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Summary

The recent revelation that two prominent YouTubers had been promoting a gambling site without disclosing the fact that they are part owners of the site has rekindled the controversy surrounding sponsored content on YouTube. Such content continues to prove to be notoriously difficult for regulators and platform owners to monitor and control. With video platforms pushing creators and consumers toward live mobile video, this challenge is set to grow in both complexity and scale.

Branded content will be a significant monetization opportunity for live video, but transparency will be vital

The legitimacy and transparency of sponsored videoson YouTube have always been issues, but the scale of the latest controversy – and influence of its creators – has renewed the buzz around these subjects. Tom Cassel (known as "TheSyndicateProject") and Trevor Martin (known as "TmarTn") have subscriber bases of 9.9 million and 3.2 million respectively, and view counts of almost 2 billion and 700 million respectively, on YouTube.

The size of such creators' (primarily young) audiences has naturally attracted the attention of brands and advertisers looking to reach the valuable Generation Z and millennial demographics. In fact, the creators are often termed as "digital influencers" for this very reason. In an attempt to reduce the likelihood of creators – and sponsors – abusing this level of influence, regulators and platform owners have tightened rules surrounding the transparency of sponsored video content. On YouTube, creators are required to clearly disclose the fact that they have been paid to promote a specific product or brand when they upload a video. Similarly, on Facebook, which has only recently allowed official branded content on its platform, publishers must tag their sponsor in the upload process.

Cassel and Martin have been accused of flouting this code of transparency, with both apparently failing to disclose their financial interest in CSGO Lotto, a gaming-focused gambling site that they both promoted through videos they uploaded to their YouTube channels. The fact that prominent influencers were able to post such questionable content undetected for a significant length of time shows how difficult it is to keep track of and challenge creators of infringing videos.

The online video ecosystem is home to a large number of influencers, each with their own dedicated audiences, which vary significantly in scale and often span multiple platforms and networks. While legislation is seemingly clear – and talent agencies (and multichannel and multi-platform networks) lend the space an air of credibility – the branded, influencer-created video sector still seems to be something of a Wild West environment.

The complexity and difficulty of controlling and regulating this environment is only set to increase as video and social platforms – such as YouTube, Facebook, and Twitter – and dedicated platforms such as YouNow and Live.me continue their push into democratized live mobile video.

In Ovum's view, branded and sponsored content will be a key monetization opportunity for live mobile video, not just for creators but also for platform owners. However, with regulators and platform owners already struggling to keep tabs on prerecorded sponsored video, regulating and controlling the practice in a dynamic, live, and democratized environment may prove to be virtually impossible in the long run. In response, platform owners and regulators should start working together on this problem while the market is still at such a nascent stage.

Appendix

Further reading

2016 Trends to Watch: Mobile Video, ME0002-000638 (January 2016)

Building Digital Audiences: Redefining Premium Video for the YouTube Generation, ME0002-000630 (November 2015)

"Building a digital audience: Facebook and Twitter embrace live video," ME0002-000663 (April 2016)

Author

Matthew Bailey, Analyst, Digital Media

matthew.bailey@ovum.com

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