social media is a drug you are a lab rat we're all lab rats
it's the world that can be incredible and that's worth a lot of money technology
companies whose business model is to make sure that advertisers are as successful as possible
this freaks me out why do advertisers pay those companies they pay in exchange for showing their
ads to us we're the product our attention is the product being sold to advertisers
before you started watching this video you were probably given an ad or two to watch by youtube
adsense through google which also services youtube is the biggest advertising service on the planet a
title that has held for over a decade according to the company's 2020 filings they generated
147 billion dollars in revenue from online advertising well we have to make money hey and
i think this advertising model is probably the most elegant way this included everything from
banners on websites to the ad that you watched before this video started it's a great business
model and it finances the free google-powered services that we all take for granted i mean
who here pays for their personal email but there is a problem with these ads that is very
different from what you might see on traditional television or on the radio or in a newspaper if
you are still old school enough to read those ads on youtube just seem to be full of scams
i deserve respect i wasn't sure if this was just me but a recent community poll revealed i am not
alone and i wanted to figure out why whether it's some hustle bro trying to tell you how you
can make a million dollars a month by day treating or a mobile game ad that is showing gameplay that
looks literally nothing like the game itself it's all very questionable so it's time to learn how
money works to find out why youtube is full of ads that look like outright scams this week's lesson
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google platforms goes through a system called adsense for facebook and instagram it's called
facebook ads and most other big social media companies have their own version of the same
concept these platforms allow businesses to create their ads and launch them to target a specific
audience a business selling office supplies can pick banner ads that are displayed to people
between the ages of 18 and 60 on business focused websites like linkedin a big company like apple
will have a much broader set of advertising filters they would be happy to put an ad for
their new iphone in front of basically everybody so they can spread their budget out over all
of these online advertising platforms as well as traditional advertising channels like print radio
and television such a large advertising campaign with such broad parameters will pay less money per
view because they are not being too picky with who they target every time someone clicks on a video
the youtube algorithm springs into action you watch too much youtube my friend oh but i am not
talking about the youtube algorithm for regular videos no i am talking about the algorithm for ads
this algorithm has one simple objective make as much money as possible but how it does it is kind
of complicated and very clever the algorithm will basically run an auction in a fraction of a second
the bidders will be the companies that want to show their ad and they will be bidding for the
opportunity to do so on that particular video for that particular person some auctions will
fetch higher prices if the viewer fits a demographic that is likely to spend money
on the advertiser's product for example if they are a young professional watching a finance video
and some auctions will go for very little money if the viewer is less likely to spend money on
the advertiser's product for example a teenager watching a gaming video in this virtual auction
house a big company like apple will just go around and place a lowball bid on every single auction
it will lose the more competitive auctions but it doesn't need to be picky because almost everybody
watching youtube is potentially in the market for an iphone yeah i don't think so these auctions
will also not always be won by the highest bidder on youtube specifically advertisers don't pay for
their ads until one of three things happens the person watches at least 30 seconds of the ad the
person watches the entire ad if it's less than 30 seconds long or the person clicks on the add link
to demonstrate what this means let's watch an ad together right now you probably clicked the skip
button as soon as it popped up didn't you i know you did well if you did the advertiser didn't pay
anything for the small part of the ad that you watched because youtube didn't satisfy any of
these requirements so if you were a cunning online advertiser why not try something like this create
a really impactful 20-second ad and then end that ad with 10 minutes of a horrible screeching sound
that will make people press the skip button then you could get the word out about your
product without having to pay for it because you wouldn't be charged for any of your ads because
they didn't satisfy any of these requirements very clever but it won't work i'm sorry
what why that's where the second part of the youtube ad algorithm steps in it chooses the
highest bidder that the viewer is likely to watch for long enough so that it can get itself paid
that 20 second ad followed by screeching might be the highest bidder but the ad algorithm will never
pick it because it knows that the ad is unlikely to pay out average watch time matters just as much
to advertisers as it does to youtubers because if people always skip their ads then the ad algorithm
will stop showing them this is why most of the video ads that you see will have people sitting in
front of a lamborghini making lots of flashy hand movements and making big promises very quickly
or it will be some bizarre gameplay video that is nothing like the actual app they are advertising
if they can keep you distracted trying to figure out what [ __ ] you are watching for long enough
for their ad to count then their ad will be shown more often and they will have a better
chance of finding more customers the remarkable thing is that this entire process takes place in
the fraction of a second between when you click on a video and when you start watching the ad
the exact formula is a closely guarded corporate secret and the way it works for youtube video
ads will be different from banner ads which will be different from facebook ads but all
these companies will be running an algorithm similar to the ad space auction house okay
but this doesn't explain why these ads are all full of scams right well wrong you're so wrong
and he'll prove you wrong well aside from that online advertising platforms have enabled scams
big time and it's not because these companies want to advertise bad stuff it's because these
companies are the best and only option that these advertisers have this is a totally new species
of power and influence ad space on television is very expensive because there can only be one thing
playing on a channel at any time this means that it's not in the budget of the smaller operators
pitching some new day trading seminar because the television channel can only have one thing
playing at a time its audience is also broader than something like a specific interest youtube
channel or website for big companies with a broad appeal product like the iphone that doesn't matter
but if a weird mobile game was to buy airtime on a tv channel they have no way of making sure that
the people watching the ad would be interested in mobile gaming the ads are also much less likely to
get approved for commercial or radio television because it is possible for a studio team
to individually review each and every ad that will get played on their station during a time slot
google and all other companies do have review process as well and i know they block thousands
of ad campaigns before they are ever shown to viewers but it simply cannot be as thorough as
tv stations running one stream of content at a time some ads will slip through the cracks and
some will get through because they are technically not doing anything illegal to be clear there is
nothing wrong with people advertising and selling online courses or mobile games it's not against
the law and it isn't automatically unethical if the course provides fair value for its price and
the mobile game plays like it looks in the ad then go ahead but there is no way for automated
systems to make this decision so most things get through the specific reason that all of you
all of my wonderful subscribers and viewers get fed an endless barrage of these ads is because
you are the prime target of these questionable advertisers they know when people are lonely
they know when people are depressed they know when people are looking at photos of your ex-romantic
partners they know what you're doing late at night they know the entire thing you are mostly
working aged men and women with an interest in finance if anybody is going to buy a course on
starting an online business it would be someone that fits your description fortunately you all
know better but the advertisers are still willing to give it a go because they are
statistically going to have much better luck with you than they will with a kid trying to
watch a fortnight video there is one other reason that these companies pick online advertising and
that's because it's just better they get to make sure that none of their money is going to waste
the accuracy with which they can reach their viewers is astounding and just a little bit scary
i have personally been fortunate enough to work with some legitimate businesses that have launched
big online advertising campaigns the targetability their platform offers means that not ascent is
going to waste which is good for big companies but crucial for small companies i know you all just
skip the ads that you see as soon as the option becomes available but if you do actually pay
attention to them you can notice a pretty sinister pattern the get rich quick style of ads promising
you a path to quit your 9-5 job only gets played during weekday morning commute hours lunch breaks
and the hours following the working day the advertisers know that people are more likely
to make a bad decision and give an overpriced course a try if they are dreading another hour
of the office or if they just got home from another day of being yelled at by their boss
you can't reach these people in moments using a tv normally when people sit down on the couch they
are going to be in a better mood than when they are scrolling through youtube on their way to work
it's much harder to sell someone the dream of changing their life if they happen to be enjoying
their life in that moment it really is no wonder that tv is a dying platform although they are not
doing much to help themselves i mean just look at the history channel have you ever wondered
how it went for making world-class documentaries to garbage conspiracy theories well go and watch
my video over on how history works to find out a big thanks again to hellofresh a sponsor i can
actually be proud of for making it possible for everybody to keep on learning how money works
thanks and press the skip add button why should i do all this work they're really good pictures
chris number three will shock you okay i'll press it oh no you pressed in the wrong place and now
you're being sent to the ad's website which also has additional pop-ups this is a nightmare