The Creator Ad Universe Needs a Cash Infusion to Truly Soar - and Brand $ May Not Be Enough

Former CAA exec David Freeman on the PE and Big Media opportunity

We (I) keep on talking about the need for standardization and technology to help brands maximize the opportunity to market via - or hand-in-hand - with creators. If creator/brand integrations were only easier to buy/track/measure, this category would be off to the races.

Maybe it’s simpler than that. Maybe these guys just need loads of cash.

That is one of the theories/predictions offered by David Freeman on this week’s episode of Next in Media.

Freeman was until a few weeks ago head of digital media at CAA Creators — he’s one of the true OGs in the digital talent arena. He recently went out on his own to launch Kynetic Media Ventures, which aspires to help top YouTubers, athletes, ‘traditional’ celebrities and more intersect with both Hollywood and the investment world.

He pointed to several top creators such as Rhett and Link, Dhar Mann and Dude Perfect bringing on outside executives while also trying to built out brands and companies that endure beyond any one individual’s talents or output.

Freeman believes there will be more - which will ultimately be necessary to further legitimize the space, and concentrate power and audiences for marketers.

A lot of creators today “make really great livings off brand partnerships, AdSense, monetization, distribution,” Freeman said. “But for the real serious ones, I think they’re sitting back saying, how long can I do this? How long can I be in front of the camera? And I will tell you that private equity and the money that’s sitting on the sidelines has a real concern about [that] risk.”

Thus “creators now know they have to create IP. They have to create IP or they have to create brands that are bigger than the individual.”

While Freeman isn’t ready to provide much detail on the plans for his new venture, from the sound of it, he’s looking to help orchestrate some investment in the space - either to help ascending creators professionalize, or to steer big media companies (back) into this space.

To date, as Freeman noted, there haven’t been many mega creator funding rounds, aside from Highmount Capital pumping $100 million into Dude Perfect. He implied that some PE firms are watching the space closely.

“I think there’s a little bit of an arbitrage moment now,” he said. “I think that there’s a lot of talent and creators, celebrities, athletes, IP holders who have this fandom that’s out there, but there’s not a lot of infrastructure around it. And I think the real thesis for Kinetic… is how do you turn that fandom into real enterprise value?”

“I do think capital is going to be needed to build some of these things and take… a media company to the next level.”

As perhaps a side benefit, the more mini creator media companies that emerge, the easier it will be for brands to deploy bigger creator budgets.

Freeman has been active in this pursuit in recent years, as part of the IAB’s Creator Economy committee, which has explored whether the industry needs a common metric or currency built around engagement.

“Every consumer facing company has to be on YouTube,”he said. “But there’s art there and there’s science there. There are people who really understand how to move audiences and use optimization. You’ve got to invest….and it’s got to be over time. And it’s not like legacy media where, ‘hey, let’s go have a hit. Let’s fund some stuff and have a hit.’ [Today you are] trying to build a trust and a programming behavior with an audience. That is a different mentality completely.”

“The smart CMOs are also bringing creators in from the beginning because [of this need].”

Besides potential PE cash, or investment from venture capital, how else might this happen?

“You’ll start to see some real operators come into these businesses. You have to if you want to have an exit you have to be willing to give up some of that equity inside your company and you have to be willing to build teams.”

Freeman pointed to the sports YouTube Jesser, who recently tapped industry veteran Zach Miller to become president of his company Bucketsquad.

“Miller is someone who can really bring efficiency to the production, who can think about applying a real flywheel,” said Freeman. “They’ve got a merch business, and they’re thinking about podcasts, and they’re thinking about live events, and really building real IP and real assets. So you will see more [moves like that].”

So are lots of ‘big exits’ coming? ”We haven’t seen a tremendous amount of that yet. I still think we’re in the building phase. I still think those creators who might be making seven to twelve million dollars, which is a lot of money in a given year, are sitting back saying, ‘wait a second, I’ve got to build and figure out how to get to that exit moment or even in a position where I can have a discussion with a media company or private equity company to exit.”

The natural question is, will we see big media companies get aggressive again, despite the bad memories of the MCN shopping spree a decade or so ago.

“Disney’s got to do it,” said Freeman. “Paramount’s got to do it. You we talked about Amazon, Apple, Apple as well. But then you have Fox who started a creator studio. I think that that that some of these folks know different than the way cable got bought and consolidated and flipped 10 different times? It’s going to happen here.”

“Do I think that you’re gonna see channels being aggregated? Yes, there’s gonna be a little bit of that old cable inside of YouTube of aggregating like-minded channels. I think there’s gonna be a rebirth of networks.”

“One of my dreams at CAA, and they’ll do it because there’s an amazing team that’s still there. Why shouldn’t CAA have an upfront?”

Or maybe a Kynetic upfront?

Check out the full episode here to get Freeman’s take on Netflix’s vs. YouTube, Amazon’s stealth creator moves, and how Dick’s Sporting Goods may have shaken up the streaming wars.