the Miami Dolphins called. “Hey, Kev,” he said, “a couple of our guys
have your shirts, and we love them. If you do me a favor and send me 150 of them, I’ll make
22. sure every Dolphin—including Dan Marino—is wearing one on Sunday.” I told him I
couldn’t give away that many shirts for the promotional value: It wasn’t in my budget. “Are
you crazy?” he said. “The exposure will be unbelievable.” He was right—the Dolphins game
would be nationally televised, and with the Under Armour logo visible on the neck of every
shirt, our brand would be in front of millions of people. That was a defining moment, one of
those decisions that determine the future of a company. “Look,” I said. “I like you very much,
and I do have the shirts in stock. But I can’t send them to you free—I just can’t. We make a
good product, we charge a fair price, and other teams are paying for them. If I give them
away to you, I’ll need to do it for everybody, and I can’t keep up with that game.” He was
apologetic, but he said he didn’t have the money, and he hung up. I was kicking myself. Had I
done the What began as a word-of-mouth brand-building strategy has evolved into a
multimillion-dollar expense item. But it’s a lot of fun. PhotograPhy: Courtesy of under
armour, getty Images story that most people don’t appreciate. They focus on the innovative
product. But I wasn’t just a guy who created a new kind of athletic wear. I had friends inside
the locker rooms of more than a dozen professional football teams. Although Under Armour
has become a $1 billion brand by selling to consumers, I created it as a product for elite
athletes. And when I was laying plans for the business, my contacts among these NFL
players were a vital part of my strategy. HBr.org right thing? I considered sending the shirts
down anyway, despite what I’d said. That phone conversation took place on a Wednesday,
and the game was on Sunday. On Thursday he called me back. “Okay, I have an idea,” he
said. “We’ll pay for the shirts, but you’ll bill us on a 45-day cycle, which will help me take the
money out of next month’s budget.” We shipped them overnight. When you deal with
products for which endorsements are important, you have to make decisions like that all
the time. When is it worthwhile to give away your product, and when do you stand your
ground and demand a fair price? As Under Armour grew, that calculation became even more
difficult. Star players began asking to be paid to wear our gear. By 1998 Barry Bonds had
become a big advocate of our product. We didn’t know how he was getting the shirts (we
weren’t sending them to him), but he was wearing them all the time, and he really liked
them. Some of our guys asked him if he’d be willing to do a photo shoot for us. “You know, I
love your product—I’d love to,” he said. It was a very big deal for us. We flew a
photographer down to spring training to do the shoot, and I went with him. Barry came
down to the set that morning and said, “I’m not going to do it.” He had his manager with
him. I pleaded with him: “Barry, it will take five minutes—let’s just get a picture of you in
the shirt.” He told me he wanted $5,000 to let us take the photo. At the time, we weren’t
paying any players to wear Under Armour, and I told him that. We came up with a
compromise: We’d give him $5,000 in merchandise and a promise that if we ever began
paying players to wear the brand, we’d pay him whatever we were paying our top-earning
athlete. (In 2001 we gave him $5,000 for his charity as well as $5,000 in merchandise; he
was still our top-earning athlete that year.) He looked at me, grabbed hold of his manager,
and said, “Kevin, if you ever screw with me, I’m going to kill this guy.” Everyone laughed. We
took the photos and put one in our catalog. It was cool. But as time went on, we were
constantly dealing with things like that. Celebrities became even more important to our
business after 2000, when we began selling apparel at retail. “What’s Up with the Stock?”
23. One thing people don’t realize about endorsements is how few athletes are instantly
recognizable—and how effective an endorsement can be from someone who’s relatively
unknown but has the right personality. Many of the early athletes we used only looked
famous—they were big, athletic, strong. Eric Ogbogu was a teammate of mine at Maryland
who played with the Jets, the Bengals, and the Cowboys. He looks like a million bucks. But
out of 800 players in the NFL, there are only about 10 that most people would recognize
with their helmets off—and Eric wasn’t one of Measuring the Payoff By some estimates,
14% to 19% of all U.S. advertisements feature celebrity endorsements, and in 2010 the
athletes Tiger Woods, Phil Mickelson, and LeBron James earned seven times as much from
endorsements as from playing their sports. But do endorsements really drive sales? In a July
2011 paper, Anita Elberse of Harvard Business School and Jeroen Verleun of Barclays
Capital studied the impact of endorsement announcements on stock price and sales—and
how an athlete’s subsequent performance affects returns over time. Their paper, which
examined 178 athlete endorsers and 95 companies, concluded that endorsements pump up
a brand’s sales by $10 million a year, on average, and increase short-term return on equity.
And when an endorser wins an athletic championship, the brand enjoys another sales
bump. “In general,” Elberse and Verleun write, “enlisting the help of celebrity endorsers
pays off.” them. Nonetheless, we put him in an Under Armour ad screaming, “We must
protect this house!” The catchphrase became really well known, and Eric became famous as
the Under Armour guy. The point is that you don’t need to have Tiger Woods in a
commercial for it to be effective. At a certain point in our evolution, it began to make sense
to pay athletes to promote our brand. Once we’d established a big consumer business—and
especially as we’ve expanded into new categories, such as footwear—the value of
endorsements became clear. Consumers know that Under Armour is an authentic brand
that was built on the field. Athletes’ endorsements reinforce that, and they provide us with a
bigger platform to communicate our product stories. We are strategic with our
partnerships—our athletes talk about the benefits of our gear because it helps them
perform. Today our most prominent athlete is Tom Brady, the Patriots quarterback, whom
we signed in November 2010. We’ve never disclosed how much we pay him, but Tom’s deal
is unique in that it includes equity in the company. It’s a great arrangement, because I want
our biggest partners rooting for Under Armour. One day last summer our stock took a
pounding, and I received a text from Tom: “What’s up with the stock? I’m buying more
tonight.” That’s exactly what I want—an athlete who has truly bought into our success.
Sometimes we decide not to spend money on particular athletes, and that can be a hard
decision, too. Recently the endorsement market for players selected in the NBA draft has
been really high. In 2010 John Wall was the number one pick, and another company paid
more than $5 million for an endorsement deal with him. He hadn’t even dribbled a ball in
the NBA yet! The number two pick was Evan Turner, out of Ohio State. We wanted to sign
him. We figured a deal with him was worth $150,000 a year. Another company came in and
paid him more than $2 million a year. To us, that didn’t make sense. Often these deals aren’t
just about the money. You need to find out who is on May 2012 Harvard Business review 47
How I dId It hBR.oRg under armour Facts & Financials Founded: 1996 HeadquaRteRs:
Baltimore employees: 3,900 Revenue and net Income US$ in millionS 725 38 Once we have
24. a top athlete on board, we look to him for more than just endorsements. Ideally, he’ll help us
drive product innovation, too. One of our top athletes is Brandon Jennings, who’s in his third
year in the NBA and plays for the Milwaukee Bucks. When the NBA locked out last summer,
Brandon didn’t feel like going home cult. But when we enter a new category, we work hard
to get it right as quickly as possible. When we launched football shoes, everyone said we
couldn’t compete. But within a few years we had Tom Brady winning the Super Bowl MVP
in our shoes, and 2011 2010 431 40 2008 Sometimes when we enter a new category, we
have to pay more to get athletes to wear our gear. We were signing up baseball players to
wear our cleats before we even made baseball cleats, so it was a leap of faith by them. Deals
like that are more diffi- 856 47 607 2007 to LA, so we offered him an internship. He had an
office at our Baltimore headquarters. He worked out here and ate in the dining hall. His
official title was Curator of Cool. He hung out with our designers. A guy like that helped
them come up with new ideas. 2006 the other side of the table and whom you should be
talking to. There’s the athlete, of course, but sometimes a friend or a handler or the mom or
dad is the key decision maker. You have to build trust and explain your story. These athletes
have everybody in the world coming after them. Your job is to break through the clutter and
the noise and show them why your brand would be a good fit. 1,064 68 revenUe net income
2009 tom Brady’s deal is unique in that it includes equity in the company. It’s a great
arrangement, because I want our biggest partners rooting for Under Armour. 1,473 97 Cam
Newton, the number one NFL draft pick, led Auburn to the 2011 national championship in a
pair. We launched basketball shoes in 2010, and I guarantee that within four or five years
our athletes will be winning championships in them, too. When we started out, the way
compa- “What I lack in experience I make up for in wildly unrealistic self-confidence.” Today
social media give us infinitely more opportunities totell our story. Most of our athletes are
on Twitter, and our marketing department has social media experts. They’re usually 25,
with two years of experience, but they know more about this stuff than anybody else.
Looking at how communication has changed in the past few years, with the emergence of
Facebook and mobile technology, it’s hard to say how the endorsement business is going to
change over the next decade. I do know that we’ll continue to embrace those changes. HBR
Reprint R1205A 48 harvard Business Review may 2012 CARtoon: ChRIs WIldt nies used
endorsements was fairly simple: You put the athlete in an ad or hoped your logo showed
clearly on TV during games. In the past few years that’s changed, too. As athletes continue to
build their own brand identities, they seek endorsements that reflect their lifestyle and
values. A successful endorsement should facilitate a conversation between the brand and
the athlete and between the athlete and the consumer. Harvard Business Review Notice of
Use Restrictions, May 2009 Harvard Business Review and Harvard Business Publishing
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use persistent linking or other means to incorporate the content into learning management
25. systems. Harvard Business Publishing will be pleased to grant permission to make this
content available through such means. For rates and permission, contact
permissions@harvardbusiness.org. MARK5810 MARKETING COMMUNICATION AND
PROMOTION Dr Haydn Northover https://www.youtube.com/watch?v=OLSsswr6z9Y
https://www.youtube.com/watch?v=c9GFpU2B258
https://www.youtube.com/watch?v=1n6hf3adNqk
https://www.youtube.com/watch?v=JJmqCKtJnxM 4 5 Course Aims 1. To provide students
with contemporary knowledge of marketing communication and promotion. 2. To
familiarise students with various components of the marketing communication mix that
firms practice and customers experience. 3. To enhance students’ ability to apply creatively
and critically marketing communication concepts and techniques in developing an
integrated marketing communication plan. Understanding Fundamental Marketing
Communication Decisions 7 Lets start by setting the scene…….. What’s the big deal anyway?
What is advertising and why do we care if it works? What is it???? ✤The lifeblood of the
consumer orientated market ✤Primary means by which to communicate with customers ✤
It exists to help sell stuff ✤Key role in most organisations, often largest marketing $$
invested ✤Seen as necessary for economic growth 9 IMC Overview • Highly competitive
global marketplace • Wide variety of media available • Clear communications needed •
Customers bombarded with communications • Integrated advertising and communications
Lean Cuisine • “Diet” not popular term • New products, new messages • “Frozen, How Fresh
Stays Fresh” • Social media – “Weigh This” • Goal to shed the idea of a “diet” food
Communication Process Sender Encoding Transmission Device Feedback =Noise Decoding
Receiver =Noise Communication noise Talking on the phone during a commercial on
television Driving while listening to the radio Looking at a sexy model in a magazine ad and
ignoring the message and brand Scanning a newspaper for articles to read Talking to a
passenger as the car passes billboards Scrolling past Internet ads without looking at them
Being annoyed by ads on a social media site Ignoring tweets on Twitter because they are
irrelevant Being offended by the message on a flyer for a local business. 1/3 1/3 1/3 Talking
on the phone during a commercial on television 1-14 Looking at actor and ignoring the
message and brand 15 16 17 Integrated Marketing Communications is the coordination and
integration of all marketing communication tools, avenues, and sources within a company
into a seamless program which maximizes the impact on consumers and other end-users at
a minimal cost. The IMC includes all business-tobusiness, channel, customer, external
communications, and internal communications. 1-18 19 Using the same creative in Digital
as for TV doesn’t always work – it’s best when it is both integrated AND customized Return
on investment by platform/combination 167 148 100 Non-integrated Integrated campaigns
with creative not customized to the media platform (e.g. TV and repurposed online video)
Integrated campaigns with creative customized to the media platform (e.g. TV and made for
web online video) Integrated (same) Integrated (custom) Source: ARF Ground Truth How
Advertising Works, March 2016. Data Source: Kantar Millward Brown CrossMedia TV +
Digital CrossMedia studies, 2011-2015. 20 Example of a well integrated and customized
campaign https://www.youtube.com/watch?tim e_continue=120&v=X7eiyYU1_io TV
Commercials Customized State Digital Videos Facebook Videos Political Website Live
26. tweeting during political debates 21 The Marketing Mix All elements communicate to the
consumer PRODUCT – product, package, brand symbolism PRICE – price-quality
perceptions PLACE – dimensions of store imagery, usage PROMOTION – publicity,
advertising All need to work together strategically (i.e.same objectives with price and
advertising) and creatively (i.e. consistent colours across platforms) 22 Advertising Public
Relations The Components of Promotion Digital Marketing Sales Promotions Social Media
Personal Selling Alternative Marketing Direct Response Database Marketing 1-23
Advertising is a huge business!! 24 25 26 SEe AdNews Special Report on website resources
27 28 29 1984 – introduction of a new brand – Apple Idea – saving man from conformity
Cost media space US$1.1m Production US$900k Aired only ever once Ad gained millions in
publicity Claimed a masterpiece Most talked about ad of all time Yet Apple Board of
directors said ‘no way’ 1984, Superbowl ad, by agency Chiat/Day, copy written by Steve
Hayden and direction by Ridley Scott.
http://www.theapplecollection.com/Collection/AppleMovies/mov/1984.mov History at
http://en.wikipedia.org/wiki/1984_(television_commercial) 1984
https://www.youtube.com/watch?v=2zfqw8nhUwA Like a Girl
https://www.youtube.com/watch?v=yIxA3o84syY Doritos
https://www.youtube.com/watch?v=kNxgxF-7SfA The Showdown
https://www.youtube.com/watch?v=1shK-j_u6LI Bud
https://www.youtube.com/watch?v=7p_3lITiK_Q 31 32 PAID OWNED EARNED Display
advertising, Google, Adwords, FB ads, Sponsorship Brand website, microsites, company
blogs, mobile apps, email, podcasts Reviews, mentions, shares, ratings, forums, retweets 35
But lets be careful with our assumptions about how to access to general public. Ad agency
folk are different to the rest Steps of a Marketing Plan Current situational analysis SWOT
analysis Marketing objectives Target market Marketing strategies Marketing tactics
Implementation Evaluation of performance 1-39 FIGURE 1.5 Trends Affecting Marketing
Communications Emphasis on accountability & measurable results Explosion of the digital
arena Integration of media platforms Shift in channel power Increase in global competition
Increase in brand parity Emphasis on customer engagement Accountability and Measurable
Results Economic pressures Want results from marketing budgets Effort led by CEOs, CFOs,
and CMOs Advertising agencies expected to deliver results Emerging social media changes
communication Emerging alternative methods and media Less reliance on mass TV ads
Explosion of Digital Media Emergence of Interactive Web sites, blogs, and social networks
Smartphones, tablets Companies shifting expenditures from traditional to digital media
Social media allows interaction In this connected ‘always on but not always receiving’ world
with fragmentation and more ways and places to engage, brands are faced with both great
opportunities and challenges. 43 Everything changed when digital arrived. Global share of
media spend: TV 45 40 Internet 35 30 Newspaper 25 20 Magazine 15 10 Outdoor 5 0 Radio
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016f 2017f Source: Group M,
‘This Year, Next Year’, December 2016 44 Average Reach – Australia & New Zealand 90%
80% 70% 64% 60% 50% 44% 40% 34% 30% 28% 28% 21% 21% 20% 10% 0% TV Online
Video Cinema Radio Newspaper Magazine Online Display Facebook Outdoor POS %Reach
Based on 127 XM studies, One standard deviation around mean Australia & New Zealand 45
27. Getting noticed and leaving an impression is more challenging than ever before Consumers
cannot keep up with the number of brands vying for their attention Number of unique
brands with monitored ad activity 2008 2015 409,563 533,603 up 30.3% Nearly 8x
divergence Average number of brands per category consumers are aware of 12.8 13.3
Source: Kantar Media and BrandZ up 3.9% 46 And with the growth in media channels it’s
easier than ever for people NOT to engage with advertising People avoid ads using
technology (e.g. ad blockers) as well as skipping and engaging in other activity: 66% skip or
pay 48% use tech 45% don’t watch/ to avoid ads to try this website today do something
else Source: Kantar Millward Brown’s AdReaction 2017 study. Global data. 39 countries. 47
Digital does have unique challenges. There is currently a major online ad receptivity
problem, and it’s even worse among the younger generation. People are less accepting of
digital advertising Positive attitude to advertising format Traditional advertising Digital
advertising 32 30 26 1 -1 -8 GenZ GenX Source: Kantar Millward Brown AdReaction Gen
X,Y,Z study 2017 GenY 48 Limited digital ad receptivity is partly due to different states of
mind when we consume media on different devices Live TV On Demand Computer Tablet
Smartphone Bored & Relaxed Relaxed Goal Oriented Relaxed & Entertained Bored, Relaxed
& Goal Oriented At home At home At work While commuting/traveling; At school/ college/
university In a public building or outdoor; at work; while commuting /traveling With other
people I live with With other people I live with On my own; With people I don’t live with On
my own On my own HOW? (Mindset) WHERE? WHO WITH? Source: Kantar Millward
Brown; AdReaction Video Creative in a Digital World study, 2016 49 Integration of Media
Platforms Consumers integrate platforms 5 hours 16 minutes → non-television screens 4
hours 31 minutes → television Ways consumers integrate media formats Content grazing
Investigative spider-webbing Quantum journey Social spider-webbing 1-50 Pathways
Consumers Use to Interact Across Media Devices 80% 70% 68% 57% Percent of Consumers
60% 50% 46% 39% 40% 30% 20% 10% 0% Content Grazing Investigative SpiderWebbing
Quantum Journey Social Spider-Webbing Source: Based on Mark Walsh, “Microsoft
Highlights Usage Across Device Pathways,” Online Media Daily, March 14, 2013,
www.mediapost.com/publications/article/195786 1-51 Changes in Channel Power
Retailers Control channel Control shelf space Have purchase data Determine products and
brands on shelves Consumers Internet shifts power to consumers Multiple methods of
making purchases 1-52 Increases in Global Competition Information technology and
communication has changed the marketplace. Products can be purchased from multiple
locations. Customers want both low prices and high quality. Manufacturers and retailers
must work together. Increase in Brand Parity Brands viewed as being equivalent
Consumers select from a group of brands Quality and characteristics less important Price
more important Decline in b…
