The youth-focused media company AwesomenessTV is staffing up to steal more business from ad agencies

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The youth-focused digital video network AwesomenessTV is building up its in-house division that makes video series for marketers.
The company says it has recently been winning business in head-to-head pitches with creative ad agencies.
It's the latest example of pressure on traditional advertising business models.

Traditional advertising models seem to be under pressure from every corner.

The latest emerging threat: digital entertainment companies saying they know how to make ads better than agencies do.

And these ads aren't even ads in the traditional sense.

AwesomenessTV — perhaps best known for producing web video programming aimed at teens and tweens for YouTube, Snap and other outlets — is ramping up its in-house unit that makes content on behalf of brands.

Harley Block, the company's executive vice president of brand partnerships, said that the division's revenue jumped 50% last year and that it planned to add 15 to 20 people this year.

The web video firm — majority-owned by Comcast, with Verizon and Hearst holding significant stakes — recently nabbed the former NBCUniversal executive Trisha Engelman to bolster the team as its vice president of marketing solutions.

"What's really interesting is that as the creative-agency space is getting tough and you're seeing layoffs on a weekly basis, we're doing this," Block said.

Block was referring to recent cutbacks at agencies including Droga5, BBDO, and Arnold. Meanwhile, many other digital publishers that produce branded content for marketers, such as Refinery29 and BuzzFeed, have also cut back on staff.

"The competition in this space is crazy," Block told Business Insider. "What's fueled our growth is that the marketplace is finally paying attention to Gen Z."

And Gen Z, the thinking goes, requires a different, less overtly commercial approach. For example, a few weeks ago, AwesomenessTV introduced a show produced for the braces brand Invisalign called "Speak Up: A Made to Move Series."

The series features social-media influencers with large followings — such as Lauren Elizabeth, who has nearly 1.3 million followers on YouTube, and Baby Ariel, who has over 20 million fans on Music.ly — discussing social issues like dealing with anxiety and bullying.

It's clear the videos are sponsored by Invisalign, but the actual advertising messaging is fairly restrained.

AwesomenessTV has produced similar original series for Hollister and Victoria Secret's Pink brand.

Block likens what AwesomenessTV is doing to Laundry Service, the social and digital ad agency that a few years ago spawned a separate content business called Cycle that specializes in video for social platforms.

He says that among the reasons AwesomenessTV is able to beat out old-school agencies for these kinds of deals is that it has legitimacy as both a programmer and a distributor.

In other words, it knows how to make shows that a young audience likes, such as a scripted series about teens on a cruise ship for Royal Caribbean, and how to get the shows in front of them where they hang out, which is less and less in front of a living-room TV.

"We're a digital TV network," Block said, adding that AwesomenessTV produces 21 original shows a week and 400 hours of video a year. "We have a relationship with this audience, because that's where we were born."

Of course, creative ad agencies will surely argue that they can better help marketers with a more comprehensive strategy — including social media posts, mobile ad targeting, even TV ads — instead of one-off video projects.

But as more brands look to shake up their ad-agency rosters and explore shorter-term partnerships, these kinds of pitched battles between agencies and media companies could become increasingly common.

"It's definitely a threat — and may be the future of how marketers spend," said Ian Schafer, a digital ad veteran who was most recently chairman of the agency Deep Focus. "There are utopian and dystopian elements of that though. But the more transactionally clients behave, the more often this will happen."

Schafer added: "The question is how sustainable it will be once it gets more competitive."

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