When Disney put up $500 million in cash plus an extra $450 million based on performance to buy online video-production company Maker Studios, many people were surprised and a bit confused.
But it looks like a much better deal now. Maker Studios has signed an eight-figure upfront deal with advertising agency Omnicom, according to Ad Age.
Maker Studios runs a wide network of online channels, including a number on YouTube, whose collective audience commands high ad dollars.
A couple of months ago, Omnicom signed a $100 million upfront deal with Instagram after the Facebook-owned photo-sharing app had experimented with ads from a handful of brands, including Michael Kors, Levi’s, and General Electric. The deal came after Instagram introduced support for video, presumably because video still commands the highest engagement and monetization. That makes the Maker Studios deal attractive to both parties.
One important element to today’s deal is that Omnicom’s clients will not only get to place ads on Maker Studios’ channels, but they will also get access to Maker Offers and Maker Labs. Maker Offers is a program through which YouTube stars create videos for brands and upload them to their own YouTube channels. Maker Labs is, more or less, the network’s in-house agency.
“Labs are a new way of creating content with brands involved … . Our version with Omnicom is to shorten the timeframe of relevant content creation,” Maker Studios global sales head Jason Krebs told Ad Age.
This deal is also one of the largest ad deals for a YouTube network ever. Usually, companies like Maker Studios give up about 45 percent of their YouTube ad revenue to YouTube. However, they get to keep the money from product placements and branded content, making deals like this one very attractive.
The report also points out that while Omnicom isn’t getting exclusive rights over Maker Studios, it is the first to ink such a deal. He expects the network to sign similar deals with other advertising and media agencies.