/There is a lot of money to be made on Youtube

There is a lot of money to be made on Youtube

I spent the last weekend of July in Avallon (Burgundy, France) at Kinnernet Europe. Besides connecting with lots of people and having a great time, I could learn some things regarding the sharing economy, new media metrics or the future of Youtube. I want to focus on this one, as it reaffirms my thinking that there is a lot of money to be made on Youtube.

Israel’s Uri Levanon explained how he is making money thru several Youtube channels, mainly one about terror movies, in which he gets a 55% return on the ads that Google sells. It’s like a blog but with video and that is generating enough money for him to be very optimistic about the future of this media.

These are the main points that he explained:

– Nowadays Youtube is dominated by networks that have over one million views/month (there is even one for food loving videos, Tastemade, and another one for fashion-lifestyle, Polished), so they need to aggregate traffic from several sources. He’s not working with these networks because, in his case, they would not bring him more traffic nor more income, as Google is not sharing its 45% commission with these companies. Gaming youtubers seem to be using these networks quite well.

– The big invention of Youtube has been the 5 second ad (called “TrueView”). As everybody is required to watch it, it’s bringing huge amounts of ad money to video producers, at a $8 to $15 CPM (much higher than what you get on blogs).

– Discoverability of recent videos is the big challenge right now. In a world in which millions of videos are uploaded every day, the scarce resource becomes the attention of users. How do you get it? There are new businesses to be created there! What networks are doing is creating all sort of apps to keep watchers inside their network as long as possible. One of those new business is Matcha, which has just been acquired by Apple, but there are also Dijit, Fanhattan or Squrl. All of them are based on proprietary algorithms that allow them to recommend some videos which are relevant for each user.

– 50% of video traffic is coming from mobile, which is huge but also risky as the size of the screen limits possibilities of showing ads or new videos. “There is no discoverability over mobile”, explained Levanon, so innovation is really needed on mobile.

– 50% of video traffic is related to some sort of recommendation, much higher than search and social. So it’s clear that innovation towards discoverability must increase possibilities of search, which are probably limited by the difficulties that video places on the understanding of whole contents.