Attic Rats, Preroll Ads & Show Your CPM

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).

Attic Rat

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.
  • Show us your CPM?
Good news: eMarketer puts online-video advertising growth at more than 43% in the next year and 35% the next year. As marketers become more targeted and sophisticated, we should easily see a CPM lift of 20-30%.

YouTube Launches Pay-Per-View Ads

Advertisers on YouTube now have an option where they only pay when a viewer engages with the pre-roll ad. It’s a bold way to get digital marketers to move confidently into the medium since, like Google Paid Search, it’s more accountable. Here’s the YouTube blog post about this new format called “True View.”

Nalts the creator: Don't skip it please. Nalts the viewer: Yey I can skip it. Nalts the advertiser: sweet I only have to pay if they DON'T skip!?

Since most content is too short for the new option (similar to Hulu’s format, viewers get to pick a long preroll or several short ad interruptions), the more interesting of these two new offerings is the “instream” 5 & 15/30 format. You watch 5 seconds, and then you decide if you’ll continue watching the rest of the ad (15/30 seconds). That means creators/publishers will make no revenue on those who abandon. But the format will no doubt demand a higher premium (per click) for those who choose to engage.

This also means advertisers should do a better job of giving the consumer a REASON to continue. The first 5 seconds should certainly mention the brand (free exposure like the “reminder” effect of unclicked paid-search ads). But most advertisers who want deeper engagement or direct response will want to use those first 5 seconds to PITCH THE AD.

For instance, “find out why this kitten is crying” would compel me to finish the ad. Or “be one of the first to own what’s in this box” is a nice teaser. Eventually when the format is less novel, the “calls to continue” will need to be better.

So, yeah... if you choose to continue to watch the advertisement on NALTS videos, on your death bed you will receive total consciousness. So you have that going for you.

I believe Business Insider is right in predicting that Google will give advertisers “love” or charge them less if they’re getting a better pull-through on these ads… similar to how strong creative text ads on Google are rewarded with better positions. Jason Kinkaid raises a good point on TechCrunch:

…given how different this is from what most consumers are used to, it may be a bit too early to gauge how well these ads are actually working — users may be skeptical of hitting the skip button at all because they’ve never seen it before.

It should be obvious that this is an additive option not a replacement of your traditional 15-30 second preroll. If it was my choice, I’d move to it quickly a) to learn, and b) to see if there’s a better ROI on them, c) to take advantage of the novelty factor. Then again, I’m biased. I’m making money from these. So frankly, I hope you buy whatever’s most expensive. But I hope you also get an ROI on it.

YouTube’s Videotargeting Gives Advertisers Precision

Now you too can target an ad on a YouTube video with more precision than ever before.

Via YouTube/Google “Videotargeting” you can suggest videos based on keywords (like humor or entertainment), viewer demographics (age and gender), interest-based categories or some combination of the three. Read more on the YouTube Blog or Mashable.

Says Google/YouTube: Our goal is to create an easy-to-use, self-service targeting tool for any advertiser who wants to run ads on YouTube. As this first version is in beta (and is being updated every day), it’s missing a few features, as well as content from some of our partners — like those who sell their own ads, for example.

Hey, Idiot. Missing “View Through” Data on Your Online PR? Don’t Even Read This.

  • 5 extra points to Tealium for remembering I downloaded a white paper, and shooting me a follow-up video (using campaign management tool). Just checked the “earls” and it’s Concentric). Hidden codes in URLs can be so informative.
  • Negative 7 points for making the videos so damned boring… like a a cross between a dull conference presentation and a phone call using Powerpoint.
  • Plus 3 points for actually using video to sell its product. I would never have looked at this closely without this video demo.
  • Plus 8 points for teaching me that there’s a way to capture “view through” data.
  • You’re not keeping track of the score, are you? This is like “Who’s Line Is It Anyway?” Points mean nothing.

Oh sorry. You didn’t know the phrase “view though” data? That’s because I’m exactly one hour ahead of you on learning about social media, and I’ll be two hours ahead if I wake up at 5 again tomorrow.

Until now, I was under the naive belief (much like your stupid self) that Webtrends or Google Analytics (or whatever tool your tools use) could not see “upstream” past the referring site. But this horribly boring video claims Tealium (which integrates with the web hosting software) can help a brand track “conversions” or web visits based not just on a direct URL… but based on whether a visitor had been to one or more other sites or unique URL (like a video) that you track.

Wait- you fell asleep on me, didn’t you. Let me put it another way… Nike.com might know you saw that YouTube viral video promoting Nike 2 days before you visited its website… even if the video HAD no URL to click, or if you went clubbing in the interim, or whether you tried to cover your tracks by visiting Nike via a search engine. Now the video gets credit for behavior that isn’t immediate or direct (which is typically 2 percent or less). In the example, 70% of the people who saw the “viral video” were not captured by direct URL visits… but if we know the video to correlate against, we can track percentage of viewers that saw that video… according to the browser’s history that we presumably peeked at, like a young boy sneaking a peek under a skirt. Not that I ever did that.

Tealium boasts that it can provide insights based on “historical browsing behavior,” so that empty-headed dope in PR can actually prove to the brand team that the stupid social-media and video-marketing campaign drove measurable action… even if it’s not immediate and direct.

Okay- are you awake now? That’s some serious shit.  I don’t know about this company, whether Webtrends and Google Anaytics are cooking up their own version of this, or whether they’ll snatch these guys up. And I don’t know how I feel about my website knowing my browser history… it’s creepier than cookies and “recontact” banners that follow you around like that awkward guy at work. You know? The guy you try to shake by going to the bathroom whenever he descends upon your desk with his bad breath.

I lost you again? Okay- you’re searching itchy nuts on WebMD and Yahoo start pimping “yeast infection” banner ads? Oh you thought that was coincidence? You MUST work in public relations. If I blow in your ear, I’ll bet this is the sound I hear. I used to make that sound with my boss whenever PR people were done talking. You had to be there.

This model — Tealium aside — is really good for the accountability of online-video and social media. We know that to judge a viral campaign on the immediate impact on web visits is like expecting the phone to ring off the hook because you placed one ad in the newspaper… there’s this thing called frequency that kinda works, dumb ass.

With someone’s “historical browsing behavior” we can presumably look at our leads by source, and see what correlated with longer time on site, and actual purchase.

You’re not excited by any of this are you? Damnit. What was I writing again? I’m so tired. Did I tell you I got up at 5?

How Much Money Does a YouTube Partner Make?

All the YouTubers are cruising with these. Let's not let them be the only ones, dangit.
All the YouTubers are cruising with these. Let’s not let them be the only ones, dangit.

Editorial Update…. here’s a newer post on how much YouTube partners make. Since this post gets so many daily views via search engines, let me answer your question simply. It’s a fraction of a fraction of a penny per view. It’s not enough to cover the mortgage for most, and it’s certainly not yet the reported $2.50 per 1,000 views. It’s often far less, and varies greatly on whether the views have InVideo ads (YouTube charges $25 per thousand and shares that with creators) or the flat square ads (cost far less for advertisers, and doesn’t pay creators). Although I can’t reveal my income, I can tell you it’s highly influenced by my top 5-10 videos, which get millions of views per month (as opposed to the new ones). That said, if you get millions and millions of views per month and live cheap, you could quit your job and buy my dang book, “Beyond Viral.”

Beyond Viral: Tips on Marketing You & Company on YouTube

YouTube’s Fred was rumored to be making seven-figures, but Google clarified that as six figures. But if you take his 350,000,000 views and multiply it by a conservative $1 per 1,000 views…. you’re talking $350,000.00. I’m making more on YouTube than I made in my first job out of school, but with four kids and a lot of debt, it’s not enough for me to pull a Sxephil, Shaycarl, or Michael Buckley and rely on it as a primary income source.

Oh how’s THAT for a blog title, when you’ve signed a confidentiality document that precludes you from talking about your revenue as a YouTube partner?! Don’t worry, YouTube. I’m not breaking rank. But I’m very interested in what people THINK partners are making.

Before YouTube, I’ve always been transparent about my revenue related to online video. I feel that’s part of my role on this blog… to give creators a realistic sense of what they can make in online video (beyond food). Alas, YouTube prohibits it for reasons that aren’t quite clear to me — are there tiers? If compensation varies, then I can be sure I’m at the bottom based on my complete lack of negotiation skills.

I do believe that some prominent YouTube partners are beginning to earn what amounts to a full-time job through the site. But I also understand that some of the early Partner contracts are up for renewal about now.

  • Could some be overstating their earnings? Yes. But some partners are doing $10K a month, especially those that already had an audience and moved them to YouTube. And some creators get millions of views consistently.
  • When some say they’ve quit their day jobs, is that because their costs are so low that even a couple grand a month can sustain them? Maybe.
  • Could the earnings be based on a point of time where, say, they had a video featured that was monetized? Sure.

While there’s no question that many could still earn more money per hour doing something else (like consulting or bartending), I am happier with my income from YouTube than what I was making from YouTube before I became a partner (zero). And while I’m not sure whether the per-view profit is as strong as Revver’s and Metacafe’s (I don’t even have access to any such metrics), I’m not getting any significant views on those sites anymore. So YouTube is far outperforming them.

My advice remains: if you’re looking to get rich, create a bunch of mortgage blogs and sell adsense. Or go into financial services or recruiting like the former co-worker that just called me to “network.”

But if you love video and the community around it, then it’s nice to get an income subsidy that helps you justify the time commitment to yourself, wife and family. I remain optimistic that more of the top creators of YouTube will be able to quit their day jobs, but that’s partially because amateurs will slowly get trumped by the semi pros (whose day job is performing or video creation). It’s already happening. While the amateur vloggers are holding top positions, we’re seeing more semi-professional content done by comedy troups, bands or known offline celebrities.

Now here’s the purpose of my post. I’m curious what people THINK partners make. I can tell from a lot of comments that people WAY over estimate what creators make: “You get paid for this shit?” “You’re asking us for ideas? You’re the one who gets paid.” I can’t participate in this thread, but it will be fun to watch.

And if you’re not a Partner yet, don’t let it upset you unless you have hundreds of thousands of monthly views. Grow the audience and reapply later. Even if YT did make you a partner, it’s not worth it unless you have some views. Take it from a guy that tried Google ads on his blog for a while, and quickly realized that it wasn’t worth the cosmetic interference.