With the BuzzFeed effect in full swing as more and more online publishers mimic the popular viral news site by creating sponsored content for brands, digital agencies find themselves forced to adapt.
Over the past two months, CNN, AOL and Snapchat have joined The New York Times, The Wall Street Journal and other publishers in starting up their own in-house studios. That's got digital shops rethinking their role, even as they fight back by emphasizing their strengths among their clients.
Credited as the first publisher to go all in with native advertising in 2010, BuzzFeed continues to invest aggressively in the space. Its content studio staffs 80 on the creative side, up from 42 in 2013. In June, it hired veteran Pepsi marketer Frank Cooper as its first CMO and creative chief. The aim: to grab as big a chunk as it can of the $4.3 billion that eMarketer projects brands will spend on native ads this year, a 34 percent increase versus last year.
"The cost of entry to compete with somebody has collapsed, so it creates a scenario where everybody can go after the dollar," said Gary Vaynerchuk, CEO of VaynerMedia.
As a result, agencies that once dominated because of their digital expertise now find themselves going head-to-head with publishers that do everything from advising brands on how to spend their ad dollars to designing custom content for them.
"Every marketer is trying to figure out how to adapt to a world which incorporates low-cost, high-turn and high-impact advertising," said Brian Wieser, an analyst at Pivotal Research.
In 2013, VaynerMedia made the first branded Vine videos for General Electric and Trident. A year later, the Times would open T Brand Studio, which since has created 70 campaigns for 60 advertisers. Just last month, it opened a second studio in London. To stay ahead of the game, Vaynerchuk has focused on introducing clients to newer platforms like Snapchat and Wattpad, explaining, "Whoever is best at creating content that's contextual to that platform is going to get the business."
When Ben & Jerry's sought to promote a new line of ice cream this summer, it signed a deal with the satirical news site The Onion to make a funny YouTube video parodying a pharmaceutical ad. The brand's lead agency, Mekanism, did not get a cut of the deal and was not involved in conceptualizing the spot, but the agency was on set and signed off on the final creative, maintaining some control over the brand's messaging.
"That's the future model—using AORs to do a brand story and then overseeing [creative] when a content studio is involved," said Jason Harris, Mekanism's CEO.
Even as publishers continue to tread on agency turf, Laundry Service CEO Jason Stein questioned whether they can pull off the long-term strategy and planning in which agencies specialize.
"At least right now, BuzzFeed's not being put on retainer to do strategy, ongoing content, copywriting and media buying," he pointed out. "They're just making content that's in the voice of BuzzFeed, whereas the agency is doing stuff that's in the tone of the brand."
Big Spaceship founder and CEO Michael Lebowitz contended that publishers will not replace agencies because of editorial considerations.
"If BuzzFeed decided that they wanted to start taking on agency-of-record relationships, it would violate church and state," he explained. "These content studios aren't looking for client partners in an ongoing way."
Meanwhile, some agencies are flipping the script and establishing their own media businesses.
GreenLight Media & Marketing, for example, created a YouTube channel for music fans called Country Now. Each week, its team publishes video content featuring such artists as Hunter Hayes and Annie Bosko.
Said Dominic Sandifer, GreenLight's co-founder and president: "We see Fullscreen, Maker Studios and BuzzFeed coming into our world and forming their own in-house agencies. We're looking out there [thinking], 'We can be competitive, too.'"
This story first appeared in the Aug. 17 issue of Adweek magazine. Click here to subscribe.