With the world of online video advertising driving towards $2 billion annually, marketers are exploring new ways to get viewers excited about watching their ads. As more buyers enter the market, they’re finding that running repurposed television spots may be expedient, but it’s not going to facilitate meaningful engagements with online audiences.

One area of significant growth has been in original Web shows that incorporate brands directly into the programming. The benefit from the marketer’s perspective is that the viewer watches the brand message via an integration that hopefully feels organic and can’t be skipped or ignored.

The goal is for the consumer to have a positive brand experience without being able to draw a distinct line between the brand message and the content. Recent examples include the Wrigley’s Orbit campaign starring Jason Bateman, or the Bailey’s Iced Coffee Break Series.

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What this trend actually reveals is the evolution of a very specific economic transaction that takes place millions of times a day between marketers and consumers. Advertisers “pay” for consumer attention by indirectly (or directly) funding content production costs.

In interstitial or pre-roll advertising the transaction is overt and the lines between the fee and the goods are clearly delineated. Consumers simply pay a fee (the time and attention required to watch a 30-second spot) to receive the goods (watching the show).

With branded entertainment, the advertiser is acknowledging the increasing value of consumer attention and is attempting to reduce the upfront “fee.” In fact, well-executed product placement adds value to the content and no longer becomes a “cost” to the consumer at all.

This is all a rational response to the increased leverage consumers have been gaining in these transactions. But simply reducing attention costs is not going to be sufficient over time.

Tools of engagement

The problem with most branded entertainment campaigns is that they still tend to fall into a broadcast mentality. It’s all about producing content in a studio and blasting it out over a network of publishers and driving views.

It’s not about forming relationships with that audience and constructing durable communities of fans that last beyond the confines of a single campaign.

Some brands are beginning to think outside of the broadcast model. They’re using platforms like Facebook, Twitter, and Foursquare to create communities and to engage them in an ongoing dialogue.

Toyota’s recent launch of the new Camry and Corolla highlights how this type of campaign can work. The company’s Facebook page has more than 200,000 fans and an active community of people posting pictures, video, and comments about their experiences with Toyota cars.

This is supported by a fairly large media buy in which selected families have had their experiences highlighted in 1-3 minute clips that have been distributed across YouTube and a network of targeted publishers.

This campaign wasn’t cheap, but they don’t have to point to a study on increased brand to demonstrate return on investment; they now have a growing community of engaged consumers that can be tapped to support future campaigns.

The no-so-lonely case of LonelyGirl15

You can trace the roots of these types of campaigns to the pioneering 2006 Web series LonelyGirl15. The series focused on a teenage girl named Bree who was being pursued by an evil organization called “The Order.” The effort came under justifiable criticism for initially not being transparent about the fact that it was fiction, but it still provides some valuable lessons.

Where Loneygirl broke new ground was in its use of MySpace to create profile pages for fictional characters in the show. These pages blurred the lines between the show and reality and gave the audience the ability to participate in the narrative.

LG15 ultimately used its large audience (110 million views across the 18 months the series ran) to introduce one of the first examples of integrated product placement in a Web video series with the episode Truckstop Reunion, sponsored by Hershey’s Icebreakers Sours Gum.

Time to get social

While this is four years and a billion dollars in US online video ad spend behind us, the things that made LG15 so successful are missing from too many of today’s branded video campaigns.

Agencies marvel over the viral success of Wieden + Kennedy’s Old Spice campaign, but the reality is that the videos didn’t really go viral (i.e. gain attention beyond paid media) until the Old Spice guy started responding to tweets and engaging influencers on the social web.

Getting people to share videos with friends is nice and the way most agencies and brands think about viral success today. But this is still a broadcast mentality: “How can we get free impressions through viewers sharing the videos with each other?” More durable brand equity is built when every dollar spent on production and distribution is also working to build a community of fans by involving your audience in the content creation process.

The faster that buyers in video and social media can work together to create these types of experiences, the faster they can help brands deliver value to consumers instead of simply minimizing the cost of the virtual tax on attention that most ads represent today.

In the future, brand equity will be measured by the strength of the brand’s community. How strong is yours?