In the last couple of years, YouTube has rapidly evolved from a huge but random collection of videos to a huge collection of videos organized into channels. That has gotten the full attention of both content creators and advertisers, not to mention viewers.
But exactly who’s making money on YouTube and how, and what’s going to happen this year? That’s what a panel titled “The Power of YouTube: Unlocking the power of programming, premium content and advertising” at the Consumer Electronics Show in Las Vegas sought to answer.
On the large panel were moderator Sun Jen Yung, managing director and head of digital media & Internet for Headwaters; Jason Kirk, global head of business development at ZEFR, a software company that helps rights holders on YouTube identify their content that has been uploaded and help marketers identify their biggest fans; Urs Cete, managing director of Bertelsmann Digital Media Investments, which has invested in various next-generation TV startups; Michael Chiang, senior vice president of strategy and operations at Defy Media, a video network created from last October’s merger of Break Media and Alloy; Mark Himmelsbach, COO of IPG Mediabrands Publishing; Rob Sandie, CEO and cofounder of vidIQ; and Margaret Laney, chief marketing officer of AwesomenessTV, the largest YouTube multi-channel network that was acquired by Dreamworks last year.
Q: How has the state of YouTube content now?
Laney: It’s no longer seen as the place where there’s only cat videos. The sale of AwesomenessTV was the tipping point for traditional media. In the zeitgeist of Hollywood, YouTube has become much more exciting–both as a platform for video and for marketing.
Kirk: There was the assumption that all these videos were uploaded by pirates. But now, not only do they keep them up, they’re monetizing them. That power is now too big to ignore. Two years ago, they were looking at these people as pirates; now they’re fans they want to encourage.
Q: What kind of content is most successful on YouTube today? My sons are watching game-play videos like League of Legends and Minecraft. My own peer group of rowers, we want endless minutes of rowing on YouTube.
Cete: Gaming and music work very well. It’s not the fully professional, “take the star from TV and put ‘em on YouTube.”
Laney: Niche content seems to work really well. Our No. 1 show is “Cheerleaders.” It taps into a community that has been ignored. Buzzfeed, too–if there’s anyone that knows what works on YouTube, it’s Buzzfeed. Throwing a mainstream celebrity on YouTube–we tried it, it doesn’t work. Matching someone like that with a YouTube star works best.
Q: What’s driving success of videos?
Chiang: Some are very SEO-driven, others are just popular searches like twerking.
Q: What has made the multi-channel networks on YouTube so successful and what will be the challenges in the next few years?
Cete: YouTube is low-margin, huge traffic that you use to create a brand and then make money somewhere else. To only live on the money YouTube wires you every month, that won’t really work for an investor./>/>
Laney: Agreed. The next frontier for us and Dreamworks is how can we reward people in our network with straight-up money?
Kirk: We started off as movie clips and still have that channel. Now we have three channels, so we’re not really a multi-channel network. We went the software route because we did run the numbers and sharing with the studio and YouTube, it didn’t look as good at the bottom (line).
Q: What companies are doing the right things?
Kirk: Tastemade and Stylehaul are niche and can turn it into something.
Cete: Now is the year to prove whether you can do a network at scale.
Q: Will the long-term future of YouTube be a bunch of channels or something more like regular TV?
Cete: For kids, it is like cable TV.
Q: Are brands going to get on YouTube to a greater degree?
Laney: There’s a lot of great stuff happening with brands. Like Red Bull. We’re going to see a lot more of that in the future. Brand advertisers realize there’s so many eyeballs there that they’d be crazy not to take advantage of it. Plus, it’s pretty cheap compared with network TV. You can get a lot done with a lot less money. I’m very optimistic about brands moving a lot more of their spend into YouTube.
Kirk: Dove had 200 million views with its Faces (Real Beauty Sketches, technically) campaign. Facebook and Twitter took a little spend because they were more open with their APIs so you could do more. YouTube will get more and more open.
Chiang: Traditionally what worked on YouTube was to have an extremely low cost base.
Cete: The people who make significant money on YouTube are not average Joes and Janes. They’re the equivalent of TV stars on YouTube.
Q: Was the YouTube channel initiative successful? They basically removed all reference to it last fall./>/>
Kirk: I think it was very successful because it got a lot of people thinking about YouTube. It was a really great marketing campaign, that’s the way to look at it. We got a lot of deal flow, advertisers looking at YouTube like they were looking at Twitter and Facebook.
Cete: Without this program, we wouldn’t be here now.
Q: Are MCNs still an attractive investment opportunity, and are there other attractive investment opportunities on YouTube?
Cete: There’s still a lot of opportunities. Like what will be the Buddy Media or similar white space for YouTube that it was for Facebook.
Q: (Missed the question but seemed to have to do with which video platforms will do well next year.)
Sandie: You’re seeing real ROI from advertising on YouTube.
Laney: I think Facebook is going to be a big winner from this platform. There are a lot of disgruntled YouTube stars. The early adopters will be experimenting on the Facebook video platform.
Q: One prediction for content on YouTube in the next year?
Cete: You’ll see traditional magazines create capability for video, either on YouTube or other portals.
Kirk: Fan relationship management will be important.
Laney: This will be the year of the YouTube star penetrating traditional media. A lot more YouTube brands will tie into television and movies and the big media conglomerates.
Sandie: You’ll see some brands really connecting with people through YouTube channels.