Since I was dangerously close to having a “dark blog” here, I thought I’d share some recent online-video information that’s worth knowing.
Online-video ad spending continues to grow, with 2017 looking to be passing $9 billion this year (it was $6.8 Billion in 2016). That’s according to recent research by the Interactive Advertising Bureau (IAB) as reported in “Digital Content NewFronts: Video Ad Spend Study.” Advertiser Perceptions surveyed 358 US agency (47%) and marketing (53%) professionals to inform projections.
You’ll need an Adsense account, which is how YouTube/Google pays publishers who run ads.
Do it. No down side unless you abhor ads around your content.
It’s not quite the same thing as being a YouTube “Partner” or “Creator,” which provides the channel with advanced branding (a logo on videos, and more flexibility on the channel page that few see). More importantly, advertisers are paying a premium for Partner/Creators and the other ads tend to command less revenue.
Still, my channels are excited. I’ll have to monetize them when I remember the passwords…
Any questions? Comment below or e-mail me at kevin (no space) nalty (a) g/mail
I was invited to join a web studio yesterday that provides a fixed CPM or cost per 1,000 views. That means the network promises you’ll earn no more and no less per video view… many of my friends have made that choice. It forced me to examine my current CPM and consider how that might change. Is it in my interest to accept a “floor/ceiling” amount? Or am I optimistic it will grow, and eager to benefit from that?
So today let’s look at attic rats, income for online-video ads, and contrast the sorry current state with what industry analysts predict.
Jim Louderback, CEO of Revision3, recently posted an intriguing article/rant about CPM prices… it’s titled “How Rats in the Attic Made Me Realize What’s Wrong With Prerolls.” Let’s examine the highlights to get a sense about why brands and online agencies have artificially depressed online-video advertising (despite shifts from print/TV to this medium).
Problem (according to Louderback):
Unfortunately, even though those two video ad experiences are as different as rats and wine (KN note: Louderback was inspired having received junk mail for rat extermination and wine), they were probably priced at similar CPMs. That’s because the online video ad market – particularly the pre-roll market — hasn’t progressed nearly as far as print. Those were two markedly different experiences, with wildly different levels of engagement. However, for many buyers, agencies and brands an on-line video pre-roll is valued the same wherever it runs, regardless of viewer intent, ad placement and playback environment. It’s as if Trump and “Take Air USA” paid exactly the same for those two print placements – even though their impact is worlds apart.
Solution (according to Louderback):
If you’re a video ad buyer, understand the value differences between in-banner impressions and engaged in-stream video ads. Focus your energy on the latter, and you’ll get far better results than if you lump the two together. Even though engaged, in-stream video ads will be more expensive, they are still a great bargain – especially if when you target demographic or content affinity along with the in-stream purchase.
Now let’s pull a “you show me yours I’ll show you mine” to see what poor targeting has done to the online-video economy.
Here’s a question for those brave enough to admit in comments below (feel free to use an anonymous name). What’s your YouTube CPM (income per 1000 impressions)? In other words, how much do you make per 1,000 views? It’s easy to compute: simply take your earnings in a given month, divided by the total number of views you get per month (divided by 1,000).
Example: you earned $200 last month. Your videos were viewed 100,000 times. So you divide $200 by (100,000/1,000). You get $200 divided by 100 equals $2.00 CPM.
Since YouTube keeps about a half, that would mean the company is fetching about $4 CPM… which is horrendously low if prerolls were used.
YouTube “Partners” are contractually obliged to not disclose earnings from Google’s video-sharing property, but that didn’t stop #2 subscribed Ray William Johnson this week. On Thursday he told ReelSEO’s Jeremy Scott that his YouTube ad-share income over the past 12 months (March 2010-March 2011) has surpassed one million dollars.
Johnson, one of few top YouTubers that does not accept sponsorships or product placement, has earned $1 million strictly from YouTube’s advertising-sharing program. In his Tuesday video titled “F-U FORUM,” the 37-year-old New Yorker told his viewers he was tired of YouTube’s “cone of silence” about his “bodacious income.”
“I’m just a regular guy with an entertaining hobby that happens to make a friggin million dollars without leaving my apartment,” Johnson told Scott. “Am I supposed to apologize for that? If you’re jealous just do what I’m doing, and do it better.”
Numerous mediaarticleshavecovered YouTube “star” income, but few YouTube Partners have revealed their revenue, either because they feared legal backlash from the “search giant,” or they hesitated alienating “fans” and viewers.” Johnson said he’s “tired of pretending he doesn’t earn it” because he “spends about 11 hours a day surfing for killer videos to rip and replay.” Johnson told Scott he was not concerned about potential copyright violations from his creations.
“My use of these moronic clips is covered by what’s called “fair use,” (expletive). And it’s a free form of creative expression because I add some comedic writing to the videos instead of just playing them over and over. Like I’ll say ‘hey look at this douchebag’ and then jump-cut edit myself saying “hey look at this DOUCHE-BAG’ from the opposite side of the video frame.”
Johnson’s claims are also validated by Paul “Renetto” Robinette, who runs the metrics site “MyU2B.” Robinette said his most pessimistic calculations range in the $800,000-$900,000 range, and it’s possible he’ll double his income in the next 6 months based on growth projections.”
“YouTube’s future is being held back is the typical innovator’s dilemma, or rather, billionaire’s dilemma,” writesAshkan Karbasfrooshan is CEO of WatchMojo.com. I included some of Karbashfrooshan’s pieces in Beyond Viral, and he’s one of the authoritative writers about the online-video industry and media monetization.
Indeed YouTube is but a toy kiosk in the Google “Mall of Americas.” Before I provide my 2 cents, here are some important highlights of his recent piece (with my comments in italics). His article was spawned, in part, by a “Video Forecast 2011” piece by AlphaBird’s Alex Rowland.
Google is generating way too much money from its “traditional” search business ($30 billion) to care about radically owning the new video space (which is a small portion of the $2.5 billion Google counts as “display”).
While YouTube commands 45% of the video streams in the U.S., it is unlikely that it will generate $600 million from video ads in 2010 (or 40% x $1.5 billion). (Hulu, he says, did $240 million… and with a tiny percentage of streams).
YouTube correctly identified ad agencies and Fortune 500 marketers as those who would turn YouTube into a billion-dollar business. However, since Google had little experience in selling to ad agencies before it acquired YouTube, growing video revenues took a lot of time to scale.
But instead of allowing content partners set prices based on actual market dynamics (demand and supply), YouTube implemented a set of obstacles and requirements that have made selling one’s YouTube channel all but impossible. YouTube did this, I believe, in an attempt to thwart content producers from owning the relationships with media planners and buyers. After all, if YouTube opened up its site, it would lose contact with advertisers and become a mere dumb pipe. (Indeed Google has been known to dismiss the role of the media buyer as somewhat useless intermediary… however the “dumb pipe” of Google’s paid-search network isn’t so dumb).
Now the WatchMojo CEO is a YouTube content provider, and has reduced the percentage of his company’s own inventory via YouTube from 45% to 15% in just the last past few months (by expanding his distribution beyond YouTube, since his YouTube audience has not contracted). He says YouTube is creating an “opening for others to win the bigger ad dollars,” and names DailyMotion, Metacafe and Facebook as potentials.
Now my thoughts: this isn’t a lone voice. I’ve heard this or similar perspective from content creators, advertising agencies, industry watch dogs and even some variations from YouTube/Google employees.
I would contend that Karbasfrooshan is more correct than controversial, and that Google is perhaps even “strategically ignoring” online-video’s near-term growth potential because it has far more critical business “levers.”
Google has a cash cow in search-engine advertising, and is broadening into other mediums especially mobile. I expect YouTube’s growth to continue (it’s usually the case with the market leader), but its share of online-video display dollars will decline dramatically.
Still, YouTube will continue to flourish via the middle market, lower maintenance, and “self serve” portion of the marketplace. This is almost certain without a significant “course correction” that does not appear imminent or within Google’s DNA.
If Facebook begins to display video and share advertising revenue with content creators, I would imagine most — from Discovery to Annoying Orange — would start posting on Facebook quickly, migrating their audience, and even staggering/delaying content to YouTube (the way some providers like The Onion and College Humor do… first posting on their own sites, then weeks later posting on YouTube).
Just as I don’t think my own content cannot survive and flourish outside YouTube (at least alone, hence my signing with Next New Networks), I do not believe Google is poised to grow or even maintain YouTube’s share of the online-video advertising budgets even remotely in relationship to its percent of video streams.
The exception will be small companies and middle markets, or advertisers who are prone to buying via Adwords. Currently the vast majority of YouTube advertising dollars (with the exception of individual campaigns and homepage takeovers) are almost entirely driven by Adsense Adwords. You heard me correctly, and that’s a sad statement about Google/YouTube’s ability to sell direct to brands and/or via partners and agencies.
Large content creators and brands will and should want a strong platform partner which puts the audience needs and preferences first, but theirs at a close second.
So the answer to this post’s title is “yes… Google is squandering YouTube’s potential right now.” It is almost inarguable truth that YouTube is not leveraging the strength of Google and its global salesforce, and not winning the hearts and minds of Madison Avenue. It follows, therefore, that the stewards of large digital media budgets are now seeking — and will continue to pursue — alternative online-video advertising options for innovative programs beyond prerolls.
I’d expect to see AOL and Yahoo, if not Facebook, knipping away at Google’s online-video Achilles heal. Google, after all, is not a media property at heart… it’s a sleuth of engineers producing innovative change. Given that identity, Google can’t be underestimated as a bold market force that will continue to shake the online-video industry in ways far more interesting than hundred-million-dollar media buys, which are akin to vending-machine revenue at a casino.
In the meantime, content creators should:
Ask YouTube to facilitate and encourage them to prevent agency buyers from feeling YouTube’s thorns. Likewise they need to aggregate to achieve sufficient strength to command the interest of digital buyers unless their niche is remarkable.
Maintain good relationships with YouTube people, recognizing that many of YouTube’s shortcomings are out of their control.
Diversify their distribution to include some of the smaller properties… especially those that grow. YouTube’s incentive to innovate for advertisers depends on market competition.
Derive income directly via sponsorships… which is no longer discouraged by YouTube, a video platform.
Pay close attention to what Google is doing with online video that has far greater potential than YouTube or any individual media property alone.
Renetto. Paul Robinette. Remember him? He makes about $55 a day from YouTube, and I once stalked him and shaved my head to assume his persona. He’s one of the guys behind one of the most interesting video website stats and mobile applications you’re bound to love and forget. It’s called MyU2B. See– I had to look at the website just to get that stupid name right.
The good news? If you’re an OCD creator or media buyer, than this is (and you can quote the guy who wrote the book on YouTube) “the crack cocaine of video statistics.” The bad news? The name is so damned forgettable I want to punch Paul Robinett in his branding boob. Half the reason I’m writing this post is so I can find his website searching the many alternative names my brain has given MyU2B: u2be, myu2be, ub40, u2b4, my2be u2be u2bme, and finally “renetto, youtube, stats, website, with, stupid, name.”
MyU2B is my indispensable iPhone YouTube viewing app because it’s incredibly easy to sort by my favorite creator’s (people, channels, accounts, profiles) most recent videos. This is a common but impossible task via the caveman-like primitive search functions on YouTube’s own mobile app, and I call that a “deal breaker” or “functional obsolescence” for any regular viewer. MyU2B tells me exactly how many videos my favorite person or channel has posted since I last checked them. It solved a problem most don’t yet know we have.
The app (free and $1.99) also allows me to “super subscribe” to select people (although I haven’t figured out how to delete people like the incorrect jaaaaaa). There are about 2-3 dozen people I don’t want to ever miss, and for that I prefer this app to using YouTube on a computer. On YouTube I’ve “oversubscribed” like many people, so I miss some fresh videos by my favorite peeps. It really sucks to not be current on some of my favorite creators or friends.
The MyU2B stats site, although new and somewhat buggy, is entirely different (yet shares the horrible name). It gives you some pretty decent estimates of how much money each channel/person makes on could make (per comments below) on YouTube, and even sorts estimated revenue by individual video. That’s badass, even if it’s assuming CPMs (revenue per view) that are impossibly inconsistent and volatile. It’s a cool tool just to track who’s getting views and comments… instead of the somewhat archaic method of tracking subscribers… like on VidStatsx. Vidstatsx is an equally crappy named but remarkably useful website, though the latter is a bit too focused on subscriptions (which is not nearly driver of daily views it once was). And tip from Zipster08, who I never miss (despite the mocked screen shot): allow MyU2B to load completely before searching for someone. (Zipster checks hourly). MyU2B doesn’t yet allow you to bookmark or link to a specific search string, but it does index more than 11,000 individual channels.
See below for an example… are they the potential estimates accurate? I don’t know. YouTube doesn’t give me reporting this precise, but I know for a fact that CPMs by individual videos for the same creator can vary from pennies to dollars — by individual video.
Since we YouTube Partners are all contractually obliged to conceal our revenue, it’s hard to know if it’s over or understating revenue/earnings. But feel free to comment (anonymously) if you want to share feedback on its precision! I’m glad it’s not accurate, because I don’t want people thinking about the money I earn from YouTube (it’s equally embarrassing whether it’s high, low or accurate).
Finally, let’s help these useful resources with their branding. Anything, including the word “pizzle,” would be better.
How much money do YouTube stars make? TubeMogul used some ad-sharing revenue estimates and view counts to guestimate the annual income of YouTube partners like Shaycarl, Daneboe, and AnnoyingOrange. These estimates don’t capture the 5-30k these guys can earn from a sponsored video.
Posting from iPhone hence the terse post and lack of lovely image and fancy hyperlinks.
Viacom employees had secretly uploaded videos from the company’s movies and shows even as they were complaining about copyright violations, as The New York Times reported. Zoing!
USAToday’s “Juicy Details piece” puts it like this: “Google cites a marketing executive at Viacom’s Paramount studio who said that clips posted to YouTube “should definitely not be associated with the studio — should appear as if a fan created and posted it.” To accomplish that, Google says that “Viacom employees have made special trips away from the company’s premises (to places like Kinko’s) to upload videos to YouTube from computers not traceable to Viacom.” Kinkos FTW.
Payouts earned from the YouTube sale, as detailed by All Things D. Chaching! That’s a whole lotta sheep.
$516 million to Sequoia Capital
$334 million to co-founder Chad Hurley
$301 million to co-founder Steve Chen
All Things D also pulls some revenue figures from YouTube’s inception in January 2005 through August 2006, the last month before the company sold itself.
It wasn’t until December 2005 that YouTube started pulling in revenue, and it wasn’t until August 2006 that the company turned a profit. (The company showed a 186 percent jump between July and August of 2006, to $2.5 million.)
Wired Magazine also had a lengthy story documenting YouTube’s past 5 years, but it’s not online… which I find really annoying. Basically YouTube isn’t bleeding anymore, but it’s not exactly a “cash cow,” as Wired states (clearly someone didn’t read the Wikipedia on cash cow before filing their piece). I’m so over Wired.
Between professional video content and user-generated content is a vibrant solution for advertisers. And most are missing it.
There’s a continuum of video content online, and it’s often misunderstood because we polarize each end. Let’s stop bifurcating, and look at 3 layers of video content. There are advantages to each one, and we’re missing opportunity in “the great debate” between “professional” (networks) and “user-generated content” (UGC).
Layer 1: Professional content (the only “safe” place to advertise): Advertisers, when they’re not convincing marketers to create their own content, are often urging them to buy ads around “safe” professional content. We don’t see as many ads swarming around such user-generated content (UGC) as cats pooping on skateboards, or dogs riding toilets. Of course the influx of ad dollars into the online-video medium (which is trending upwards while most other ad mediums trend downward) will create a problem. Either ads will get expensive, or online-video’s professional content will have to expand rapidly. True, we’ve seen a proliferation of quasi-pro content that is almost as good as television, and far better produced than most online-video. Unfortunately, that market is hurting more than any because it has neither low production costs or large audiences.
Layer 3: User-generated content (the cheap buy): UGC offers much lower CPMs, so you can reach a wider audience efficiently. You can target specific niches or demographics, and the UGC viewer is, frankly, easier to distract from their content. Want to get someone to respond to your stupid “shoot the monkey” banner ad?You’ll have better luck on a weather and gaming sites than on a professional site (the Wall Street Journal, where audiences are generally engaged in the editorial content). YouTube has limited its number of “partners” who receive a portion of online ads, however. There’s a lot of crap among UGC and a lot of it is inappropriate for ads or copyright infringements. At some point, it’s not worth YouTube’s time to filter creators with tiny audiences. That’s not to say my videos are better than the guy that just started posting on YouTube, of course. Given a random a
Layer 2: The Hidden Online-Video Layer: The hidden layer is the overlooked one between pro and UGC, so I’ve decided to call it “The Hidden Video Layer.” I’m creative like that. And I’ll have to say this 100 times before anyone listens. It’s real, it’s big, it’s important to advertising, and most marketers don’t know it exists. Let’s look at three examples.
If a YouTube partner (amateur) has a huge following (50 million views and 100K subscribers) on videos about videogames, we’d agree that it’s an incredibly smart place for ads and sponsorships selling the Wii or acne cream. There’s lots of ad inventory in that “hidden layer.” Fred — the most popular kid on YouTube — draws more daily views than many prime-time television shows. More importantly, when you aggregate the views of the top 100 amateur creators, you’ll far exceed the audience of almost any daily television show! Little old Uncle Nalts may have 60 million cumulative views, but gets 100K plus views a day. But combine me with a few more, and you’ve got traffic that beats many websites (and the audience is more engaged).
If Yahoo saw fit to create a 24×7 “Lindsay Lohan Online-Video Show,” that’s where you’d want to sell your latest Lindsay Lohan action figure (handcuff accessories sold separately). The video content certainly wouldn’t need to be “professionally produced,” and arguably you’d want to keep costs down to $200 per minute. This channel, while not worthy of professional production, is certainly not UGC. BTW- I’m not advocating for a Lohan network any more than I understand Nancy Grace covering the Tot Mom the past 6 months. Jessica fell into a well, hon, and we’re over it.
To use a non-video example, your aunt’s blog about her daily struggle with foot fungus is somewhat different from the popular TechCrunch blog. But we call them both blogs, and media loooooves its recent stories about bloggers failing to make a living on the medium. Four years ago, we saw stories about brave editors ditching media corporations and starting their own profitable life as a blogger. It’s simple: a blog’s not a blog. And a video channel isn’t a video channel. If you’re advertising, you want to reach large but targeted audiences. That usually means you’re surrounding or interrupting professional content, but not for online video at this point in time. Making well-produced content doesn’t guarantee viewers any more than creating amateur content guarantees a lack of an audience. Make sense? I sometimes spend hours on these posts and minutes on my videos, and dozens will read these words while hundreds of thousands will see my videos. Bad example since neither are professional.
Now this “missing video layer” offers advertisers 8 unique distinctions. I’m holding up four fingers on each of my hands right now, and jumping up and down.
Established audiences. No smart producer or advertiser would try to build a new Fred show- Fred already has nearly one million people that have “subscribed” and are waiting for his next video. If I pitched “Fred” to NBC two years ago, I’d have been tossed from the building. But Fred usually gets far more views per video than almost any professional content online. Would you rather “roll the dice” by shooting a viral video, developing branded entertainment, or simply leverage Fred to reach “asses in seats”? Many amateur video creators on YouTube, for instance, have audiences that surpass those of entire video sites.
Loyal and Passionate Audiences: viewers consume their YouTube stars like zombies in pursuit of a brain. It’s an indisputable fact. If Fred starting wearing Madonna rings on his wrist, they’d be back in style.
Quality: It’s not “professional and TV-like,” but it’s good enough for the audience. I’d rather watch someone I like on a webcam than a boring sitcom or reality-show in HD. If you trust audiences will eventually migrate to “quality” content, then please reexamine what quality means in this medium (at least in 2009).
Relevance: Ad targeting is easier as we move deeper into amateur content. “The Onion” has brilliant comedy, but “You Suck at Photoshop” probably has a more specified demographic that helps brands target. You want to reach people that celebrate their adolescence (at any age) or soccer moms? Check out Nalts. But Uncle Nalts isn’t likely to deliver too many right-wing, wealthy, retired men to sell time share or cigars. Relevance is easier now that video content and audiences are growing and fragmenting. Growfragmenting. Want to sell toe fungus medicine? Go to a toe fungus blog, not a health ‘n wellness website. There’s a reason Google text ads outperform almost any targeted display media buy. Relevance. Unfortunately, this makes an ad buyer’s job quite complex and will require more creative treatments than television. But video makers take note: this means we’ll need more than three versions of our 60-second spot (default, gay, and the Hispanic/African American). And if creative budgets aren’t getting bigger, than amateur video creators are well poised.
Ad-Safe Content: Unlike regular UGC, most of “the hidden video layer” content is vetted to be ad friendly (a YouTube partner, for example, gets dumped if they break “terms of service” rules like being fowl or violating copyright laws). That’s as true for Nalts as it is for The Universal Music Group’s popular channel on YouTube.
Economic Sustainability: Most of “amateur stars” have low costs. So many are making a comfortable living while expensive video sites struggle (Funny or Die). As an advertiser, I’d rather do a deal with content or a distribution channel that is profitable.
Cost-Efficient Spends: You can saturate Fred’s channel with ads, or work with him and YouTube on a program that does far more than ads alone. Premium video creators, by contrast, simply need to charge higher CPMs given their higher cost-structure-per-view.
Scale: The deeper advertisers go into “the long tail” of video content the better their chances of being able to broaden and scale campaigns without sacrificing targeting & relevance. We may temporarily saturate some niches, but if there’s audience and advertiser demand, new creators will appear.
We’ve allowed ourselves — as viewers, advertisers, and creators — to obsess on the polars of the content continuum: From Oprah to “David After the Dentist.” From “Lost” to and “the giggling infant.” From “The Office” to “monkey smelling its finger.” There’s a lot in between.
There’s goals in them niche hills, advertisers. Gooolllllddd (he cackles with toothless grin and ominous, shaking index finger). Then again, during a gold rush I like selling shovels.
While we’re precluded from revealing specifics about YouTube revenue, it’s now becoming more common for YouTube “partners” to know what others are making. While the CPM (cost per thousand views) once seemed to have settled, the creator income fluctuates wildly. As noted in this chart, the month of May took a nose dive for me– June was up slightly. July’s amount (due in days) will tell give us a sense of trends, and whether we’ll return to the peak of the first quarter when InVideo ads were flowing like wine at a wedding.
What’s interesting is that views/subscribers don’t appear to correlate with income very well. See TubeMogul stats (chart 2) for monthly views, but recognize that YouTube’s Partner revenue (paid via AdSense) lags by a month. Any statisticians in the houuuse?
It would appear to me that there are two variables a creator can’t control, and significantly alter YouTube Partner earnings:
Inventory. If YouTube isn’t selling InVideo ads (ads that surface on bottom of video after 20 seconds) in my videos, there will be almost no income. The income from text ads and banners is paltry even in volume. If that yellow line is in the video player I’m a happy camper. Otherwise I fear retiring a corporate mule. I am aware that this isn’t healthy, thank you. Keep in mind that my revenue is not necessarily suggestive of YouTube revenue or inventory — it could simply be that my specific videos weren’t targeted by advertisers in a certain period. I do see a day where the creator can help sell his/her own advertising revenue, but that’s a logistical challenge.
Location of view. YouTube currently doesn’t flight InVideo ads except for videos viewed on YouTube.com. That means a sweet lil’ old blogger embedding my video and getting me hundreds and thousands of views is of no consequence yet to her or me. Yet. Yet!
A few lessons for those hoping to make a living via online video:
Be realistic. It takes a long while for views to translate to income. Think of it as a bonus not salary.
Don’t count on it as a primary income unless you’re one of the top most-viewed creators and your audience is attractive to advertisers. In that regard, it feels more like TV/movies. Hopefully the predictions of radical increase in online-video advertising will equalize this effect… making it more democratic.
If you expect to live on YouTube, become a hot rock star or lower your cost of living.
Expect fluctuation. While in theory you control your views, thse too are dependent on a variety of factors. And unless you start selling for YouTube, the total advertising revenue and inventory is out of your control. People kinda have to be travelling on Maine highways for your Maine hotels to have high occupancy. You can make sure your hotel is more attractive than the very busy Motel 6 across the street.
Find other ways to earn money via online video. Don’t bother selling crap to people (to date, the Nalts DVDs and merchandise has accumulated less than my worse month on YouTube). Rather find ways to appropriately sponsor brands or companies, and pursue those deals on your own. Until I start popping up in keynotes at Advertising conferences, it’s going to be a while before advertisers come hunting for you.