Why YouTubers are Cashing In (hint: they are worth it)


moneyteen I've read more than a few articles that sensationalize the large dollar amounts that Digital Influencers are making. I've also overheard many people having conversations about this that indicate they think this is frivolous. I want to tell you that when I hear anyone snicker at what Digital Influencers are making, I automatically think:

  1. That person is out of touch with the reality of marketing today - these kids in their bedrooms with their iPhones making videos are who people listen to (especially Millennials, who everyone seems to want to reach).
  2. That person is going to regret their dismissal of Digital Influencers when they are priced higher than the current market rates for other forms of advertising.

Just because you don't understand why this is happening doesn't mean it isn't happening. And it's only the beginning.

Doing The Basic Math

The simplest way to describe the value is by presenting the basic math. When you work with a Digital Influencer, you are getting more than someone sitting in their bedroom for a few hours recording and editing a video. You are getting video production/editing/direction, talent, natural amplification AND celebrity/influence.

If I was to conservatively price out a basic YouTube video looking for 100,000 views (equivalent views to a mid-range YouTube influencer with around 200,000 subscribers), it would look like this:

Scripting/production/shooting/editing - $5,000 (for really basic stuff) Hiring basic talent (with charisma) - Average $250/hr - ACTRA says you have to pay for a full 8-hour day - $2,000 Boosting - Assuming the CPV (Cost per View) is $0.05 = $5,000 for 100,000 views Influence/Celebrity - hard to price this, but Kim Kardashian makes $100,000/hr for appearances and Snooki makes $25,000. Neither of them show up on the most influential list. Let’s be conservative, though, and say $10,000 for the appearance.

That nets out to a very conservative estimate of value for a YouTuber with 200,000 subscribers (and ~100k views/video on average) to $22,000 per video.

And when I say that I was being conservative about this estimate, think about the costs of a 30-second TV spot - which is reaching fewer and fewer people (and, in my opinion will continue to decline in relevance...if there ever was much anyway). According to the American Association of Advertising Agencies, the average cost of a 30-second spot on television in 2011 was $354,000. That's a pretty penny.

So, when Jerome Jarre, who has 7.2 million followers (and rapidly growing) on Vine is reported to make $35,000/vine, I say those brands get a helluva deal! Don't tell Jerome, but he should be making $500,000+ if he was charging for just the boosting capability (his vines see >10million unique views)!

I guess the $1,000,000 offer he turned down was a good move after all:

[youtube https://www.youtube.com/watch?v=CIuJOYceU3o?wmode=transparent]

The Bottom Line

When you hire a Digital Influencer, you aren't paying for the few hours they take to record the video or the quality of the camera or editing work. You are paying for their SOCIAL CAPITAL, which in their world is VERY tangible.

You can see their subscriber numbers and the way their audience is deeply engaged in everything they do (from what they are wearing to who they listen to and beyond). They've spent years building deep trust with their audience by investing in them and being open and transparent. According to a study by Variety, Digital Influencers rate higher than Hollywood celebrities in influencing purchases.

To dismiss them for being too young or their work being too fun/easy or their content being too casual is to completely miss the reality of the situation: your brand should have invested in digital content years ago. Just one 30-second spot would fund anywhere from 1-10 YouTube stations for a full year (depending on your production investment + complexity). That sort of investment would mean a smaller long-term investment, bringing that efficiency that many companies look for today.

The building your own audience ship hasn't sailed quite yet, though. Condé Nast, under the amazing leadership of Dawn Ostroff, is investing in a better digital content strategy on YouTube and it's really paying off. Their audience is growing rapidly as are their organic views. Much of their content is modelled on the types of videos the audience enjoys: entertaining, funny and authentic.

I still believe that working with Digital Influencers is one of the strongest short term marketing tactics you can deploy today and going forward, but it's also important you learn from them and invest in becoming an influencer yourself.

Let me know how you are investing in an audience below.

[title image credit: Thinkstock]

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