> There is now a near-infinite supply of YouTube content. OF COURSE the advertising rates are approaching zero.
This doesn't make sense to me. The advertising rates are a connection between the advertiser and the consumer. If the content scales to infinity, there's still the same number of consumers that advertising dollars compete for regardless of available content.
> The channels that will survive here are going to play ball and raise the quality of their content and production values. They're going to be family safe. They're going to provide lots of content and it's going to be shot multi-camera by a staff of people. Smaller creators days on the platform are numbered.
> Thing is, the channels that do this best can do this for themselves. They don't need YouTube if they build a dedicated-enough audience.
> This doesn't make sense to me. The advertising rates are a connection between the advertiser and the consumer. If the content scales to infinity, there's still the same number of consumers that advertising dollars compete for regardless of available content.
The advertiser has a set budget and is looking at a supply of content. If there's a fixed supply of avenues to reach their customers, then they have to bid against lots of other advertisers to reach those customers. The rate to advertise goes up. If the supply of avenues to reach customers is near infinite, then the cost to reach those customers is almost nothing because there's no market driving up the cost of advertising. It doesn't make sense to spend more money to reach those customers. Reaching customers is cheap and easy. This is Supply & Demand 101.
In terrestrial advertising, there's only a small number of advertising slots that are valuable because that content is gated by place & time. This is not true online (caveat, read below).
(caveat explanation) Okay, I lied: It actually is really valuable. Joe Rogan's advertising slots are _extremely valuable_ and he uses them to to advertise businesses he has a partial ownership stake in (Onnit), which is brilliant. This is the same shit the Zuffa brothers did with the UFC & Xyience and it put millions upon millions of dollars in their pockets. But that's not advertisers paying for those slots, that's pocket A paying pocket B...and as a regular advertiser you can't buy that slot!
PewDiePie is probably making a small fortune off G Fuel, those chairs, and his phone games. These are the smart content creators today. Everyone relying on YouTube or Twitch partner programs for monetization is just on the dole or will be.
If you're a content creator with a reasonable following and not on a 2-3 year plan for productizing your brand, you're on a path to insolvency.
> Then that leaves room for the smaller creators.
Not on YouTube. And video hosting with a global CDN costs money and requires some know-how.
Aren't you just splitting up the consumers into smaller batches? Sure, you now have 100x as many avenues, but each one has 100x fewer customers at the end of it. How does reaching consumers get cheaper because of this?
Because your target consumers are watching more YouTube channels than ever before. Example: as a 3D printing and general "maker" enthusiast, there used to only be a few channels putting out a few videos a month in these categories. Now I'm subbed to probably a dozen and their release frequency is increasing while the overall ad budget has probably not grown much. On a per-channel, per-minute basis, the dollar value has thus gone down.
In other words, creator and content growth outstripped ad spend growth.
> In other words, creator and content growth outstripped ad spend growth.
And by several orders of magnitude. I'm surprised at how many highly intelligent people out there have failed to grasp these basics.
It's also sort of a winner-take-all market. Established channels for each customer segment will capture all of the revenue. Everyone else fights for scraps.
If you look at art/culture trends through modern history, teens aspire to the accomplishments of the generation before them. The clearest sign of YouTube being "done" was all of the surveys of teenagers aspiring to be Youtubers.
Ah, so the important part isn't that creator or content growth is outstripping ad spend; it's that viewer growth is outstripping ad spend. (Which means less revenue per view.) That makes way more sense.
I'd say it's both. More viewers, so per-view revenue is down, but more creators and videos as well so per-video revenue is also down due to increased competition. The net result is what you see today on channels - ad revenue used to be plenty for creators, but now they're plugging sponsors, merch, Patreon, and anything else they can to make up the shortfall.
True, but that's a separate issue from the one being discussed in this article. Increased competition between creators may make it more difficult to get viewers, but it doesn't directly hurt CPM.
What the other guy said. Also, segments have overlap and you can target.
If all 100 of the streamers creating content about diy synthesizers have an audience that also watches this larger channel about vintage amplifiers, I might be better consolidating my spend there...or if I'm a small advertiser with a tiny budget, I might be better off doing just the opposite and spending tiny amounts at the 100 small channels.
The point is that as an advertiser I'm almost fully in control over my own destiny, which is simply not true with television and radio networks.
Advertisers and Content Creators aren't really against each other...they're kind of following separate destinies, but if a Content Creator is entirely reliant on Advertisers for their funding model and the market is heavily skewed in favor of Advertisers like online content and newspapers are now, then Content Creators are going to have a really bad time. And there's a bloodbath just over the horizon.
If you look at Netflix, it's the opposite problem. Content Creators are reaping huge rewards and Advertisers have no power, but that's also financially untenable.
This doesn't make sense to me. The advertising rates are a connection between the advertiser and the consumer. If the content scales to infinity, there's still the same number of consumers that advertising dollars compete for regardless of available content.
> The channels that will survive here are going to play ball and raise the quality of their content and production values. They're going to be family safe. They're going to provide lots of content and it's going to be shot multi-camera by a staff of people. Smaller creators days on the platform are numbered.
> Thing is, the channels that do this best can do this for themselves. They don't need YouTube if they build a dedicated-enough audience.
Then that leaves room for the smaller creators.