THE YOUTUBE SPONSORSHIP CRISIS: YouTube has a sponsorship problem.
Once upon a time, YouTubers used to pitch products and services that they truly used,
enjoyed, and believed in.
But, today, YouTubers pitch just about anything from questionable products like Skillshare
and Better Help to straight up scams like FTX, Luna, and NFTs.
And it’s not surprising why.
The amounts that these sponsors offer is downright stupid.
Remeber the FTX collapse, well I’m a relatively small channel, and I was offered $30,000 to
promote some sort of Shiba Inu bailout fund.
That’s of course an extreme example, but I’m regularly offered amounts of $5 to $10,000
from more tame sponsors several times every single day.
Given that I post about a 150 videos every year, if I did sponsors, that could be an
extra $750,000 to $1,500,000 every single year.
So, it’s not surprising why so many YouTubers put their morals aside and start shilling
for these sponsors.
Now, don’t get me wrong here, I don’t hate sponsors or YouTubers who use sponsors.
In fact, if done the right way, I think sponsors can benefit the YouTubers, the sponsors, and
the audience.
The problem is that in 99% of cases, the audience is left out of the picture.
In fact, the intended purpose of the ad is often for the audience to literally get scammed.
And even if the sponsor is a reputable company, it’s questionable how much value the audience
is actually receiving.
Doesn’t everybody just skip through the sponsored segments anyway?
I mean, why would you watch them when they’re virtually indiscernible from regular ad slots
that play before a video.
The only difference is that it’s the YouTuber pitching the product as opposed to some random
actor.
But, don’t be fooled, this doesn’t mean that the YouTuber is any more knowledge or
familiar with the product than some random actor.
When things go to crap like with FTX, YouTubers will be the first one to shift the blame to
you.
They’ll say something like, at the end of the day, it’s up to the viewer to determine
whether to use a sponsored product.
And that’s fair, but if that’s how YouTubers are gonna approach sponsors, why should you
as a viewer give sponsors any more importance than a random ad.
The answer is that you shouldn’t and that’s probably for the best.
But, it wasn’t always like this though.
At one point it in time, sponsors were actually enhancing content on YouTube and adding value
to the audience.
And there are still a select number of YouTubers for whom this is still true.
So, here’s how sponsors devolved from being a valuable production tool to being a shameless
money grab.
GOOD SPONSORSHIPS: Before we get into bad sponsorships, let’s
first establish what a good sponsorship implementation looks like.
One of the best examples of sponsorships being used well is none other than Mr. Beast.
For one, he thoroughly vets each and every one of his sponsorships, but that in itself
doesn’t make a good sponsor.
I mean, just because you get sponsored by a reputable company doesn’t mean that it’s
actually valuable to the audience.
Now, you could go down the rabbit hole of determining whether your audience demographic
matches the demographic of the sponsor, and what type of topics you are audience is interested
in, and all of that.
You should also make the sponsored segment as engaging as possible and maximize audience
retention and all of that.
But, there’s a much simpler way to determine if a sponsorship implementation is good or
not.
The key to a good sponsorship is that it should offer value even to viewers who skip the sponsorship
completely.
But, wait a minute, how could that be possible?
If a viewer doesn’t watch the sponsor, how could they possible get value out of the products
or services offered by the sponsor.
Well, easy, from the video that they’re actually watching.
At the end of the day, viewers are there to watch the video, not watch the sponsor.
So, by nature, sponsors should only be incorporated if they directly make the production possible.
This is obviously the case with Mr. Beast.
Each and every one of his videos costs millions of dollars to produce, and even with a hundred
million views per video, there’s no way he’s breaking even with just YouTube adsense.
In fact, he’s probably losing money even with sponsorship money, but the sponsors make
the loss much more manageable and affordable when combined with Jimmy’s other ventures.
In other words, you can go to any of Jimmy’s vidoes, cut out the sponsored portion completely,
and you’d still benefit from the extra production quality that was made possible by the sponsorship.
You don’t have to look that high up in the YouTube hierarchy to find good sponsors either.
Another channel with good sponsorship incorporations is Magnates Media.
If you’re not familiar with this channel, you should absolutely check them out as they
have extraordinary production quality.
They basically produce full on documentaries for free on YouTube.
Videos like this can easily cost several thousand dollars to produce if not more, so it’s
no question why they need sponsors.
Some other channels with solid sponsorship integrations are Johnny Harris, Wendover Productions,
Poly Matter, and Airrack.
Now, let me disclaim, I haven’t watched every video on all of these channels, so I
can’t vouch for the reputability of their sponsors.
But, what I can say is that for their type of content a sponsored segment is appropriate
as it actually makes the rest of the video better.
For most sponsored videos though, this is not the case which leads us to bad sponsorships.
BAD SPONSORSHIPS: A bad sponsorship is extremely easy to spot.
In essence, it adds nothing to the video or the production.
And the niche that’s most notorious for implementing such sponsors is the finance
niche.
As ya’ll are probably aware, the ad rates on finance videos are through the roof.
They’re usually able to earn $10 to $15 per thousand views from adsense.
For larger channels, this means that they’re able to earn as much as half a million per
month just from adsense.
On top of this, they’ve also got course sales, affiliate links, YouTube memberships,
patreon, and who knows what else.
So, they clearly pull in an extraordinary amount of revenue, but that’s just half
the story.
Not only do they have a ridiculous amount of money coming in but they have virtually
no production expenses.
For the most part, finance videos consist of just talking heads.
Most of these channels can be run be a single person and they are often run by a single
person.
At most, they may have an editor.
So, no argument can be made that the production needs sponsors or that sponsors make the rest
of the video better in any notable way.
If anything, the sponsor actually makes the rest of the video worse because the YouTuber’s
thoughts have to be censored to remain sponsor friendly.
In many cases, YouTubers aren’t even allowed to mention or talk about other brands even
in passing when a video is sponsored.
Bigger brands are usually the worst offenders and one of the best or I guess worst examples
of this is actually Google.
If you go to a Yes Theory video called “Running for 24 hrs to see all of Paris”, you’ll
see that a large portion of the video is filled with a random blur effect on Ammar’s arm.
The reason for this was confusing until you reached the sponsored portion of the video.
It turns out that the video was sponsored by Google Pixel, and it’s likely that Ammar
was using an Apple Watch and an iPhone.
Google’s sponsorship team was probably not super happy with this, so Yes Theory had to
go back and add a blur effect throughout the entire video and judging by the comments,
this very much made the rest of the video worse.
Some people even went as far as claiming that this alone made this video the worst video
they’ve ever produced.
Now, a constant blur effect is no doubt annoying, but this issue becomes exponentially worse
when we’re talking about finance content.
Back in the day, finance content used to be about index fund investing, house hacking,
and maximizing credit card points.
But, over time, more and more of the finance community turned to popularizing cryptos,
NFTs, and high risk options.
During the worst of it, YouTubers were pitching crypto brokerages left and right.
Here’s some of the most notable ones that you’ve probably heard of.
Voyager Digital, Celsius, Block Fi, Genesis, and FTX.
But, these brokerages have more in common that just being YouTube sponsorship favorites.
All 5 of them are now bankrupt.
I should mention that many of these YouTubers lost money themselves because of these brokerages,
but as Scott Shafer put it: YouTubers just lost money, viewers had their lives ruined.
UGLY SPONSORSHIPS: If you thought pitching risky investments
weren’t bad enough, it gets even worse.
A select number of YouTubers have straight up turned to scamming their audience.
A great example of this was Roobet.
If you’re not familiar with Roobet, it’s basically an online casino, and being a casino,
the odds are obviously stacked against players.
Pitching something like this would already be bad, but it’s worse than just that.
You see, Roobet had an affiliate program that essentially gave influencers 5 to 15% of all
the money that their viewers lost by using the platform.
So, these influencers were literally incentivised to have their viewers bet away all of their
money.
But atleast with Roobet, the viewers had the potential of making money or atleast the exhilarating
experience of playing those games.
With something like Logan Paul’s CryptoZoo NFTs, viewers were basically just handing
over money to the influencer and the scammers.
But, how did things get this bad?
Well, of course the money is part of it, but I don’t actually think that’s the main
reason.
The main reason is because of the classic “I did it because he did it”.
As audiences are exposed to sponsorships more regularly, there tends to be less scrutiny
and backlash.
This allows a few brash YouTubers to push the boundaries and pitch something that’s
just a little bit more risky.
Instead of pitching something like Vanguard or Fidelity, you start pitching something
like Robinhood or WeBull.
If the audience doesn’t respond poorly to these integrations, this gives bigger creators
the confidence to start pitching these as well.
And before you know it, it’s normal to pitch fintech companies, but why stop there.
Once again, a few bold YouTubers, will push the boundaries even more.
If stock brokerages are ok, why not pitch crypto brokerages.
And if crypto brokerages are ok, why not pitch NFTs.
And if NFTs are ok, why not just pitch scams?
And before you know it, you get to the situation that we’re currently in.
It really just comes down to how much the audience is willing to tolerate and put up
with.
And some creators like Jake Tran are figuring out the hard way that there is actually a
limit to what viewers will tolerate.
But, by the time they realize this, it’s already to late.
A BREAKING POINT: The silver lining about all of this is that
audiences are finally reaching a breaking point.
And with mainstream collapses like FTX, viewers are more wise to sponsorships than ever before.
Most viewers have come to accept that sponsors are just a part of YouTube just like ads,
and that you shouldn’t pay too much attention to them.
This sort of mentality is definitely for the best, but sponsorships don’t have to be
this way.
As we discussed, there is a good way to do sponsorships that actually improve the production
and viewing experience.
And with this breaking point being reached, hopefully, more YouTubers will turn to value
adding sponsorships moving forward and work on making the best videos possible instead
of just turning to the sponsorships that pay the most and milking their audiences just
to become even richer.
But, that’s just what I think.
What are your thoughts on YouTube sponsorships?
Comment that down below.
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