Once you consider the rising payouts for content, the cost of hosting all those videos, and the fact that YouTube gets paid according to how much of an ad is viewed, the conclusion could be that YouTube is struggling to make a profit. But don't get the wrong impression that the site is struggling. The bulk of Google's revenue is owed to its proprietary advertising service, Google AdWords. The algorithm attempts to provide the most relevant results for your query, and, along with these results, you may find related suggested pages from an AdWords advertiser.
To gain the top spot in Google advertisements , advertisers have to outbid each other. Higher bids move up the list while low bids may not even be displayed. Advertisers pay Google each time a visitor clicks on an advertisement. YouTube was a long way from making money when Alphabet Inc.
When Google took over YouTube, the popular opinion was that the copyright issues would be sorted out and advertisers would quickly join. The copyright discussion is still a pressing issue 10 years later, but advertisers did come on strong in the beginning. Then, with user-generated content flooding in daily, advertisers began to see too many videos of the wrong type of content. Ad rates dropped as advertisers went back to search ads that reached the consumer when they were researching a purchase rather than watching a random video.
Despite the bleak profitability outlook , Google kept investing in YouTube. There were the operational investments that were needed to deliver all that content at speed, and there were payments to the content creators in the partner network. Soon, every uploader could have a cut of the ad revenue a video might produce. The advantage for Google was that the user-uploaded content really only cost the company in terms of infrastructure maintenance.
The idea seemed to be that the cost of maintaining YouTube would drop as technology improved and more video content could be monetized through ads and market pricing. Thanks to some innovation within the ads themselves, the market for the ads has improved.
YouTube overlays allowed ads to populate videos at different points of the viewing rather than just having a pre-roll ad, and they followed the embedded video around the web. Even with better ads, however, as of May , the revenue was still not enough to pay for the site. YouTube approaches video advertising through an opt-in ad program named TrueView. TrueView includes two types of ads: in-stream and video discovery.
With in-stream ads, the viewer only has to watch the first five seconds and then can skip the rest of the ad. The supplier pays only in case the user watched over 30 seconds or clicked on an entity on the screen related to the ad. Video discovery ads are advertisement videos listed on the page along with other content and charged for only when the user clicks on them.
According to a Alphabet financial report , TrueView ads were one of YouTube's revenue growth drivers for the quarter. YouTube is not selected as a separate reported entity in the company's reports and is a part of Google websites segment. Google has a few different options for expanding YouTube. YouTube Red that was probably intended as a competitor to Netflix, also includes original shows and movies. Around the same time, the company launched YouTube music app, which is free with ads, but offers an enhanced music experience if a consumer is simultaneously subscribed to YouTube Red.
If you only sell your product in one country, you need to avoid advertising to the rest of the world. Similarly, you may want to limit your ad to countries where the majority of people speak English. Your videos may be entertaining, but you do not want people watching them through who are never likely to buy your products. Businesses often find that video creation can comprise the highest proportion of YouTube video cost. This does, of course, depend on the level of sophistication and professionalism you are aiming for with your video ad.
If your video is low quality, then people will skip it at the 5-second point. A low-quality video does not reflect well on your brand, either. It depends on the expectations of your target audience. The more creative you can be with your video ad, the less reason there is for the viewer to rush to the Skip Ad button. Remember that YouTube is not the same as broadcast t. A live tv viewer does not have a SkipAd button.
While you may think you can save money by reusing your television ads, you are likely also to be foregoing income, with people choosing to bypass your ad. The only exception is when you manage to create a cult ad. A few firms can upload their ads to YouTube as video creations, rather than paid advertisements. For instance, Air New Zealand has gained a reputation for their quirky safety videos. As such they do not to pay to advertise on YouTube. They have a thriving channel, where people search for their latest safety videos.
Of course, many of these videos are high-budget productions, including videos made by international film producer, Sir Peter Jackson, director, Taika Waititi, and some of the Hobbit and Lord of the Rings cast. You will probably have to learn to be comfortable in front of the camera. YouTube does have tools to help you with your video production.
They even have a scheme called Director Onsite to help businesses make professional videos. This project is currently under review and will be modified in early The key to the level of your YouTube ads costs is the need to bid on ad placement. You are not given any set price for advertising on YouTube. You set yourself a daily budget of what you are prepared to pay for your YouTube advertising. You only pay when somebody engages with your ad in some way.
Perhaps they watch your skippable ad for 30 seconds, or they click on a Call to Action on a display ad. Make sure that you do your targeting before you set your bidding options. The bidding suggestions that YouTube makes change as you alter your targeting. In most cases, you bid by CPV — cost per view. This means that you are willing to pay up to your bid figure for each view of 30 seconds or longer.
You will also set a maximum figure you are willing to pay per day. This ensures that you do not receive any nasty surprises should you find that more people watch your ads than you anticipated. You will be asked to bid a Max Cost Per View.
Nate O'Brien , a personal finance YouTuber with 1. Different video topics can also lead to different pay rates. Read a full breakdown of how much Jikh has earned. But YouTube creators with far fewer followers can also make decent money. When it comes to a viral video, how much money a YouTube creator makes can vary wildly.
In all, Insider has spoken with dozens of YouTube creators about how much each of them made per month , on videos with , or 1 million views , and other financial topics. Many YouTube creators earn money off the ads that play in their videos and receive a monthly payout. Here's a full breakdown of our coverage of how much YouTuber creators earn monthly:. For every 1, ad views, advertisers pay a certain rate to YouTube. Some subjects, like personal finance or cryptocurrency, can boost a creator's ad rate by attracting a lucrative audience.
Here's a full breakdown of our coverage of what YouTube creators earn per 1, views:. Creators on YouTube often have no idea how much money they will earn off a single video after they upload it to the platform. Many creators also try to avoid swearing or copyrighted music in their content because those factors can increase a video's chance of getting flagged by YouTube and demonetized.
So if a creator does everything right in the eyes of YouTube, how much can they expect to make at the top end? Read the full post: YouTube stars reveal the most money they've made from a single video. How much money a single YouTube video with , views makes from Google-placed ads depends on the content of the video and the audience who watches.
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