Tuesday, October 28, 2008

Conversation with Paul Kontonis, CEO of For Your Imagination on The Power of Branded Entertainment and OmniReliant Holdings' Equity Stake

I recently spoke with Paul Kontonis CEO and Co-Founder of the New York-based online media studio For Your Imagination about the funding they secured from OmniReliant Holdings, Inc. in a bridge capital round two weeks ago. The amount of the funding was undisclosed but it gives OmniReliant an equity stake in FYI and helps fund ongoing operations. In the FYI press release Paul W. Morrison, CEO of OmniReliant said, "For Your Imagination has shown the way for online branded entertainment that not only entertains and engages an audience but also delivers a powerful marketing message. We recognize that brands can use the internet for more than just advertising with publishers – brands can now become the publisher and truly engage their customers and For Your Imagination knows how to do it successfully."

FYI produces The Green House, DadLabs, Break a Leg and many other web shows. Last month Paul spoke on my panel session at Streaming Media West on Updating and Syndicating Your Channels for New Media Distribution and he will be at Digital Hollywood on October 28th.

Larry Kless: How about your big announcement with OmniReliant? Had you been working with them for a while? How did the initial relationship get started?

Paul Kontonis: It was a long time coming but it felt very good to say we came in to a little bit of money. We met OmniReliant through a potential client that we were pitching at the time. Somebody who was on their Board knew the guys at OmniReliant really well and made an introduction and then we took it from there.

We worked with them on a web series together called, A Day with the Hiltons, one of the products that they license and they own is a fragrance called "My Secret" which is Kathy Hilton's fragrance. They had come to us and said, "Hey look we're going to be doing this PR event with a mother and daughter who won this competition in Cleveland to come over to LA to celebrate Mother's Day with Kathy Paris and Nicky Hilton. What would you guys do with that?"

This was a month before Mothers' Day and we developed the concept of A Day With the Hiltons and we went out to LA and shot the while day and released it as a 5-part mini-series. It involved meeting the contestants and meeting Kathy Hilton and going to brunch and getting their hair and nails done at a beautiful salon in Beverly Hills and going shopping on Rodeo drive, and probably the most exciting part about it is the shopping on Rodeo Drive in which the paparazzi are just absolutely insane, and they're like vampires outside a church because you can't go on private property so that when they would duck into a store they would all stay out front and try to shoot through the windows but the minute they went outside they got inundated.

The goal of the web series was to move product. It was to create awareness for Kathy Hilton's fragrance that was being sold at Macy's and they saw a really nice increase in sales, I don't remember exactly how much, but it went up enough that they said WOW, here's a great company that could some really wonderful stuff for us and this idea of branded entertainment is really powerful. So they made the commitment to invest into us.

The series was actually on the TMZ blog, they blogged about it, there was something going on Rodeo Drive with Kathy and her daughters and it showed up in People magazine and not Entertainment tonight, but one of those other kind of celebrity shows, plus we did a distribution deal with TV Guide broadband so it showed up on TV Guide celebrity show and across the TV Guide network.

LK: So what does it mean that OmniReliant gets an equity interested in FYI? Do they have a financial stake now in the company?

PK: Yes, they own a percentage of the equity of the company, like owning shares. So it's not convertible debt. The structure of the investment was not debt it was equity.

LK: What is your goal with this funding? Do you have immediate investment plans?

PK: It's actually the non-sexy working capital answer. Every other month we're in and out of profitability so we wanted to make sure that we had enough money in the bank to insure smooth functioning of the company and also support to new hires.

We just brought on a new VP of Brand and Sponsored Entertainment and we're about to bring on a new distribution person.

(Editors note: See related post, Branded and Sponsored Programming Hits the Big Time - For Your Imagination - For Your Imagination - develops and markets high-quality original web video "As online video programming continues to develop and the pathways to monetization become more evident, branded and sponsored videos are taking center stage. For this reason, For Your Imagination is proud to announce that Kathryn Velvel Jones has joined the team as the Vice President of Branded and Sponsored Entertainment Kathryn will be responsible for matching brands with For Your Imagination's strong line-up of targeted and advertiser friendly content and for developing original branded entertainment that meets messaging and reach needs..." (more)

LK: What do you say to the fact that you've been able to secure funding in the current financial crisis?

PK: Well I think the securing funding thing is kind of significant given the environment but kind of not significant since we started way before the financial problems hit the markets. So it really only needed to close which it did before all the financial hits. I don't know if things would have gone different if it took longer but I'd like to think it wouldn't. A lot of things are still business as usual and there's a lot of business conducted and to be conducted . Everyones knee jerk reaction is "Oh my God things are gong to be terrible now", but it's not really the case. We're seeing some clients pulling budgets and holding off until 2009 but we're also seeing a lot of things moving forward that were already pre-planned. Maybe people are a little more gun shy with the off-the-cuff expenditures but for the planned expenditures for the most part they're still going to move forward.

It helps to have a business plan.

LK: So what's new and sexy with FYI?

PK: I think there's a significance here with Omni getting more involved in a company like ours because they are a direct response company. They are looking at how do you move product off the shelves directly to consumers. They're not a company that sells to stores. So rather directly online or directly over the phone that's what they do. So they're seeing a big opportunity with online video as a mechanism for direct response. Now we've heard a lot about it being a great brand medium and to create brand awareness and that's all great but we haven't heard many case studies about it really coming into play in the direct response arena. So I think this is going to be interesting.

A couple of things are going to cross paths now:
A) Direct response
B) Infomercials and
C) The idea of branded entertainment

So that is more brand building all with the intent of driving sales. They (OmniReliant) have legends in their company of the Harrington Brothers and the Harringtons are probably the biggest names in the infomercial space. If there was a major infomercial series or an infomercial that you remember, Billy Mays, Anthony Sullivan, all those guys were part of the Harringtons. So the Harringtons are part of OmniReliant and are driving OmniReliant's business so for them to look at, they've been innovators in the infomercial space, for them to specifically look at a company like ours and say WOW, this is where we need to start going in and start investing in that space, I think is very interesting. There's no proof points for it yet but everyone recognizes that there could be an incredible opportunity for video to be a direct response vehicle just like everyone thought banner ads, direct emails and online campaigns could be.

LK: How long do you think it will be before you see some results? For that "Wow" to hit?

PK: I don't know. We did one series so far and it seemed to be pretty good. We're probably going to begin production on a new series or at least a couple of videos for one of their products and we'll see how that goes. I think it will be interesting to see it evolve especially when there's a downturn in the economy everyone wants to invest in direct response type of vehicle so if web video can be also seen as a direct response tactic then that is really going to insure that it retains a lot of the money in this downturn.

LK: How will these OmniReliant video be different from your current FYI web series?

PK: We're looking at these from the idea of brand entertainment which is original. So it would be something specifically created for them vs. sponsored entertainment where a brand comes in and says, "I love your network DadLabs I'm going to sponsor it and get my brand out through that." This idea is make us something completely brand new like we did with the Hiltons and then what we bring to the table that a production company can't, because were not a production company is the idea of distribution and insuring that people actually see the videos.

So when we did the Hiltons deal we knew we had a goal of at least 2 million views on those videos and we got about 4 million on them in the end. Whatever series we do next we're going to have goals on the viewership of those videos as well. So part of what we contribute to it is, yeah we can develop an idea, we can write it, we can shoot it we can make it look beautiful but then we can insure that it gets out and is seen by however many people or it gets as many views as we think will meet the needs of the campaign. So we're talking millions of views which is usually the goal so that's an important piece there. Anyone can make a really nice video but not everybody can make sure that it's viewed.

LK: That must make you feel pretty good?
PK: Sure! (laughs)

LK: With the Hiltons campaign, where did all those views take place? On their own web site? Various distribution networks?

PK: Mostly it happened on the distribution networks. There was also views on her web site Kathy Hilton Fragrance. On ForYourImagination.com there is a button that will take you to the series on her web site.

LK: What else is happening with FYI? Through the end of the year? Plans ahead?

PK: The next phase for us is trying to close a Series A round of investment so we can really expand the type of product that we put there but also our sales and marketing efforts. Specifically our sales efforts, that's going to be really critical because with the ability to ensure that we have inventory to sell. It's just a function of our sales. What I mean by that is if we can sell up to 20 million views on DadLabs a month then it's just a function of our sales on how much money we make. If we sell all 20 million great, if we only sell a million okay, if we only sell 100,000 that sucks. So we really need to be able to expand our sales capabilities to make sure we've got dedicated sales people per network or per channel of content that we're putting out there to close the bigger and better deals.

LK: What are your key metrics? What are you looking at each month?

PK: Because of our ability to leverage our distribution and to ramp up our views when we need to it's almost more interesting to say what is our capacity for viewership, that's how we measure it. So we know that for our comedy side of things our network Axis of Comedy our capacity is 60 million views in a month, on DadLabs we're looking at 15 millions view a month and on our Green network GreenHouse our capacity is 20 million views so we're looking at really big opportunities in each of our networks that is just a function of sales on how much money we make from them. So that's how we look at it, what is our capacity? and these are guaranteed views so if somebody came along and said,"I want to sponsor Axis of Comedy and in the month I want get 60 million views" we can deliver 60 million views.

LK: Do you take any time off?

PK: Between Christmas and New Years. That's the only time we're off. But if we're putting out content, content doesn't take a day off. So if it's a holiday on a Monday we still have to put content out and that means working over the weekend to make sure it's distributed and it hits. Our people work all the time.

About For Your Imagination:
New York City based For Your Imagination develops and markets high-quality Internet television and web video series, turning concept into reality for brands and content creators. The company works with creative individuals to develop their show, offering them the opportunity to reach a targeted, advertiser-friendly audience effectively and monetizing quickly. For Your Imagination is built upon the experience of industry veterans whose combined expertise includes web development, major television and movie production, national marketing campaigns and technology. Video networks and shows available now include DadLabs, The Green House, Axis of Comedy and more -- see for yourself, visit www.foryourimagination.com.

About Paul Kontonis:
Paul is the Chief Executive and a co-founder of For Your Imagination. As an interactive media veteran, Paul has been a new media pioneer and has developed interactive content practices which reach out and engage an audience. He appears in a number of marketing publications, digital media books including the Documentary Filmmakers Handbook, and is a speaker at several industry conferences and seminars annually. Read Paul's full profile here and his Linkedin profile here.