I started my career as a journalist. Warren Rogers, my editor and a well-known Washington D.C reporter, created a literal wall between the Georgetown Courier’s editorial department and the advertising team… it was wooden and about 4 feet tall. He taught me the importance of not having editorial pander to the needs of advertising. No lofty reviews of restaurants that took full-page ads out in our newspaper.
Sure the newspaper folded in about 6 months. And sure I now work in advertising. I still have a pet peeve about “native advertising,” which is basically advertisements that masquerade as content. You’ve seen them:
An apparent news story on a website that’s actually an ad for some diet product
A section of a magazine that, on closer inspection, is actually “advertorial” content (sponsored)
A tweet or Facebook post that’s paid content even though it’s designed to look like a post from a friend
We need to know when a commercial interest is impacting our news or entertainment. And it’s not often obvious. I don’t like search-engine results that are ads pretending to be organic. I don’t like product placement without credit/transparency. And I don’t like hitting a news website expecting to read an article, but it’s a poorly veiled attempt to pitch some crap.
Ads can do their job even when we know they’re ads. But news and entertainment cannot do their jobs when we have to worry about whether they’re ads or not.
We YouTube Partners require two things to make money: a large number of views, and advertisers. Thanks to Kalle Tompros of SearchEngineWatch for summarizing the options available to advertisers. These include promoted videos (which requires advertisers to have videos on YouTube), homepage takeovers, instream ads (prerolls), and text overlays. For more options, see YouTube’s how-to page.
With online-video advertising projected to grow 30%, advertisers are increasingly looking at YouTube ad options. And as Mashable reports, the first quarter of 2012 showed record-high online advertising revenue, citing an IAB/PWC (see AdAge).
Online-advertising revenue continues to grow with an all-time high last quarter (click image for IAB/PWC report)
Here is my 2 cents on some of the right YouTube options based on the primary approaches (direct response and awareness):
The best option for direct-response oriented advertisers are promoted videos and text overlays. They’re not expensive and can be triggered on search queries like Google adwords. Time magazine also covered online-video advertising for small business.
Advertisers with larger budgets can gain reach and awareness through more expensive prerolls/instream and homepage takeovers.
I’ve had a few requests from readers/viewers to clarify YouTube’s evolving Partnership program, and help “up and coming” YouTube creators understand how to make money via video. As always, I’d caution YouTube video creators to keep realistic expectations on earnings– right now there are hundreds of YouTubers earning six-figure income from YouTube. But the majority are earning small amounts, and the driver is daily/monthly views.
Below is some information about the evolving YouTube Partnership, and 9 additional ways to make money via video.
A YouTuber can expect to make anywhere from 50 cents to $5 on every 1,000 views. So a channel getting 1,000 views per month can maybe cover a cup of coffee. The bigger YouTubers like RayWilliamJohnson are making anywhere from $500K to $4 million a year (SocialBlade), and I’d guess it’s around $2 million. It’s a steep pyramid, folks.
So here are the ways to become a YouTube Partner, where you’re eligible for “revenue sharing” on your videos. Ads appear before and around your videos, and Google shares a percent (roughly 40% of what advertisers pay for those ads).
Sign up to become a Partner on YouTube. Unlike previous years, most are granted Partnership (including my dog, FreddieNalts). In truth, this isn’t a full Partnership as we previously knew it. You’ll make a smaller amount of money because the ads are not exactly premium. YouTube has effectively changed the name of “monetize your videos” to Partner.
If you’re getting tens of thousands of views per month, you could approach an Online Video Studio (OVS) to come a full-fledged Partner with advanced branding. You’ll need to share a percent of your earnings with the studio, but you’ll get some help resolving issues, and potentially some help building an audience. This type of Partnership also allows creators to customize their channel page and put a small icon over the videos that appear on “watch page.” This used to be available directly via YouTube, but YouTube is increasingly encouraging intermediaries to handle this process… remember Google doesn’t like to deal with people. It’s a technology firm, and isn’t resourced to provide personal attention to millions of YouTube creators. So becoming a full Partner can be accomplished broadly in two ways. First, you can sign with an “Online Video Studio” (OVS). In that post about web studios, I neglected to mention The Collective, which has helped a couple YouTubers (Fred, Annoying Orange) cross over to television.
Finally for smaller YouTubers, there’s another option I discovered via Jason Urgo last night. Urgo/SocialBlade is helping smaller YouTubers (maybe 1,000 views per month) you can apply to become a Partner via Maker’s RPM Networks. The result is similar to option #2 but the bar is lower.
Don’t think of YouTube ad revenue as your only source of income for video creation. Here are 9 other options for making money via online video:
Create Commercials. If you’re talented and have high production capabilities (but don’t have an audience), you might join Poptent and create videos and commercials for brands… you’re not guaranteed to be compensated, but if a brand selects your video, you can make $5 or $10K.
BYOS. If you have a large audience, you can pursue your own sponsor (bring your own sponsor- BYOS). Just call a company and see if they’ll pay for a custom video or some product placement. These are easier to get if you’re in a web studio/OVS.
Get Free Loot. Call a company and see if they’ll send you free loot in exchange for your mentioning them. It’s not easy to find the right person, but I’ve been surprised how receptive companies are. They often have programs to reach online influencers, and if you have a decent audience… that includes you.
Sell Your Stuff. This DailyFinance reminds us that artists can sell their stuff via video. Got something on eBay? You could mention it in a video, and see if you can get the video SEO-optimized so it might appear via a Google search.
Sell your videos if you think there’s a market for them. Learn more here. I believe you need a Partners account to do this, and I wouldn’t count on this tool. Most people don’t purchase amateur video content, unless you count porn or Louis CK. I suppose there’s some “how to” video that’s worth buying, but I don’t see this as being lucrative.
Drive to Website: you can try driving traffic off YouTube onto a website that allows you to sell loads of additional advertisements/sponsorships. It’s difficult to get people to follow a link of YouTube, and I’d estimate low single-digit numbers (depending on the reason). But Smosh’s “Smosh Pit” is a nice example of how YouTubers have created adjunct websites where additional monetization is possible.
Affiliate Links: If you’re really cheesy, you can try making videos an inserting affiliate links into the description. I’ve never seemed to make anything notable via affiliate links on my blog and in a few links from a video.
Merchandise: CafePress and other sites allow you to create your own branded merchandise and sell it to viewers. I think I’ve sold max. a dozen things on CafePress, but I haven’t put much effort into it.
Get Rich Quick: Try one of the bullshit “get rich quick” schemes. Good luck.
The Brightroll data comes from a survey of advertisers about how they’re approaching online video and what their budget plans are for the coming 12 months.
64 percent said they believe that online video advertising is equally or more effective than the ads that show up on TV. That’s a big deal.
Why is online-video rivaling TV? Because 70 percent of Internet users watch video online, meaning scale/reach is now possible.
Most respondents see online video as more effective than both display and social media. That’s notable given the market’s increasing obsession with mobile and social-media ads.
30 percent of respondents said they expect online video to grow faster than any other type of advertising. That’s actually oddly conservative. Remember eMarketer estimates that US online video ad spending will grow by a compound annual rate of 38% in a five-year span ending in 2015, making this by far the fastest-rising category of online spending. Do the other 70% feel otherwise?
Performance metrics continues to confound media buyers. About 70 percent said that they needed a more clear ROI and success metrics to justify increasing spend on online video. And about a third want more info about the impact their online video buys have on offline purchasing. TV has had more time to develop metrics and prove results.
As any new media emerges, there’s a dance between the evangelists and skeptics. We saw it when the web arrived. We saw it at the dawn of display. We saw it with paid search (which the survey suggests is still the favorite of advertisers). Now we’re seeing it with the ongoing debates about the merits to TV and online-video.
But now it’s hard to deny online-video and praise TV has the bedrock of branding. With apologies to Mark Cuban (who is still a skeptic of online-video). It’s time to recognize that both TV and online-video have a powerful role in advertising and marketing, and that’s why most media-buyers are savvy enough to plan, buy and measure TV and online video together (eMarketer).
Remember what Nalts has been saying for many years, kids. Eventually we won’t have terms like “TV” and online-video. We’ll just view video as a channel or media manifestation whether it occurs on a computer, mobile device, HDTV, pad or those new fangled cathode ray tubes.
The headline is a quote by Mark Cuban, who is very rich. The full quote, as captured by Adam Kleinberg in last week’s Videonomics event in Dallas Cowboys stadium, is: “Online video is irrelevant. The top videos most days on YouTube get 250-750k views. If you got that kind of traffic on TV, you’d be a huge failure.”
Before I comment on Mark’s thoughts, I gotta say… I love Adam’s post for three reasons:
He references me before Mark Cuban.
He captured the quote I was too lazy to write down.
Adam let me kiss him on the head, and he’s like a human teddy bear. I told him I almost want to go back to a big company just to hire his agency, Tractionco.com. If you know anyone from Studio Lambert, tell them to get Traction Co on The Pitch (AMC) NOW.
I did get a photo of Mark Cuban and me, but nobody seems to care as much as I might have thought. Only 5% of the people I know seem to recognize him, and only 14% of that segment seem mildly impressed that I arm wrestled him. Some were more impressed that he’s on Shark Tank than the fact that he sold Broadcast.com for 55 billion.
Mark Cuban arm wrestling me
And now to the point (you buried your lead again, Nalts): Mark Cuban’s point was that the view count of “YouTube’s most viewed videos of the day” pales against television-show viewership. He’s got two reasons, the first is that YouTube most-viewed daily videos sometimes don’t often more than a few hundred thousand views. Second, the views are brief relative to viewing durations of Shark Tank, which Mark says is the show most watched by entire families. Mark appears on that show.
What Mark didn’t point out is that the most-viewed YouTubers (top 50-100) typically have daily views that exceed top television shows. Annoying Orange or Ray William Johnson get 10x the daily views of many network shows. They are, in effect, small networks. Sure the views are minutes not 30 or 60 minutes. And they’re less monatized. Furthermore, here’s another little secret for Mark. Sometimes a creator’s “daily views” are not, in fact, driven by their most recent video — a creator’s daily views are often driven by the cumulative views of the creator’s collection. (For instance, my recent videos tend to be viewed a mere fraction of the total daily views I have; the latter number is driven by a few older videos, like “Scary Maze” or “I Are Cute Kitten,” that continue to accumulate views).
During last week’s Videonomics event, Mark invited people to challenge him, but I declined because… this is all a moot point. Why? For starters, advertisers want eyeballs, and they don’t generally care if they bought 100 ads on 100 YouTube videos or 5 ads on 5 television shows.
They want targeted reach with spending efficiency.
Period. Advertisers also need scale, and if media fragments so too will their media spend. Most studies show that online-video advertising growth will come at the expense of television advertising in years ahead… but eventually these budgets won’t be separate. That brings me to my second point… in the next 4-8 years we won’t really discern between online video, cable TV, mobile and television. It’ll all be video, and the long and short tail will both matter to advertisers.
Perhaps you watched Celebrity Apprentice last night, where the b-listers teamed up to create a “viral” video for O-Cedar’s ProMist Spray Mop.
Note that I put “viral” in quotes since it’s not a viral video unless it goes viral. For that matter, let’s call it what it is: try-ral. It’s trying. It may go viral, but it’s not.
This isn’t the first time Celebrity Apprentice has tasked the (has-been but charming) celebrities to create a “viral” video. But here’s my favorite quote from NJ.com on the coverage and the decision made in the boardroom after the competition:
The execs didn’t get the women’s “number” concept initially but liked the entertainment aspect of the video. They liked the men’s slogan… and thought the concept was clear and highlighted the mop’s selling points, although the video was a bit too much like a traditional commercial. The men win.
Did you notice anything there? The video was a bit too much like a traditional commercial, but… by the way… it won.
At the risk of stating the obvious, please don’t learn from this. They didn’t win despite the video being too commercial. They won because the women’s video was entertaining but not purposeful. That’s not good either. But if your “viral” video is a commercial, prepare to spend your media dollars to get it seen as prerolls. We almost never share commercials… we sometimes send entertaining videos that happen to pitch a brand.
Do not expect people to share your commercial. Please.
In a study that should be of no terrible surprise, Burst media showed that although young viewers (ages 18-34) watch more online videos, we 35-54 geezers are more likely to interact with an online-video ad. This provides a word of caution to eager marketers in search of large views: don’t forget the demographic. Chart by eMarketer.
Oh and according to Auditude we’re desensitizing to video ad units: “video publishers, content owners and distributors can increase revenue potential based on viewer acceptance of ads in premium content.” (That’s code for “jack up the prerolls).
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.
This Dan Greenberg story in MediaPost is good news to online-video advertising enthusiasts. Seems the “gap” is closing, and online video is moving into critical mass. Did I just say “critical mass”? Oh well.
Dan provides 5 reasons:
Big brands be making video content investments
Top agencies be making online video a practice/priority
Agencies are creating titles like “director of earned media” (a residual of PR)
We’re developing better metrics than fargin’ clicks. Remember that clicks are like hits (which stood for “how idiots track success”) and impressions aren’t impressions unless they make one. Don’t be a click prick.
Forrester and Nielsen are validating this approach with reports. Whatev.
Anyway this is good news to online-videophiles. Yeyy the market is catching up.
