A new breed of social video specialists are stealing business from old school, TV obsessed ad agencies

• A new breed of social video specialists are carving out a niche.
• These startups are stealing business from traditional ad agency giants by mastering the creative aspects of social media, while also helping brands connect to influencers.
• Industry veterans predict that this group could become acquisition targets down the road.

Creative ad agencies have traditionally been focused on big ideas, and making ads that capture those big ideas. Think "Coke is It!," "Just Do It" and "Dilly Dilly."

And while these TV-centric ad giants have focused on these big ideas, they haven't had to think much about: distribution, analytics, social channel management, making thousands of ads for each different social platform, and dealing with talent agencies for high-school aged digital influencers.

But that's exactly the sort of thing marketers need these days. Enter a new breed of scrappy creative upstarts that are treading on classic ad agencies' turf, while threatening to usurp their businesses and relationships.

Indeed, a slew of startups have emerged in recent years that specialize in helping marketers connect with the right digital influencers, and make content - mostly videos - designed to be shared across social media while subtly communicating advertisers messages.

This group, which includes companies like Portal A, Epic Signal, Collab, and Collectively, is tough to categorize. 

• Some of them produce original video entertainment series for brands.
• Most of them make branded content videos designed to travel across social networks. And they've become experts at customizing this content for each platform, whether it's Facebook, Instagram, Snapchat, Twitter.
• Besides just making content for advertisers, they promise help in distributing it, and getting it in front of the right people
• To that end, they're versed in using social analytics.
• Most are deeply connected with digital influencers, and how marketers should and shouldn't work with this type of talent.
• Several are housed in Los Angeles and have Hollywood roots

Regardless of where you put them, these firm are winning business from top marketers like Procter and Gamble, Warner Bros., Mountain Dew and Nike. And that potentially represents a missed opportunity, and maybe even a long term threat, to the classic ad agencies and their parent companies, such as Publicis and IPG.

Agencies are constantly playing catchup to new media trends

Matt Britton is the CEO of the social influencer firm CrowdTap, and was previously the CEO of a social media-focused ad agency MRY. He said he's seen pattern this before.

For instance, in the early 2000s, a bunch of agencies came on the scene, establishing bona fides buying search ads on Google. A few years later, startup firms appeared claiming to be early experts on mobile marketing and social media advertising.

Eventually big ad agencies had to either snatch these companies up, or match their capabilities quickly.

"This is the same pattern," Britton said. Only in this case, "brands are getting more savvy. Agencies are bloated, and that world moves very slowly. So they are going directly to the source for these new capabilities." 

"They are probably all going to get bought up," he said.

Portal A started making web shows

The Los Angeles-based digital production company Portal A has launched original series for platforms like Spotify and Verizon's video app go90. But it is fast becoming a go-to for unique social video work for marketers anchored by influencers.

For example, here's a YouTube video crafted by Portal A featuring digital comic personality King Bach and NBA superstar Steph Curry (taking inspiration from the Salt Bae craze) promoting the water filter brand Brita.

Portal A cofounder Zach Blume said that this kind of work is tough for classic ad agencies to pull off, and has gradually become his company's sweet spot.

"You've had this 50-year precedent of brands working almost exclusively with [a single core agency] on creative work, and the last five years that's been cannibalized," Blume said. "For us, you've got a social strategy on one hand and influencer talent on another. Then throw in production and strategy."

"It's all very specialized, and there's very little relevance and connection between this discipline and making expensive TV ads," he said.

Blume said that Portal A's revenue should net out at $17 million in 2017, up from just over $5 million in 2014. Back then it had 10 employees. It now has a staff of more than 50 in Los Angeles who work directly with dozens of marketers.

Epic Signal focuses on bespoke social ads

Epic Signal founder and CEO Brendan Gahan said his company has found a niche in working directly, and frequently, with a consistent crop of YouTube talent. It even helped Mountain Dew curate its own niche network of digital stars.

"I think we're seeing a backlash against scale and we're the antithesis of that," he said.

"Everything we do is custom. We are social, mobile and digital first. And we're probably not going to do something that maybe a more traditional agency would. We don't fit neatly in."

The company recently put together a live streaming event on Facebook on behalf of Dockers, as well as an extensive series of custom photos and posts on Instagram and Facebook and even a talk show on YouTube for Amazon Fire TV.

Gahan's surprised the big ad agency holding companies haven't moved into the space more aggressively. "It's not that old any more," he said. "It's mind boggling to me. How is something that is over a decade old seen as new or experimental? This is a huge issue for the industry as a whole."

Collab once built its name on Vine

The decade-old Collab started out focused on YouTube, and eventually became a go-to for marketers looking to connect with Vine stars.

The firm calls itself "a digital talent network and entertainment studio helping creators win at life." Thus, compared to other companies in this arena, Collab is a bit more focused on talents' needs, like managing creators' content rights and things like syndication deals. It works with roughly one thousand creators.

Chief strategy officer Eric Jacks said its connections with this group are a key differentiator compared to influencer platforms or "multichannel networks" that claim to represent several hundred thousand influencers. "This whole business really operates on relationships," he said. "A connector with little context has little value. It's a very high touch business."

Collab has landed ad work for top brands like Nike, including a Twitter and Instagram video campaign featuring LeBron James. It's the kind of work most agencies would kill to be a part of.

"It's very hard to be a digital agency and be good at everything in digital," said Jacks.

Collectively helps brands with volume and gamers with rage

The San Francisco-based Collectively Inc. bills itself as a social influencer-focused agency. It boasts of clients ranging from GMC to HP to Pandora, and has been particularly successful with producing images for advertisers like Sephora on Instagram.

But the firm also recently showcased a group of popular gaming influencers smashing their computers, as part of a Gamer Rage confessional series of videos for HP.

Natalie Silverstein, vice president of brand, marketing, & culture, said marketers need to figure out a way to connect with consumers in social feeds, where plain-old ads are easily ignored. And unlike in traditional media, these brands simply need to make lots more ads to constantly feed these digital platforms.

"We're in the middle of a major transformation in the way marketing works," she said. "Marketers need content at scale, and it has to be really high quality. And that's often not the way traditional agencies are set up to work."

"These are relatively new practices in marketing, and that's all we do."