Posted by Chuck Reynolds on November 05, 2016 - 7:18pm

Sponsorships that Used to Work

In the era of Facebook and YouTube, brand building has become a vexing challenge. This is not how things were supposed to turn out. A decade ago most companies were heralding the arrival of a new golden age of branding. They hired creative agencies and armies of technologists to insert brands throughout the digital universe. Viral, buzz, memes, stickiness, and form factor became the lingua franca of branding. But despite all the hoopla, such efforts have had very little payoff.

As a central feature of their digital strategy, companies made huge bets on what is often called branded content. The thinking went like this: Social media would allow your company to leapfrog traditional media and forge relationships directly with customers. If you told them great stories and connected with them in real time, your brand would become a hub for a community of consumers. Businesses have invested billions pursuing this vision. Yet few brands have generated meaningful consumer interest online. In fact, social media seems to have made brands less significant. What has gone wrong?

To solve this puzzle, we need to remember that brands succeed when they break through in culture. And branding is a set of techniques designed to generate cultural relevance. Digital technologies have not only created potent new social networks but also dramatically altered how culture works. Digital crowds now serve as very effective and prolific innovators of culture—a phenomenon I call crowdculture. Crowdculture changes the rules of branding—which techniques work and which do not. If we understand crowdculture, then, we can figure out why branded-content strategies have fallen flat—and what alternative branding methods are empowered by social media.

Why Branded Content and Sponsorships Used to Work

While promoters insist that branded content is a hot new thing, it’s actually a relic of the mass media age that has been repackaged as a digital concept. In the early days of that era, companies borrowed approaches from popular entertainment to make their brands famous, using short-form storytelling, cinematic tricks, songs, and empathetic characters to win over audiences. Classic ads like Alka-Seltzer’s “I Can’t Believe I Ate the Whole Thing,” Frito-Lay’s “Frito Bandito,” and Farrah Fawcett “creaming” Joe Namath with Noxema all snuck into popular culture by amusing audiences.

This early form of branded content worked well because the entertainment media were oligopolies, so a cultural competition was limited. In the United States, three networks produced television programming for 30 weeks or so every year and then went into reruns. Films were distributed only through local movie theaters; similarly, magazine competition was restricted to what fit on the shelves at drugstores. Consumer marketing companies could buy their way to fame by paying to place their brands in this tightly controlled cultural arena.

Brands also infiltrated culture by sponsoring TV shows and events, attaching themselves to successful content. Since fans had limited access to their favorite entertainers, brands could act as intermediaries. For decades, we were accustomed to fast food chains’ sponsoring new blockbuster films, luxury autos’ bringing us golf and tennis competitions, and youth brands’ underwriting bands and festivals.

The rise of new technologies that allowed audiences to opt out of ads—from cable networks to DVRs and then the internet—made it much harder for brands to buy fame. Now they had to compete directly with real entertainment. So companies upped the ante. BMW pioneered the practice of creating short films for the internet. Soon corporations were hiring top film directors (Michael Bay, Spike Jonze, Michel Gondry, Wes Anderson, David Lynch) and pushing for ever-more-spectacular special effects and production values.

These early (pre-social-media) digital efforts led companies to believe that if they delivered Hollywood-level creative at internet speed, they could gather huge engaged audiences around their brands. Thus was born the great push toward branded content. But its champions weren’t counting on new competition. And this time it came not from big media companies but from the crowd.

The Rise of Crowdculture

Historically, cultural innovation flowed from the margins of society—from fringe groups, social movements, and artistic circles that challenged mainstream norms and conventions. Companies and the mass media acted as intermediaries, diffusing these new ideas into the mass market. But social media has changed everything.

Social media binds together communities that once were geographically isolated, greatly increasing the pace and intensity of collaboration. Now that these once-remote communities are densely networked, their cultural influence has become direct and substantial. These new crowd culture come in two flavors: subcultures, which incubate new ideologies and practices, and art worlds, which break new ground in entertainment.

Amplified subcultures.

Today you’ll find a flourishing crowd culture around almost any topic: espresso, the demise of the American Dream, Victorian novels, arts-and-crafts furniture, libertarianism, new urbanism, 3-D printing, anime, bird-watching, homeschooling, barbecue. Back in the day, these subculturalists had to gather physically and had very limited ways to communicate collectively: magazines and, later, primitive Usenet groups and meet-ups.

Social media has expanded and democratized these subcultures. With a few clicks, you can jump into the center of any subculture, and participants’ intensive interactions move seamlessly among the web, physical spaces, and traditional media. Together members are pushing forward new ideas, products, practices, and aesthetics—bypassing mass-culture gatekeepers. With the rise of crowd culture, cultural innovators, and their early adopter markets have become one and the same.

Turbocharged art worlds.

Producing innovative popular entertainment requires a distinctive mode of organization—what sociologists call an art world. In art worlds, artists (musicians, filmmakers, writers, designers, cartoonists, and so on) gather in inspired collaborative competition: They work together, learn from one another, play off ideas, and push one another. The collective efforts of participants in these “scenes” often generate major creative breakthroughs. Before the rise of social media, the mass-culture industries (film, television, print media, fashion) thrived by pilfering and repurposing their innovations.

Crowdculture has turbocharged art worlds, vastly increasing the number of participants and the speed and quality of their interactions. No longer do you need to be part of a local scene; no longer do you need to work for a year to get funding and distribution for your short film. Now millions of nimble cultural entrepreneurs come together online to hone their craft, exchange ideas, fine-tune their content, and compete to produce hits. The net effect is a new mode of rapid cultural prototyping, in which you can get instant data on the market’s reception of ideas, have them critiqued, and then rework them so that the most resonant content quickly surfaces. In the process, new talent emerges and new genres form. Squeezing into every nook and cranny of pop culture, the new content is highly attuned to audiences and produced on the cheap. These art-world crowd culture are the main reason why branded content has failed.

Beyond Branded Content

While companies have put their faith in branded content for the past decade, much brute empirical evidence is now forcing them to reconsider. In YouTube or Instagram rankings of channels by the number of subscribers, corporate brands barely appear. Only three have cracked the YouTube Top 500. Instead, you’ll find entertainers you’ve never heard of, appearing as if from nowhere.

YouTube’s greatest success by far is PewDiePie, a Swede who posts barely edited films with snarky voice-over commentary on the video games he plays. By January 2016 he had racked up nearly 11 billion views, and his YouTube channel had more than 41 million subscribers.

How did this happen? The story begins with the youth subcultures that formed around video games. When they landed on social media, they became a force. The once-oddball video-gaming-as-entertainment subculture of South Korea went global, producing a massive spectator sport, now known as E-Sports, with a fan base approaching 100 million people. (Amazon recently bought the E-Sports network Twitch for $970 million.)

In E-Sports, broadcasters provide a play-by-play narration of video games. PewDiePie and his comrades riffed on this commentary, turning it into a potty-mouthed new form of sophomoric comedy. Other gamers who film themselves, such as VanossGaming (YouTube rank #19, 15.6 million subscribers), elrubiusOMG (#20, 15.6 million), CaptainSparklez (#60, 9 million), and Ali-A (#94, 7.4 million), are also influential members of this tribe. The crowd culture was initially organized by specialized media platforms that disseminated this content and by insider fans who gathered around and critiqued it, hyping some efforts and dissing others. PewDiePie became the star of this digital art world—just as Jean-Michel Basquiat and Patti Smith had done in urban art worlds back in the analog days. The main difference is that the power of crowd culture propelled him to global fame and influence in record time.

Gaming comedy is just one of hundreds of new genres that crowd culture has created. Those genres fill every imaginable entertainment gap in popular culture, from girls’ fashion advice to gross-out indulgent foods to fanboy sports criticism. Brands can’t compete, despite their investments. Compare PewDiePie, who cranks out inexpensive videos in his house, to McDonald’s, one of the world’s biggest spenders on social media. The McDonald’s channel (#9,414) has 204,000 YouTube subscribers. PewDiePie is 200 times as popular, for a minuscule fraction of the cost.

Or consider Red Bull, the most lauded branded-content success story. It has become a new-media hub producing extreme- and alternative-sports content. While Red Bull spends much of its $2 billion annual marketing budget on branded content, its YouTube channel (rank #184, 4.9 million subscribers) is lapped by dozens of crowd culture start-ups with production budgets under $100,000. Indeed, Dude Perfect (#81, 8 million subscribers), the brainchild of five college jocks from Texas who make videos of trick shots and goofy improvised athletic feats, does far better.

Coca-Cola offers another cautionary tale. In 2011 the company announced a new marketing strategy—called Liquid & Linked—with great fanfare. Going all in, it shifted its emphasis from “creative excellence” (the old mass-media approach) to “content excellence” (branded content in social media). Coke’s Jonathan Mildenhall claimed that Coke would continually produce “the world’s most compelling content,” which would capture “a disproportionate share of popular culture,” doubling sales by 2020.

The following year, Coca-Cola launched its first big bet, transforming the static corporate website into a digital magazine, Coca-Cola Journey. It runs stories on virtually every pop culture topic—from sports and food to sustainability and travel. It’s the epitome of a branded content strategy.

 Journey has now been live for over three years, and it barely registers views. It hasn’t cracked the top 10,000 sites in the United States or the top 20,000 worldwide. Likewise, the company’s YouTube channel (ranked #2,749) has only 676,000 subscribers.

It turns out that consumers have little interest in the content that brands churn out. Very few people want it in their feed. Most view it as clutter—as brand spam. When Facebook realized this, it began charging companies to get “sponsored” content into the feeds of people who were supposed to be their fans.

.The problem companies face is structural, not creative. Big companies organize their marketing efforts as the antithesis of art worlds, in what I have termed brand bureaucracies. They excel at coordinating and executing complex marketing programs across multiple markets around the world. But this organizational model leads to mediocrity when it comes to cultural innovation.

Brand Sponsors Are Disintermediated

Entertainment “properties”—performers, athletes, sports teams, films, television programs, and video games—are also hugely popular on social media. Across all the big platforms you’ll find the usual A-list of celebrities dominating. On YouTube musicians, Rihanna, One Direction, Katy Perry, Eminem, Justin Bieber, and Taylor Swift have built massive audiences. On Twitter, you’ll find a similar cast of singers, along with media stars like Ellen DeGeneres, Jimmy Fallon, Oprah, Bill Gates, and the pope. Fans gather around the tweets of sports stars Cristiano Ronaldo, LeBron James, Neymar, and Kaká, and teams such as FC Barcelona and Real Madrid (which are far more popular than the two dominant sports brands, Nike and Adidas). On Instagram, you’ll find more of the same.

These celebrities are all garnering the super engaged community that pundits have long promised social media would deliver. But it’s not available to companies and their branded goods and services. In retrospect, that shouldn’t be surprising: Interacting with a favored entertainer is different from interacting with a brand of rental car or orange juice. What works for Shakira backfires for Crest and Clorox. The idea that consumers could possibly want to talk about Corona or Coors in the same way that they debate the talents of Ronaldo and Messi is silly.

Nike’s approach, launched in the 1970s and perfected in the 1990s, was to tell stories of athletes who overcame societal barriers through sheer willpower. But a decade ago Nike abandoned its competitive-underdog ideology to go all in on branded content, using famous athletes to make entertaining sports films. Under Armour stepped into the void, producing arresting new ads, such as “Protect This House,” that championed the same ideology and took off on social media.

Under Armour also followed Nike in dramatizing how übercompetitiveness, traditionally associated with masculinity, applied equally to women, broadcasting spots that showcased female athletes. The latest effort, “I Will What I Want,” pushed gender boundaries even further, challenging conventions in areas where traditional ideals of femininity still reign.

Ballet star Misty Copeland—who grew up in poverty with a single parent—is an athletic, muscular dancer in a profession that celebrates waifish, reed-thin women. Under Armour made a video about how she rose above adversity (the voice-over is from a rejection letter saying that her body was completely wrong for ballet), showing her dancing in a form-fitting sports bra and pants that reveal her curvier physique.

A Gisele Bündchen film followed the same convention-breaking formula but mashed up incongruous ccrowd cultureto provoke a social media response. The former Victoria’s Secret star is usually portrayed within the glamorous world of runways and celebrity hobnobbing. Under Armour broke the frame by placing her in what was essentially an old Nike ad: a backstage video of Gisele in an intense kickboxing workout. The company announced the partnership ahead of filming. It immediately stirred up the ccrowd culture Sports fans were cynical, Gisele fans were curious, fashionistas were puzzled, and feminists simply loved it. Under Armour’s agency scraped all this commentary from the web and projected quotes from the digital discussion on the walls behind her.

Under Armour succeeded because it innovated with ideology—using female celebrities to provocatively push against gender norms. The company aimed its communiqués directly at the crowdcultures that held those norms, which set off a firestorm of debate.

Chuck Reynolds
Contributor