Hey you! My name is Thomas “TomSka” Ridgewell and this week I thought we’d do something
a little different. There’s a lot of speculation on YouTube when it comes to money. How much
do people earn? Where does the cash come from? And do I still have to pay child support if
she lied about being on birth control? Well I figure it’s about time that you got the
answers to most of those questions.
Now, consider this a warning. In this series I’m going to be talking very openly about
money and using myself and my earnings as an example. YouTubers make money off of their
“YouTubing” shouldn’t come as much of a surprise these days but it is admittedly
an uncomfortable to talk about. This series is undoubtedly going to change the way some
people view me and our relationship but, given that your support is what keeps me and others
afloat, I think you have the right to know how it all works. Let’s do this!
There are 3 main ways to make money through YouTube: advertising revenue, brand sponsorships,
and merchandising. Today we’re going to focus on ad revenue. There are currently 5
different types of advertisements that can be shown on and around YouTube videos.
Embedded ads. These feature directly on the video page and don’t really get in the way at all.
Overlay ads. These pop up 10 seconds into a video, right on top. Also if I’m watching
a video with you and you don’t close these? You’re the worst.
Skippable ads. These are adverts which play before or at some point during the video you’ve
chosen to watch which you can and probably will choose to skip after 5 seconds.
Non-skippable ads. These also play before your chosen video but you can’t skip them.
Fortunately they’re limited to being a maximum of 30 seconds long.
Sponsored cards. Kinda like an overlay ad these can appear on sponsored videos with
information relevant to whatever product is being promoted.
So, here’s how it works. First, an advertising company will say to YouTube, “I want my
advert to be seen a hundred million times!” and YouTube will say, “Alright, give us all your money!”
Next, a creator uploads a video to YouTube and says, “Hey YouTube, I want some of that
money, put those sweet sweet ads on my video.” They do this using a service called AdSense.
YouTube then asks, “Do you own absolutely everything in this video? We don’t want
our ads to be associated with anything stolen!”
The creator says, “Yep! I made all of it and the stuff I didn’t make, I have the right to use!”
YouTube then puts those ads on and around the video. The type of ads are usually chosen
by the creator but not what the ads are actually promoting. That’s all decided algorithmically
based on the audience and what YouTube thinks is relevant to that individual video.
Then, the more those ads are seen, clicked on, or watched, the more money the creator makes.
What money exactly? Why a percentage of the money the advertisers gave to YouTube, of course!
What percentage exactly? Who knows! Not me.
YouTube says it's a pretty even split and we kinda have to just take their word for it on that.
Now, that’s a little bit about the different types of ads and how they work but it still
doesn’t answer the question of how much money they actually generate. Well that, my
friends, varies massively from channel to channel and even then it still fluctuates
daily. A lot of this comes down to your CPM which essentially means how much money you
make each time 1,000 adverts are delivered to your audience. So, say my CPM was £1,
I’d make £1 each time I got 1000 views; or £100 for 100,000 views; or £1000 for
1,000,000 views. And so on... You get where I'm going with this?
However, it’s not really that straight forward since different types of ads make different
amounts of money. Unsurprisingly if your audience sits through a 30 sec unskippable ad, that’s
going to be more valuable to advertisers than a little box on the side of the screen that's
quite east to ignore. Again, how great that difference is though? We don't really know.
That’s of course assuming that people can actually see the ads on your channel and haven’t
installed some sort of ad blocker. Because if you've done that… The YouTubers don’t
get anything. I'll admit as I am a larger YouTuber both in subscribers and body mass
that it doesn't affect me too much, but for a smaller YouTuber it can be the difference
between keeping a channel going and giving up entirely. Essentially what i'm saying is...
THINK OF THE CHILDREN!
So, why do CPMs vary and fluctuate? Well, I think a lot of that comes down to your audience
and the type of content you make. For example, I’ve had my CPM drop as low as 30p. I think
that's because advertisers know that they can reach my predominately teenage boy audience
anywhere. However, if your content reaches out to an incredibly niche audience - say,
older women - you could be looking at a much higher CPM - say £30 - because you've got
that corner of the market completely covered. Also advertisers spend more money at different
times of the year; so, leading up to Christmas there’s plenty of delicious ad money flying around YUM YUM!
But come January… Oh no…
Finally, at the end of the month, AdSense calculates everything together and pays you…
Assuming you’ve made more than the minimum amount necessary to actually be paid. If not
it’ll carry over to the next month and so-on. Hurrah! Now, with all that in mind, my channel
brings in an average of around 10,000,000 views per month. So, depending on my CPM and
the time of year, that can range from a payment of around £3,000 to - if I’m really lucky
- up to £10,000. Now would probably be a good time to point out that that money goes
to my company, not to me. Would be nice though.
Now, the last thing I want to talk about in this video is MCNs - multi-channel networks.
MCNs are typically management companies who offer logistical support to YouTube channels
in exchange for complete control of their ad revenue and usually a percentage of all
other income streams. They can be a good thing, they can be a bad thing, it all depends on
the company and the contract you sign. They all promise to make you more money than you
already are and usually try to play it off that they’re doing so simply because they’re
such great, supportive people… If that sounds too good to be true, that’s because it absolutely
is. Like any company, they’re in it for the money, so just don’t rush into anything
until you have a full understanding of what it is and how you can get out of it. Lawyer up, baby! Lawyer up!
Okay! I hope that answered a lot of questions you may have had. There are obviously more
complexities to ad revenue and AdSense but, and it pains me to admit this, I don’t actually
know everything. However, do check back the next time I do a YouTube Money Video because
it's gonna be all about Brand Sponsorships, if you have any questions about that leave
them in the comments below. Thanks for watching! I'll see you next time!
TomSka out.