Some ad buyers are starting to wonder whether working with multichannel networks—the high-flying collectives of Web video talent known in the industry as “MCNs”--is worth all the trouble.  In the last five years, MCNs such as Maker Studios, Fullscreen, Stylehaul and many others became buzzy media upstarts ostensibly for their ability to help advertisers connect with digital creators and influencers—and their young, TV-avoiding fans. They started out selling ads across YouTube channels centered on themes like gaming but evolved into part talent agencies and part production firms for YouTube stars, eventually branching out to platforms beyond the Google-owned video site.  These middlemen brokering deals between brands and social influencers also attracted major investments along the way; for instance, Walt Disney Co.’s $500 million cash purchase of Maker in 2014 that also came with hefty payouts if Maker hits performance targets.  But now, as major MCNs like Whistle Sports and Studio71 make their pitches to advertisers this week and next during the annual “NewFronts,” the question is whether ad buyers are still as receptive to their messages.  “I think there is a little bit of a hangover going into the NewFronts this year,” said Donald Williams, chief digital officer at the media buying firm Horizon Media. “Brands are saying, ‘Let’s make sure we are maximizing our spending and reaching new people.’”  Some advertisers who have worked with MCNs on custom ad efforts involving digital stars over the past few years say that these campaigns have required much more time and energy than buying pre-roll video ads programmatically or working with an individual influencer. And the payoff of the extra calls, approvals and costs of working with multiple influencers and their MCNs is unclear, they say.  “The reason MCNs were interesting is that they allowed for a more authentic voice for marketers [in the YouTube influencer ecosystem],” Mr. Williams said. “Now there are more and more ways to do that. Their role is more narrow.”  As more marketers gain experience working with digital influencers, some are opting to work with this talent directly. And brands that want to pay a group of influencers to mention their product in videos have the option of connecting via Web-based marketplaces like Reelio and FameBit that allow advertisers to sift through hundreds of influencers to find their desired audience. It used to be that MCNs were the only practical way to coordinate a campaign with multiple influencers; networks like Maker, for instance, have access to more than 60,000 globally.  And in an industry that is increasingly gravitating toward more software and data-driven ad targeting, “if MCN’s are looking to grow revenue from direct deals, they might have a tough time,” said Charlie Fiordalis, chief digital officer at Media Storm. “Direct deals involving content creation can require a significant investment in resources while a programmatic content alignment strategy can generate similar results with less risk.”  But many MCN sales executives say that they are seeing strong ad revenue growth and aren’t feeling the impact from programmatic or other channels.  “Can you do a [programmatic] buy? Yes. Can you call an individual influencer? Yes. But we bring it all together. So much packaging that goes into what we do,” said Jason Krebs, Maker’s head of sales. “We have a very vibrant business.”  At the same time, it’s worth noting that Maker rolled out 15 Web shows during a splashy NewFront presentation last year—several of which have yet to be distributed. And one of the more noteworthy projects, a “late-night talk show” featuring YouTube star Taryn Southern, has drawn less than 100,000 views for most episodes on YouTube (though it is also on Maker.tv). This year, Maker’s NewFront was closed to the press.  There’s no doubt that some ad buyers see the value in working with MCNs, but having a group of often young YouTube influencers create original videos on behalf of a marketer is not easy by nature.  “For some brands it makes a lot of sense, but it is not turnkey in any way,” said Adam Kasper, chief media officer at Havas Media North America. Not only is working with YouTube stars potentially labor intensive, said Mr. Kasper, but he—like some other buyers—isn’t completely sold on how valuable it is for advertisers to align their messages with influencers. “My question is, if you are running advertising on YouTube, are you really benefiting from the influencer or is it just an ad when someone is paying attention?”  It’s true that advertisers have more and more options for quickly buying scale for their messages without having to take the time to coordinate a product integration with influencers via an MCN. Brands can go directly to YouTube, which sells access to its top channels via its Google Preferred program—and in fact highlighted its ability to connect advertisers with top creators during its BrandCast event on Thursday night.  Or, as Mr. Fiordalis noted, another way to reach people on YouTube is through buying platforms like OpenSlate and Pixability, which enable ad buyers to purchase ads on specific YouTube channels without the help of MCNs.  And, of course, Facebook and Snapchat are only getting bigger video audiences and becoming more attractive to brands.  There’s a lot of money at stake, with the ad market for Web video expected to surge by 29% to nearly $10 billion in 2016 in the U.S., estimates eMarketer.  Pete Stein, Fullscreen’s general manager and head of its brand group, acknowledged that the market is getting more competitive and that some brands prefer to bypass MCNs to work directly with influencers. But he said his business isn’t suffering, with the company’s ad revenue jumping 100% during its first quarter.  “Our value is our access to data on our influencers, and we know our talent extremely well,” he said. “The programs we are doing with advertisers are bigger and the volume of interest is up. I don’t think the space is in trouble. “  Steve Carbone, managing director and head of digital and analytics at the media buying agency MediaCom, said that many marketers have come to understand the value of custom content and the power of social influencers. That puts MCNs in the conversation when advertisers are deciding where to spend budgets.  “With that said, their inclusion in a plan is dependent upon a client’s [objectives,]” he said. “If a client’s core need is reach, for example, that brand may be better served by the inventory available via YouTube.”
Over the past few years, multichannel networks, or “MCNs,” have emerged as a popular way for marketers to connect with Web video audiences. But now ad buyers say there are more direct—and less labor intensive—ways to reach these viewers.