YouTube is part of Alphabet, the mother company that owns Google, YouTube, Android, and much more. Google acquired YouTube in 2006 for $1.65 billion, and it turned among the most successful video platforms on Earth. Now YouTubers can make money in a few ways: YouTube Partner Program, Affiliations, Sponsorships, Crowdfunding, and selling their own Products.
Understanding YouTube Business Model
Now to the question, how do YouTubers make money?
YouTube Partner Program
The YouTube Partner Program enables users to monetize their videos via CPM and CPC advertising.
In the CPM model, the viewer must watch the ad for at least thirty seconds or half the total runtime of a shorter ad. On the other hand, CPC advertising works by paying YouTubers for how many clicks the ads in their videos receive.
To be eligible for the YouTube Partner Program, the channel must have reached 4,000 watch hours in the previous 12 months with a minimum of 1,000 subscribers.
Affiliate marketing is a popular form of making money on YouTube. Here, a merchant will pay the YouTuber a commission for traffic or sales they refer through their channel.
Affiliate marketing in videos usually takes three forms:
- A simple video reviewing the product.
- A video recommending a product or service.
- An unboxing video where the YouTuber films themselves taking a product out of its box for the first time.
YouTubers then make money by insert affiliate links into video descriptions.
YouTubers with smaller audiences can profit by encouraging their followers to crowdfund the creation of new content.
Many use the crowdfunding service Patreon because the platform makes it possible for YouTube channel subscribers to sign up for extras. For example, one YouTuber might charge $10 a month for exclusive content. Another might charge $30 a month for personalized, consultancy-based videos.
Brands often approach YouTubers with large, devoted followings to bring a human element to their promotional strategies. Less well-known creators can also approach brands known to sponsor YouTube videos directly.
Video sponsorship is seen as the holy grail of revenue generation, and for good reason. While prices vary from industry to industry, many partnership negotiations are based on a price of $20-$30 per 1,000 views.
Marketing funnel integration
As one of the most trafficked websites in the world, some YouTubers make money by directing viewers to a landing page and collecting their email addresses.
Essentially, this allows them to harness the popularity of YouTube while having full control over developing a relationship with the target audience. They can then sell their products to viewers “in-house” and collect a much higher percentage of the resultant sale price.
- YouTube has over 2 billion monthly active users and a diverse range of revenue generation methods. While the platform has high revenue potential, most methods require a reasonably substantial following.
- YouTubers commonly make money via affiliate advertising. They can also integrate their content with platforms such as Patreon to effectively fund new content creation.
- Brand sponsorship is one of the most profitable ways YouTubers can make money. Industry standards vary, but a good starting point for any sponsorship negotiation is around $20-$30 per 1,000 views.
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