YouTube's acquisition Tuesday of a Santa Monica start-up that connects advertisers with online video creators gives the streaming video service a new tool to fend off rivals Snapchat and Facebook.
FameBit is a portal where digital video producers with more than 5,000 followers on social media can solicit product placement or promotion deals from sponsors. Companies such as Adidas, Canon and Office Depot have bought in, viewing inclusion inside YouTube videos from personalities with names including StunnerBabe15 and Spreadinsunshine15 as a way to gain exposure among young consumers.
YouTube has informally helped direct companies to video makers whose style may fit well with their advertising plans. But with FameBit in the fold, the Google property will now be able to point its deep roster of advertisers to a self-service option and gain revenue from the deals.
If the direct tie leads to more advertisers using FameBit, as YouTube is betting, it also could mean a significant revenue increase for many more video makers, who often rely on sponsorship for the bulk of their income. Such a boost could go a long away in persuading companies and individuals to post their videos to YouTube instead of Facebook and other apps with exploding viewership but more uncertain moneymaking opportunities.
Video industry experts regard FameBit as the largest of several influencer marketing companies, many of them also located in Los Angeles. The fate of others is unclear, but YouTube said it hopes FameBit's competitors thrive as well.
YouTube grew enamored with FameBit's technology. And with such a deep reliance on YouTube, FameBit saw it best to partner when Google came calling with an acquisition offer, said Mike Jones, chief executive of Science Inc., which funded and incubated the start-up.
The 18-person operation, nearly 3 years old and still based out of Science's offices, will operate independently for the foreseeable future. Terms of the deal were not disclosed.
FameBit co-founders David Kierzkowski and Agnes Kozera said they've enabled more than 25,000 branded videos. The company takes a 10% cut from bids approved by video makers and charges a separate 10% fee to advertisers.
Science also incubated and invested in HelloSociety, a marketing service aimed at Pinterest users that was sold to the New York Times Co. in March.