Entrepreneur Insight

Channel Factory: Taking on the New Age of Advertising

Channel Factory CEO and founder Tony Chen talks about the importance of conscious advertising and being an AAPI entrepreneur.

It initially started with one goal: to get famous. As a classical piano major at Rice University, Tony Chen wanted to leverage YouTube as a platform to showcase his musical talents—the question was, how to get the views?

He dabbled around with buying YouTube ads before deciding to start his business, which initially started as making jingles for other people.

“Basically, no one ever bought one of these jingles,” Chen laughs. “But part of the package was I would guarantee views to these jingles, and people were like, ‘Hey, we don't like your jingles, but we'd like to get some views on our YouTube videos, let's just purchase that for me.’ So that was essentially the start of the business.” Thus, Channel Factory (then known as YTM) was born.

Adapting to a changing advertising landscape

Channel Factory, an East West Bank client, found success early on. Chen was able to drop out of college at age 21 to pursue his business full-time, which now has companies like Apple and MasterCard as its clients. However, the true difficulty lay in responding to people’s real-time needs.

“The challenge is just basically always refining [and] being nimble enough to figure out what people are actually looking for,” Chen says. And where Chen saw the opportunity was in helping advertisers navigate the increasingly crowded social media space, where over 58% of the world’s population are active users.

When companies first started advertising in the digital sphere, particularly on video platforms like YouTube, it was purely a numbers game. “It was so new…people are like, ‘I want to get a million views, I want to get a billion views,’” Chen shares. “Then in 2013-2014, programmatic advertising, [which] basically enables what’s called audience targeting, became extremely popular—and that basically got people to stop caring where they advertised for a couple of years.”

Then ads for big brands like McDonald’s and Honda started popping up on content related to terrorism and white supremacy. Although digital automation got many more eyes on these companies’ advertisements, it didn’t filter where those ads showed up.

What businesses should focus on—and where Channel Factory can help—is conscious advertising. According to a survey conducted by Channel Factory, 69% of consumers would prefer to buy from socially conscious brands, and 68% of consumers also want brands that are committed to making online spaces safer and more inclusive. As a result, brand suitability, contextual targeting and brand safety are now at the forefront of conversations.

The three tenets of conscious advertising

“Consumers are driving and dictating both media outlets and brands to be much more socially responsible,” Chen states. “Consumers now have a much bigger voice as to what they want to see media outlets and advertisers do.”

There are three aspects of conscious advertising that helps address these concerns:

1. Brand association: This ties back to brand suitability, where you need to make sure your content partnerships and where your company advertises suits your brand, says Chen.
2. Inclusiveness and diversity: With racial inequality at the center of social conversations, companies need to be conscious of working with minority content creators and/or minority-owned businesses.
3. Value-driven content: Instead of aligning with content that may have a negative impact, Chen says that it’s important for companies to find creators making value-driven content that actually teaches consumers something.

To help companies evolve their content ecosystems to incorporate these three aspects of conscious advertising, Channel Factory launched The Conscious Project to help the advertising industry become more inclusive.

Chen’s goal is to get businesses to not only be more inclusive of both ages and minority groups, but to make the online sphere a more positive space by highlighting value-driven content. “We're really creating this positivity pillar to help educate advertisers,” he explains.

Channel Factory also wants the use The Conscious Project to educate advertisers about the digital space and social media. “We [want to help] advertisers change how they think about advertising online,” says Chen. “Because most people have a blocklist [where] they essentially just eliminate any content associated with certain keywords—and quite a bit of those keyword lists are very broad, so we're helping educate clients [that] this is how you can be much more inclusive, as well.”

Building a business as an Asian American entrepreneur

Chen certainly had to overcome some challenges as a young Asian American entrepreneur. He moved to the United States when he was 9 years old and built Channel Factory while still in college, with few connections in the advertising space.

Channel Factory team bonding event

“Just being an immigrant, building a business 10 years ago in the advertising world which is really relationship driven, was hard,” he admits. “I didn't really know anyone, didn't have too much family here, so building the relationships was definitely a challenge to begin with.” Luckily, Chen was able to find the right mentors who helped him along the entrepreneurial path and connected him with the right people.

That being said, Chen hasn’t forgotten his roots. Although he’s lived in the U.S. for over two decades, his heritage plays an important role in his life and business.

“I think our culture is pretty awesome, especially around family-driven values and an empathy to help others,” says Chen. “I think that's a lot of how the AAPI community and families foster their kids. That’s something I think I'm most proud of, and we've been able to bring that into our business, as well—we treat our staff like they’re family, and we really care for the people in our team.”

Contact East West Bank Entertainment and New Media Financing Team