As YouTube Traffic Soars, YouTubers Say Pay Is Plummeting
Advertising rates on the platform have dropped significantly during the coronavirus pandemic
While boredom-inducing stay-at-home orders may be good for YouTube channel traffic, increasing by 15%, according to the New York Times, YouTubers say that the rates companies pay to advertise on their videos are dropping significantly. That means that despite increased audiences, some YouTubers are making less money.
Carlos Pacheco, a former media buyer turned YouTube adviser, says that across 180 YouTube channels he works with — which have a total of nearly 68 million subscribers worldwide across a range of different interests — advertising rates have tanked by an average of nearly 50% since the start of February.
“Everyone is pausing their campaigns on YouTube,” Pacheco says.
Data from the Interactive Advertising Bureau (IAB), an advertising industry body, suggests that one in four media buyers and brands have paused all advertising for the first half of 2020, and a further 46% have adjusted their spending downwards. Three-quarters say the coronavirus will be more damaging for the ad industry than the 2008–’09 financial crisis. That means fewer ads for Big Macs on TV and in newspapers, but it also means advertisers are less likely to compete for the pre-roll ads that usher you toward your next YouTube video.
Digital ad spending is down by a third, according to the IAB — a slightly less painful drop than the traditional media’s 39% cut, but still damaging. YouTubers are reporting anywhere from 30% to 50% declines in their cost per mille (CPM), or the amount YouTube receives for every 1,000 views of an advertisement served against a video. YouTube takes that money, keeps 45% for itself, and gives 55% to creators.
Roberto Blake, a YouTuber who also advertises his social media consultancy business through social media ads, says he has seen a 10% drop in his CPMs, to around $20. But, he says, other YouTubers have it worse. “People I know are going down from $8 to $5.50. I’m seeing people go down from $12 to $4.”
Those calculations are based on advertisers and their budgets.
If you’re a food-based channel focused on finding the world’s best street food in the planet’s farthest-flung corners, you might rely on tourist boards, airline companies, and restaurants to advertise against your videos. But when the restaurants are closed, the airplanes are grounded, and the tourism industry in all practicality doesn’t exist, there’s no reason for anyone in the chain to spend money advertising. While the entire industry is becoming parsimonious with their spending, some areas are affected less than others: You still need groceries, and given you’re likely working from home, office supply companies may be keen to market to customers.
“Everyone is pausing their campaigns on YouTube.”
Video game content received 13% more views across five key markets in Europe in the last month compared to the same time in 2019, according to data collated by Tubular Labs, a video intelligence company.
Though CPMs for video game content have also taken a hit, it’s a glancing punch to their finances rather than a knockout blow. “They’re dropping,” admits Pacheco, “but just not dropping as much as other channels.”
Hank Green is an author and one half of the Vlogbrothers YouTube channel, which has 3.3 million subscribers. He also runs a suite of different educational channels, including Crash Course and SciShow, which combined have tens of millions of subscribers. Even he’s not immune to the impact of falling CPMs: He said in a tweet in late March that while views across the multiple channels he runs were up by around 5%, CPMs dropped by 30%. Another creator, who uploads drumming videos to YouTube, reported his ad income had halved.
Jason Kint, CEO of Digital Content Next, a digital content trade organization, believes that TV will hold out better than YouTube. When budgets are tight, he says, brands seek safe harbors, and while YouTube has managed to project a message of professionalism in recent years, it still has an radical, independent streak that companies shy away from. “I would expect the savvier brand advertising money to go towards trusted brands and higher quality video, including traditional TV,” he says.
Both Pacheco and Blake say that falling ad revenue hasn’t discouraged YouTubers from producing more content, who see increased traffic to the video sharing platform from people stuck at home as an opportunity to attract new followers. “Everyone is being a little careful and tightening their belts in terms of the production side of things, but using this opportunity to gain audiences,” says Pacheco. “Think about it this way — it’s the perfect environment, where many people who wouldn’t be online consumers now are, so the audience is growing exponentially.”
But making more content unfortunately only makes the falling advertising prices fall faster. More content, says Blake, “means the bidding war for that advertising is lower. It’s cheaper to advertise, and there’s more inventory to sell it against. The market just shrunk, but more people are creating content.”
Many YouTubers, he says, are hoping that the pandemic’s impact on advertising lasts three or four months, before bouncing back. (They may be holding their breath: IAB data forecasts that advertising in the third quarter of 2020 will be 75% planned budgets, and only 88% the original planned spent in the last three months of the year.) “Anyone that makes money only off YouTube at the minute is in a very precarious place,” he says.
YouTubers have been here before. The “adpocalypse,” a 2017 scandal where advertisements were being placed against terrorist recruitment videos on the platform, caused a mass exodus of big business from YouTube. Some of the world’s biggest brands yanked their advertising budgets away from the site, hitting creators in the pocket.
The advertisers eventually returned after YouTube made sweeping changes to clean up the platform — changes which ended up irking the site’s independent creators, and making it more difficult for them to survive. In the interim, YouTubers sought income off the platform. They diversified their revenue streams by developing and selling merchandise, building up an audience on other social networks in case their YouTube channels disappeared, and joining platforms like Patreon, where fans can directly support their favorite talent financially with a monthly stipend. Those who did diversify back then are better prepared to weather the storm now. “Anyone that has all their eggs in one basket right now is getting hammered,” reckons Pacheco.