The major points of our interview transcript include:

•           – Why YouTube created MCN’s and how they’ve evolved
•           – Why creators often sign with MCN’s
•           – How brands should work with creators

The Confessional is a series of anonymous interview with influencers, brands, marketers, agencies and MCN executives to get honest, no-bullshit opinions on working in the space – the biggest gripes, the toughest lessons, the most valuable advice.

The following has been edited and condensed for clarity.

Coming from the MCN side of the equation – what was it like working with the brands, the creators, the agencies? What worked and what didn’t?

My understanding of the MCN industry is that Google created it as a way to help produce better quality content and help support creators. It’s largely populated with people who are coming from the talent side of the equation versus the advertising agency side or the technology side.

The biggest challenge is that the industry is new, so the norms have not been defined clearly. You have the MCNs, you have the agencies, and I’m saying “talent agencies,” like WME and CAA. You have the advertising agencies. You have managers. You have creators.

You have a lot more inputs to that equation than what you had back in the old television days. All those inputs and all these people who think that they have a role in the equation make it complicated to establish any real norms, or rules of engagement, metrics, and ways of doing business.

The players have not clearly defined their roles, and because of this everybody is running towards every opportunity. And that causes murkiness. That causes aggravation. It causes the true value of influencer to be masked because of the immense amount of waste of people’s time to get to the bottom line.

So, depending on your entry point you could end up with a very different deal?

Right, and just to focus on the MCN part of it, one of the big problems with MCNs is that they don’t harken back to their mission. Basically their mission was not defined by themselves.

Their mission was defined by Google and it is to add value. That’s ambiguous, but you could say there’s three places that MCNs could add value.Very few are doing this. You could say ad agencies and talent agencies could do two out of three of these easily. 

•       – By growing views & subscribers
•       – Providing business and/or production support
•       – Growing revenue

So, it’s important for MCN’s to be doing something different – creating technology, interesting integrations with available APIs etc.  Because you want to differentiate yourself and if you want an acquisition it’s good to own IP or unique processes .

Even if a creator is signed to an agreement, then at some point that creator’s going to want to get out of that agreement or that agreement’s going to expire. That’s not something other companies really want to invest in because you can go and hire talent.  This is the secret many in Hollywood do not want you to know, talent will “go” with almost anyone who is creating interesting stories, product, services.  The challenge is managing the workflow.  A lot of brands have success working directly with talent.

Anybody can hire your talent. That’s something people forget.

So, what’s the future of MCN’s?

It’s hard to build a product in technology that is actually going to be used by creators, but that’s the need.

We should be more focused on technology to help channels grow.

My classic example is Brendan’s Omelet Channel and my Crêpe Channel, and your handler at the MCN says, “Hey, Brendan. There’s this guy who’s making omelets and you’re making crêpes and you basically have the same audience and you’re both releasing videos on Tuesday. Why don’t you switch to Wednesday and point people there to Interviewee’s channel on Tuesday? And he’ll reciprocate and then down the line, let’s see if there’s a collaboration we could do.”

So, that is a perfect example of not only adding value, but growing the network because traffic goes back and forth.  A couple of MCNs have automated this process again points to the power of making great product and/or using technology to add value. More monetization opportunities. That’s an example of a great way an MCN could add value.

What actually happens is that everybody goes running into the space and the investors who put money in go, “Hey, wait a minute. You guys aren’t making any money. You’ve got lots of expenses, but you’re not selling enough.”

So, the MCN’s try and sell more media (not just brand integrations). The problem with that is that that media is already being sold by a person who has a Google business card OR it’s being sold in real time via an exchange.

The largest ad exchange called ADEX, which is part of DoubleClick, which is owned by Google.

By definition, if you have a seat on the exchange, you can buy and sell YouTube inventory. So, you can just go bid on channels in the exchange because there’s not an exclusive. You can get that inventory if you want it and probably pay less than what the Google salesperson is selling it for if you buy it via the exchange.

So that’s a challenge for MCN’s. Any savvy media agency is going to know that they can buy inventory via an exchange. They have a trading desk.

That is a perfect example of how an MCN fails because an MCN goes to try and sell more media, which isn’t really working because of the exchanges. And, as a result, helping to grow their audiences is falling by the wayside.

Why would the MCN’s sell media? Forget about that the exchange even exists – there are hundreds of Google salespeople crawling over every agency with piles of data. You can’t compete with that nor should you.

They [MCN’s] are just not going to sell the media. They’re not going to get the price that they want. And, the customers don’t want to buy their media because they’re able to get it already and from a cheaper source.

So, how were you guys actually adding value to creators?

Every channel, as part of our agreement would get optimized. We were trying to create technology to solve this, so that it wouldn’t become such a manual process.

You really need a technical understanding of what the Internet and in particular YouTube is…how it works. If you don’t understand the technical intricacies or the map of how to navigate this web, you basically won’t get the views that you need for free via SEO. And that is, once again, a point where MCNs have failed, where they don’t offer leadership. They don’t offer enough of those services.

I’m proud that we offered that. I think most MCN’s just made a lot of promises, and were just casting a wide net and pulling channels in as fast as they could without actually delivering much value.

There’s a lot of name dropping and that’s like heroine to a lot of young creators. They want to work with the big names or go to Hollywood and that’s what sucks them in. They have a little success and they think they’re going to be on CSI. That’s it. They’re just like, “Oh, my God, Hollywood. I’m doing this. Yeah.”

Let’s transition to the advertising side of things. Do you feel brands are doing enough to capitalize on this space?

What’s happening now is that MCNs, advertising agencies, talent agencies, and creators themselves are making it very difficult for a brand to figure out how to get from A to B.

I think that brands over a certain size…let’s say, if you have over $50 million in gross sales per year, they should be interacting with influencers and creating content directly.

And when I say “directly,” I meant they shouldn’t be going down the chain, the digital agency goes to MCN, who goes to the manager, who goes to so and so and then finally goes to the creator who comes up with the idea. That needs to stop.

There’s no reason to have that kind of expense. The whole thing about the Internet is that it removes layers, so you can have more direct control and access and that usually means you save money and you can do things quicker. And that’s what should be happening in 2015.

It should be, “Decide, create, deploy, measure.” And then you just keep doing it.

In terms of execution, there’s always tension between the creator and the brand. What do you think is the best way to navigate that?

Well, that’s called “creative tension” and that’s something that has existed since day one. And it exists in the writers’ room. It exists on the set.

When Martin Scorsese or Francis Ford Coppola is yelling at you and Marlon Brando in “Apocalypse Now” to act a certain way.  It exists everywhere. So, I think people are just basically fucking idiots if they don’t understand that.

But you have to set and control expectations. My rule is early, loud and often. You over-communicate to ensure everyone’s on the same page throughout the process.

What advice do you have for those working in the space?

I don’t care what anybody says. This is goddamn 2016.

There is so much talent, out there.  If someone’s an asshole and difficult to work with.  Guess what. You can find somebody else just as good. I’m not saying it’s going to be easy, but you can find somebody.

This latest interviewee for The Confessional is with a YouTube creator who has over two million subscribers across multiple channels. This creator is extremely well known, and has been on YouTube since 2008. He has (yes, it’s a he) a wealth of knowledge working with brands and building up channels.

He’s one of the most professional YouTube creators I’ve ever worked with and approaches his channel like a business in a way that few other creators do. He shared his approach to dealing with brands, managing brand deals, as well as his thoughts on how creators can better sell themselves to brands and get paid what they’re worth.

Some of the highlights from our interview include:

• His ‘Fuck You’ approach he takes to working with brands
• How YouTubers can negotiate and prove their value to brands and agencies
• Insight into how YouTube has changed (as well as how to keep up with future changes)

Enjoy.

(Editor’s Note: The following has been edited and condensed for clarity.)

I’d love to hear what’s it like for you when you work with brands? How do you approach that? What’s the process? What’s the pain point?

As much as I hate to say it I’ve had a kind of “fuck you” approach to brands.

I don’t mean to sound arrogant in that sense, but you don’t really have time to waste, so I try to be to the point and not be a jerk about it. But as far as brands are concerned, I’m very up front and I’m like “Hey, this is what I’d like to do and how much it will cost.”

I try to storyboard stuff from time to time or I’ll do a visual deck to make sure that we’re on the same page. There’s been maybe a couple of brands that nickel and dimed revisions and I just wouldn’t work with them again.

You’re definitely among the YouTube creators who are more professional, buttoned up, and process oriented. Why is that? Is that a conscious thing to differentiate yourself from other YouTube creators?

I want people to understand that this is a business and I’m treating it as such. And I really demand that respect and time, that effort and energy and in doing so I give them equal.

So if I spend a half-day creating a visual deck for a brand so that we are clear as to the flow of a campaign, great, because then I know that’s going to reduce stress and hurdles down the road where there might have been a lack of communication.

I don’t know if other creators do that level of work. I don’t necessarily do it to separate myself from them. I just do it to try to make my life easier.

It’s ultimately just trying to help make it seem more professional.

Do you think creators understand how to work with brands and how to address their needs and goals?

It’s hard to speculate for the masses because there are so many different types of creators out there. I personally feel that it’s hit or miss. For every example you can give, you can give another that’s completely different.

You can take someone like Michelle Phan or somebody who is insanely business savvy and understands a successful campaign strategy, how to biz dev etc. It’s all over the place.

But, I think it’s kind of hard to be successful if you’re not business savvy, because you end up burning bridges and then the well runs out.

Do you think YouTubers are getting paid what they’re worth?

I feel like certain ad agencies and brands understand the value of social media and digital content creation for their demographics. Unfortunately, a lot of them don’t necessarily see the value, or they see the value and they try to undersell it to the creator.

At the end of the day your rate card should reflect your ability to sell to your audience.

I know a lot of guys especially in the entertainment industry will say, “Hey, this is my rate, if you can afford it, great, if you can’t just come back to me when you can.” They don’t do the whole “Let’s do a deal this time and then later on we’ll figure it out,” because later on it never happens. Unfortunately it doesn’t because when you commit to doing something for a specific rate be it professionally or for a brand integration people hold you to it.

And more often than not the brand ends up coming back because the brand or the agency goes “Hey, well, I really want to do this with him”, and that ends up working in your favor.

How do you explain to brands why you charge them a certain amount? Do you go into detail on production costs, TrueView, comparisons to TV, etc?

All the time. That’s easily one of the best way to show a brand your value. You can buy views to target my audience and it’s going to cost you like $150,000 to get the same views and demographic as my video.

So when I say, I want $30,000 to $70,000, to do a custom integration, that’s worth its weight in gold. It’s a deal to get the content and reach the same demographic for half the costs of a media buy.

You’ve been on YouTube almost since the beginning. How do you think things have changed? What do you feel has changed the most?

The space is so competitive at this point.

People are willing to sell themselves short, and as a result you have to really work really hard to figure out where and how you can bring value to the viewer and capitalize off of it. It seems as though everything that you’re willing to do, somebody else is willing to do for the attention and you’re trying to do it for profit to pay the light bill.

A lot more people just see YouTubers and think “Hey, I could do that too.” It’s great because ultimately, I’m a consumer and I love shaking the system up and making sure people are creating good stuff.

Competition breeds innovation.

The second you feel complacent or you feel like you understand, it changes. It’s constantly evolving how people consume media and what’s effective.

What do you think is the key to success in building a channel on YouTube?

I don’t think there is one and it would be very arrogant for me to say definitively how to start a successful channel today. I think there are so many different variables.

If I were to start out a channel right now I would pick the one thing that I am the most passionate about that I enjoy doing every single day that I feel like I could come up with an endless supply of creative content. That’s it.

I would also spend so much money on marketing. I think that a lot of people spend their time creating a lot of really good content and then don’t bother marketing it.

But, regardless, you need to be brutally honest with the stuff that you create.

You know if you’re gaming the system or not. You know if you’re phoning it in or not, and that’s why I said I would just pick something that I was extremely passionate about.

The major points of our chat include:

•       The difference between buying on reserve vs Trueview
•       Why more people should be buying media on reserve
•       Whether MCN’s actually increase CPM’s for their talent
•       How many YouTubers don’t understand brands

The Confessional is a series of anonymous interview with influencers, brands, marketers, agencies and MCN executives to get honest, no-bullshit opinions on working in the space – the biggest gripes, the toughest lessons, the most valuable advice.

The following has been edited and condensed for clarity.

Can you explain the difference between buying in auction (TrueView) and buying media in advance (with reserve) on YouTube?

Think of it like a restaurant reservation. There’s a hot new restaurant in town and you want to go to this restaurant. Let’s assume you have to pay 20% more to make a reservation, right? But you can make a reservation well in advance for the best table, for your one-year anniversary, but your meal is going to cost 20% more. That’s like buying on reserve.

You know that you want to eat at that restaurant and you know the day you want to go eat there. You probably would want to make a reservation, especially if, let’s say, your anniversary is around Valentine’s Day or New Year’s Eve or Christmas when you know that it’s going to be busy at the restaurant.

While buying on reserve is paying a premium to reserve your media (or table if we’re continuing with the analogy) and TrueView is like walking in and hoping that you’re going to get a table.

Now, it could be that you walk in and it’s a slow night and a slow week. You get an amazing table and you pay 20% less. But, if it’s a hot restaurant, you may know that it’s never dead. You’ll have to show up and you’ll maybe wait an hour and then you’ll get a table. So it really sort of depends on the inventory — your risk tolerance — in a sense. Some people would prefer to take the risk and potentially get a really great deal, but other people are less risk-averse and would rather say, “I’d rather reserve in it advance, I know I’m going to get it. I don’t have the tolerance to go and show up and eventually have to wait in line.”

On TrueView, can’t you get the same inventory (ie any channel you want) but cheaper than reserve?

Buying on TrueView is operationally difficult to target on the channel level. Technically, yes, you can do it. There’s a section in adwords where you can target even to specific videos if you want. In my experience, though, that is an operational headache.

There’s also the idea that if you’re targeting a very specific set of channels and you’re in the auction, there’s a lot fewer impressions that you could win. If you’re like, “I need to fill a million impressions, only on these five channels,” you need to make sure that you win almost every auction to fill the campaign.

The final point – there are certain times of the year, Q4 for example, where TrueView is generally more expensive than reserve. I think if you were a sophisticated buyer of TrueView, you could probably target individual channels and get the same content for less, but there’s also risk involved. Maybe you won’t get the exact inventory you want because its already been bought on reserve or you’ve been outbid.

On the media side, creators often join MCNs thinking their CPMs are going to go up because more of their inventory is going to be sold on reserve. How often do you think that typically happens for a creator in an average MCN deal?

At the MCN I work at, when we talk about renegotiating or resigning channels, media and higher CPMs are oddly not a huge part of conversation. I don’t know if that’s a choice we make or that’s just not something that our creators ask about. Most of our creators are more concerned with content guarantees and with ancillary revenue opportunities. Book deals, licensing, stuff like that.

But I totally agree with you. I have to imagine it’s a bigger point of conversation for your mid- to long-tail creators, because I think that most of them are self-aware enough to realize that they’re probably not big enough to get brand integration deals. I have always been a huge fan, maybe naively, of reserved media. I think it’s one of the very few win-win-win products that MCNs offer.

Selling reserve video inventory is better for the creator because they don’t need to do anything and their CPMs go up. Even with YouTube rev-shares, those net CPMs are 20-30% higher than what they’re already getting via the auction and other AdSense revenue.

Selling reserve inventory is good for the MCNs because it’s operationally easy to do. Obviously you need to have a little bit of understanding, but there’s no back-and-forths with creators, margins are predictable because it’s based on flat pricing. Selling on reserve you don’t have unexpected travel expenses, you don’t have all of the stuff that comes with working with influencers — which is worth it, but it can be unpredictable. I think it can be a fairly decent margin business.

It’s an easy way to get revenue in the door at anywhere from between 20-40% margin depending on how you can scale it.

The third win is with the brands and agencies, in the sense that I think you could make a case that its more premium inventory than you could get anywhere else, or at least more targeted or more transparent. You could argue that a lot of the inventory that MCNs have in their network is among the most premium video inventory on the web. I think that’s good for advertisers.

For brands that do not understand or don’t feel comfortable with influencer marketing, buying media  allows them to dip their toe in the water.

That is my belief on the media side of things.

But, I don’t think selling the ad inventory has really been a focal point of any of the MCNs.

How do you think the brands and creators have evolved to work with each other? One thing we hear a lot, especially from creators, is that brand’s don’t ‘get it’ (ie that brands don’t understand how to work with YouTuber creators). But, do creators ‘get it’? Have they adapted to work with brands?

I think brands have adapted to working with creators more than creators have adapted to work with brands.

I wonder if part of this, is the result of creators having gotten into this business because they didn’t want to get real jobs. They figured out what they love to do and they’ve been savvy enough to figure out how to make a living doing it.

I often get asked by creators “Why can’t I just do a cool video and just slap a logo on it. Why is that not good enough?”

They don’t understand that these companies have real people working for them that want to be great at their jobs, who want to work hard and provide for their families, live happy lives.

The prevailing perception among YouTubers, is that brands are just some faceless organization with a shit load of cash that is just indiscriminately throwing money and they don’t actually want something in return.

In reality, there’s someone who’s vouching for this creator or making a decision and their boss, understandably, expects a report showing why they made this decision. There’s hundreds if not thousands of people involved in the entire process.

We have gotten to a point where certain people treat popular YouTubers in such a way that the YouTubers don’t feel that they need to think about accountability. They think that because they’re the new hot thing, they don’t have to be accountable.

So what’s the outcome of this in terms of project execution?

I continually experience that kind of over-promise, under-deliver from the creators …a lot of them are super entitled. They’re a pain in the ass to work with.

They are surrounded by Yes Men and Women, management, MCNs.

I hate to say this, but in some ways creators are almost like a commodity in a sense that, if the [REDACTED – NAME OF FAMOUS CREATORS] are a pain in the ass to work with, there are 50 other channels that are pretty similar to. That’s the case across the board.

Eventually, everyone will get wise that some creators are easier to work with others, word will get around that so-and-so is difficult to work with.

I think some creators are going to realize that they have burned themselves by being hard to work with. In some cases, yes they’re hard to work with because they’re jerks or they’re entitled, but I wonder if another part of it is that creators don’t know when to ask for help, or they try to be a one-man team, but they’re getting five brand deals a month and they’re making $10 million a year.

There’s no one-person company out there that makes $10 million in revenue. Most organizations that are bringing in the amount of revenue that a lot of these creators are doing are creating sustainable businesses by making sound business decisions, by hiring a staff, by putting structures in place to be able to follow timelines and execute deadlines. I understand why some creators may have no interest in doing that. They may not personally want to make $250 thousand a year on 10 million in revenue by building themselves into a company.

They may prefer to keep it independent and to make $10 million salary on $10 million in revenue, but I think eventually a lot of them will either burn out or they’re not going to be able to handle that much big money, and in two years, word is going to go around that they’re not easy to work with, and they’re going to fall apart.

——————————–

The last year has been pretty incredible within the YouTube ecosystem.

The space has gotten a lot of buzz and a lot more ad dollars flowing into it. Previously brands were experimenting, but not quite investing the way they should.

A lot of this really changed when Disney made a huge investment in the ecosystem, when they purchased Maker Studios about a year ago. When Disney spends half a billion dollars on something people tend to take notice.

The ad dollars really started flowing in as a result of the credibility that Disney lent to the space. The acquisition also kicked off a string of acquisitions and you could really sense and see the hype in all the PR and press that had flowed out of the space over the last year.

YouTubers were on the cover of Fast Company, they were on the cover of Variety, celebrated as the future of celebrity. They were on the cover of Adage and Adweek. And the overarching narrative throughout this was that YouTube is the future of media, entertainment, celebrity, advertising, and within the ad industry everywhere you looked it was YouTube is the future, the future, the future.

But I call bullshit. Not because YouTube isn’t the future of all these things, I think it’s got a bright future, it’s more that YouTube for a long time has been the past and the present. The platform is over a decade old and for nearly as long its been around has been having a huge impact on media, entertainment and advertising.

For as long as I’ve been working in this space, which is about nine years now, I’ve been able to work with a lot of the same channels and creators and leverage a lot of the same tactics and still continue to deliver value to brands and continue to surprise and delight them.

But brands have had a tough time with this space.

Look at the top 100 most subscribed channels on YouTube and there’s not a single consumer packaged goods or apparel brand. Now, compare this to other platforms like Facebook where there’s nearly a dozen brands in the top 100.

YouTube culture has become pop culture but that this is not a new phenomenon by any means, this has been in place for a long time. Despite this, advertisers have largely ignored the opportunities. But you can make huge gains in this space.

I imagine a lot of people are familiar with this space and probably thinking ‘I get it, I understand what’s happening’.

But, what do you think of when you hear ‘Breaking The Internet’? I imagine a lot of people think of Kim Kardashian’s Paper Magazine cover photo showing off her rather large assets. That photo was deemed to have ‘Broken the Internet’ because of all the press coverage and hype it generated online, and it did generate a lot.

The week following the release of the photo, there were close to 600,000 mentions of Kim Kardashian’s Twitter handle, which is a lot. But, that this was the first time in about a year that she generated more conversation and more mentions than this PewdiePie, the popular YouTuber who posts videos of himself playing video games with commentary.

In a typical month PewDiePie generates 50% more conversation on Twitter than Kim Kardashian. And what’s crazy is he’s not alone, he is by no means the exception.

A couple other great examples, Jenna Marbles versus Chelsea Handler. Jenna Marbles generated ten times as many tweets last month as Handler.

Neil Patrick Harris and Tyler Oakley. Neil Patrick Harris hosted the Oscars, he’s huge. Tyler Oakley generated, over 20 times as many mentions of his name.

It might be easy to dismiss this and say these may be outliers or this is a new phenomenon that digital stars are overtaking traditional stars, but, it’s not.

Going back to 2008, I was working with EA on the launch of the video game. And we came up with a pretty cool campaign. We gave early access to a portion of the game, where you could design your own creature, to a handful of traditional and digital celebrities. Everybody participating went, created their own creature, and then invited their audiences to go vote for them. The winner with the most votes was going to get $15,000 to donate to the charity of their choice.

We had traditional celebrities like Stan Lee,Katy Perry, Elijah Wood, Carlos Santana, The Flight of the Concords. On the digital celebrity side we had folks like Kevin Rose, Phil DeFranco, iJustine, Veronica Belmont, the lead editor of Kotaku.

Who do you think won? Was it Katy Perry who just did the Super Bowl halftime show? Elijah Wood who at the time was at the peak of his Lord of the Rings fame?

It wasn’t any of the traditional celebrities that won. It was Phil DeFranco who posted one video and in 24 hours got over 100,000 votes, it was incredible. He beat all the traditional celebrities by a landslide.

So, this shift has been possible for so long, I mean this was seven years ago.

Why isn’t everybody doing this?

The ad industry, my industry, admittedly is probably as guilty of this as much as anybody.
We’re obsessed with what our peers are doing, who they’re working with, what press they’re getting, what awards everyone is winning. This is holding us back.

For example, let’s take a look at the content creation process as it typically exists with the brands and agencies today. It’s not the most efficient system.

Typically the brand gives the agency a creative brief. The agency goes through rounds and rounds and rounds with a number of creatives, finally lands on an idea, they take that to the brand, typically there’s back and forth. Now from there they get sign off and it goes back to the agency. And the agency then doesn’t go off and produce it, what they do then is they go and hire a director.

After you finally hire the right director, then you go into post production – casting, storyboarding, and so on. After a few weeks you end up on set and then you’ve got to pay for a production crew, you’ve got to pay for craft services, it’s a whole ordeal. There’s unions, and if you go past eight hours you’ve got to pay time and a half and it’s a big expense.Then finally after that you go into post production – editing, color correction, music, sound design and so on. And at the end of it you’ve spent a couple hundred thousand dollars and nobody’s even seen your spot. Then you have to support it with media.

Now, you could do that or you could brief one of these YouTube creators.

Give them a brief, allow them to create, concept, produce, and distribute a video to their millions or thousands of fans and followers.

When they distribute content, it’s to their hundreds of thousands, or millions, of fans who are desperate for the content. And oftentimes, not always, you can do this for about as much as you pay for craft services on a typical production set.

Despite this, one of the things that I often hear when I’m kind of pitching this to clients is, “Well don’t you think this is a fad?

And, I don’t really think that’s the case and that’s because these creators have a direct line of communication to their fans, there’s a feedback loop there.

You create one bad video as a YouTuber, you see all the comments, the feedback, you can even look at the analytics and see where people are dropping off and you can leverage those insights and make changes and adjustments with the next video. People are not shy at all about sharing their opinion with creators. So, the YouTubers have an opportunity to learn from this.

Now, compare this to the studio system.

If you’re an actor and you’re in a terrible movie that didn’t make any money, the odds are a studio doesn’t want to go out and hire you again. There’s a saying, “You’re only as good as your last project.” And it makes sense, a studio doesn’t want to invest and throw good money after bad.

But, this direct line of communication that YouTubers have is incredibly powerful. And it’s more than just likes, comments, and shares, there’s a real tangible benefit to this. In fact, Variety did a study among teenagers asking them who are the most popular celebrities today and the results were pretty incredible.

Of the top 20 most recognizable celebrities 50% were YouTubers, and all five of the top five were YouTubers.

And, going back to my point earlier about this not being a fad, these guys having real staying power, number one on that list is Smosh, who were the first creator that I worked with way back in 2006. They haven’t gone away. Even back in 2006 they were averaging two million views a video, so it’s pretty incredible.

Now, who’s number 20 on this list that Variety put together? Number 20 on is Leonardo DiCaprio. Poor Leo, not only has he not won an Oscar, but he’s also lost a popularity contest to YouTubers.

As an advertiser it’s tempting to throw my money at these top creators – those on the cover of Adage or Adweek or Variety.

But, it’s important to keep in mind the context of the new media landscape. Old media is based on scarcity, new media is based on abundancy.

Twenty, thirty, and forty years ago there were only so many distribution outlets, and so many networks, so you only had so many celebrities. Today, the whole model has totally flipped on its head.

YouTube has:
– Over a billion visitors every month
– 300 hours of content being uploaded every single minute.
– 50% of visitors are coming from mobile (so it’s a highly fractured audience)
– 10,000 channels with at least 50,000 subscribers

So as an advertiser that’s a huge opportunity, 50,000 subscribers is a lot.

To put it into context, there are shows on MSNBC, that don’t even get 50,000 viewers. So you have 10,000 outlets with the potential for TV scale. So you don’t need to necessarily go for the biggest creator to be effective, bigger isn’t always better.

A great example of ‘bigger not always being better’ is six years ago I was working with DKNY on the launch of a new fragrance and we faced a bit of a crossroads.

We were deciding how to allocate our dollars, we knew we wanted to work with influencers and we were debating whether we should we give our money to one of the top five fashion makeup beauty gurus at the time, or should we distribute our dollars across up and coming creators?

We did the math and on a cost per view basis it made a lot more sense to distribute our dollars across ‘up and coming’ creators. We got about 50% more views than if we’d allocated it to one of the top more recognizable creators. This was six years ago, there wasn’t as much competition among advertisers as there is today. By going with the ‘up and comers’ we were not only getting a more efficient spend but we were also tapping into more niche communities that hadn’t been as saturated with brand names like the those following the top creators.

In working within this space I definitely recommend you let your competitors be star fuckers.

It’s good to buy low, sell high. Spread your dollars amongst the most relevant creators because you’ve got plenty of options in terms of scale.

So, why does all this matter?

Well, in a lot of ways, we in the ad industry are behaving in a manner not that dissimilar from the same teenagers that we’re trying to target. I mean, we’re obsessed with what our peers think of us, we want all of these awards, this recognition, these accolades without necessarily putting the time and the effort to understand the realities of the way the world is working today.

By continuing to tell ourselves YouTube, Snapchat, Vine, etc are something that’s going to be big in the future. We wash our hands of taking any responsibility and taking action today. We need to change our mode of thinking.

An analogy that seems appropriate is this story I heard about Arnold Schwarzenegger. I heard that when Schwarzenegger was training for Mr. Universe he took ballet classes because he thought it would help him with his posing on stage.

At first I thought that sound so ridiculous, a bodybuilder doing ballet?!?! His peers must have thought he was crazy.

However, when you take a step back it makes so much sense. He wanted to look more elegant and fluid when he was doing his poses. So what more effective way to understand how to do that than study ballet? Who cares if it’s different, it works.And I think we need more of that thinking in advertising.

How ridiculous does it sound to say, “Hey, you know, don’t give your money to a bunch of professional directors, invest it in YouTubers, and not even necessarily the most popular ones.”

We in advertising can spend a few more years and try and win some awards for commercials, or invest in this space and in new ideas and ways of working.

Because, YouTube is not going to future proof you, it’s not the end all, be all of advertising. It’s investing in a mode of thinking and basing decisions on facts, and the realities of the way the landscape is working. When you do that, even if it looks ridiculous to your peers, you’re going to adapt and change and set yourself up for success to evolve and be able to learn, and ultimately that mode of thinking is what’s going to let you thrive and set you up for success in the long run.

Over twenty thousand executives, YouTube creators, and fans were in attendance. The Anaheim Convention Center, where Vidcon took place, was packed – the event entirely sold out. For comparison, there were only 1,400 attendees at Vidcon’s inaugaral event six years ago in a Los Angeles Hotel.

Vidcon is a microcosm of the digital video ecosystem, and the growth in attendees in reflective of the growth of the industry. This year there were more fans, brands, platforms, and creators all vying for attention than ever before.

I’ll explore these macro trends in more detail below–

1) IT’S ABOUT DIGITAL VIDEO NOT JUST YOUTUBE

John and Hank Green had a great deal of foresight when they named Vidcon – VIDcon and not YOUTUBEcon. For the better part of a decade, YouTube has held a virtual monopoly on digital video, but, that is starting to change.

The digital video ecosystem has grown and diversified a great deal as video becomes the de facto form of communication for millennials.

In the time since last year’s Vidcon Vessel, Twitter Video, and Tumblr video have all launched. Facebook video has also grown into a viable YouTube competitor, as its made strides to promote its native video player.

As a result, this year’s Vidcon was about a great deal more than YouTube.

Vimeo, Vine, and Vessel all had prominent placement on the showroom floor as some of the event’s biggest sponsors. Vimeo’s logo appeared on all Vidcon schwag bags.

A great deal of conversation focused on these YouTube alternatives. Popular panels included ‘Experiences Branching Out from YouTube’, and ‘Options for Branching out from YouTube.’

Jason Kilar, founder of Vessel, and Baljeet Singh, Twitter’s head of video, also made keynotes. Each touted their platform’s benefits to prominent YouTube creators in hopes of driving adoption.

2) FILM IS THE NEXT FRONTIER
In the past I’ve compared VidCon to SXSW; that statement seems to be more true this year than ever.

VidCon doesn’t formally have a film festival component, but it may want to consider adding one next year.

Several YouTuber focused films premiered in the days overlapping with Vidcon. Smosh screened their first feature length film the night before Vidcon in Anaheim (the film has since reached the #1 spot in iTunes).

John Green, the co-founder of Vidcon, and writer of ‘The Fault In Our Stars’ premiered his latest film Paper Towns. Green, also announced a he’d signed a ‘first-look deal with film studio Fox 2000 Pictures’.

And, The Chosen, a horror thriller starring YouTuber Kian Lawley and produced by SuperGravity Pictures, also chose a theater near Vidcon as the venue to launch their premiere.

According to Variety we’ll be seeing a lot more YouTubers in films – there are at least a dozen more films featuring digital stars slated to launch this year.

3) BRANDS, BRANDS, BRANDS
Six years ago when I attended the first ever Vidcon, the only brand that had any presence whatsoever was a small company by the name of Orabrush – a tongue scraper.

Vidcon, and the ecosystem as a whole, has come a long way since then. A quick loop around the expo floor revealed a bevvy of Fortune 500 brands vying for tween eyeballs.

Over a hundred brands descended upon Vidcon. Kia, Nickolodeon, Cover Girl and countless others, spared no expense to make their presence felt on the expo floor.

YouTube even played matchmaker for brands and creators at Vidcon. To help get more brands collaborating with creators and spending dollars on the platform, YouTube invited a dozen popular YouTubers to meet with different brands.

These trends at Vidcon are representative of what’s happening within the ecosystem as a whole.

As a result of having audiences, creators have developed into real businesses. Consequently they’re expanding their offerings, and diversifying their profiles. They’re filmmakers, authors, and true celebrities. Meanwhile, brands and platforms are chasing them in hopes of reaching their valuable audiences.

The growth of Vidcon over the years, and its expanding focus beyond just Youtube is a reflection of the aspirations of the creators spawned from the platform.  I have no doubt next year we’ll see more creators branching out into new mediums and brands following close behind.

Kevin Kelly has theorized that to make a living, a creator needs to build a core fanbase of 1,000 “true fans” — people who can be relied upon to buy pretty much anything the creator puts out. Alex Carloss, YouTube’s global head of entertainment, recently echoed this sentiment in a speech at the MIPTV conference in Cannes. If all a creator puts out are YouTube videos, though, a creator with these thousand “true fans” is going to have a rough time making more than pocket change. So, to make serious money, a creator needs to look beyond ad revenue alone. If you’re a YouTuber hoping to make a living, and if you’ve managed to build that core fanbase, you’ll want to do everything you can to diversify your portfolio. Here are some of your options:

Merchandise

Custom apparel sites like Spreadshirt and District Lines have provided turnkey platforms for creators to go and sell their wares. Many creators, like Olga Kay, also build digital storefronts to sell their catchphrase-emblazoned t-shirts, coffee mugs, and stickers with the help of sites like Shopify. If you’re an emerging YouTube creator, merchandising is probably the first non-ad revenue stream you’ll want to start building.

Merchandise from popular creators has even made its way into your local mall, with shirts from YouTube personalities like Shane Dawson available at Hot Topic, right alongside the Tardis aprons and Vampire Diaries posters. Annoying Orange has even gotten into the toy game, and Wal-Mart stocks official licensed Annoying Orange boys pajamas.”

Affiliate Sales

A number of companies are beginning to tap into YouTubers to help drive affiliate sales. For example, check out this Epic Meal Time video — skip to the 2-minute mark to see the referral to Netflix.  Along with merchandising, this is one of the easiest ways for you to add a new revenue stream. Let’s say you’re a YouTube creator and you’ve got a video demo for a home construction project. Link your viewers to the Amazon page where they can buy the same snazzy tape measure you used, and for every customer who makes the purchase, Amazon will kick back a small commission.

Music

Creators are using the platform to build their music careers. In a previous Betabeat post, I outlined how Charles Trippy and We The Kings shot to #1 on the charts in large part thanks to Trippy’s YouTube fans. Other artists like Lindsay Stirling are skipping traditional marketing pushes for album releases, relying instead on the massive YouTube fanbase that helped get them a record deal in the first place.

Musicians use YouTube in a couple of different ways. For some, it’s where they first find their audience. If you’re a YouTuber working out of your bedroom and you’ve never played a gig, this is you. Other, more established musicians may use YouTube to build their existing fanbase — they’re already playing gigs and selling albums, and YouTube serves as a way to reach a broader audience. Either way, YouTube is a great way to build and connect with your fanbase. These are the people who will come to your concerts, buy your t-shirts, and pre-order your new single on iTunes, and your YouTube channel is a hub for connecting fans to all of those things. To make the most of it, make sure you’re updating on a regular schedule, and taking time to connect with your fans in the comments.

Apps

A quick look at the app store, you can find many apps from top YouTubers: the Internet Killed TV app helps fans connect with Charles and Alli Trippy. The PhillyD Official app does the same for Phil DeFranco. The Epic Meal Time game offers a food fight for your phone.

Having a core fan base has helped YouTubers raise funds for these types of projects. Toby Turner’s crowdfunding campaign for a gaming app based on his YouTube videos raised over $644k — far over his $240k goal. Smosh, hoping to develop “Food Battle, The Game,” (apparently YouTubers are obsessed with virtual food fights) raised the $250k via a crowdfunding campaign as well. Sites like Indiegogo and Kickstarter can be part of your larger revenue ecosystem, if you have a specific project in mind that needs funding, and if you are sure you can follow through with your commitments to donors. They say any publicity is good publicity, but that’s probably not the case if your crowdfunding attempt ends in a total trainwreck.

Movies and Television

Given that they’re already familiar with the medium, it’s no surprise that some YouTubers have made the leap to film. Camp Takota, the brainchild of YouTube stars Grace Helbig, Hannah Hart, and Mamrie Hart, was released on Valentine’s Day this year for digital download. This year will also see the release of I’m Vlogging Here, a documentary about blogging by YouTube star Shay Carl, and featuring a number of YouTube’s biggest stars.

Others have made the leap from one small screen to the other: YouTube channel AwesomenessTV premiered a half-hour Nickelodeon show in July, and Annoying Orange has a show on Comedy Central. If you’re on YouTube because you want to succeed as an actor, screenwriter, or comedian, the platform can be a great way to build your resume.

Brand Integrations

I’ll be talking more about brand integrations from the brand’s perspective in a future post. In this post, though, we’re focusing on brand integrations from the creator’s perspective. These deals, which have become quite common, vary drastically depending on who is involved, with managers, MCN’s and creators all having different arrangements depending on their deal structure and involvement.

These types of collaborations can be a huge boost to a creator’s bottom line. Of course, for a brand integration to be successful, it needs to be a good fit for the brand and the creator. After all, content creators are trying to build and maintain their own brands. One example of a successful collaboration has been Devin Super Tramp’s partnership with Ford. As part of the collaboration, impressive, heart-thumping stunts are carried out across gorgeous landscapes like the Moab, Utah canyon where the channel’s team went slacklining. It’s a good fit for both the channel and the brand: the cars are incorporated naturally into the videos, serving as anchors for a slackline stretched across a canyon. The stunt participants are clipped to the slackline with a safety harness, making the activity adventurous but not dangerous — a good balance for a motor vehicle brand to strike.

Now, there’s no guaranteed way to get a brand integration deal. Brands (or, more often, their creative and media agencies) choose the creators they want to work with, not the other way around. But there are a number of things you can do to make yourself attractive to brands:

• Own your niche. Focus on owning a particular audience, and be the best at it. Brands are interested in reaching the right audience, even if it isn’t necessarily the biggest audience.
• Update regularly. Choose a day and time each week to post updates, and stick with it. Consistency is good for building your fanbase, and also good for demonstrating your professionalism to brands.
• Be prepared for serendipitous events. Prepare a one-page synopsis of what makes your channel unique, and have copies ready when you go to YouTube-related events. Reps from creative agencies attend events like Playlist Live, Vidcon, and Bufferfestival — if you meet someone who represents a brand that would be a good fit for you, you’ll be ready.

Live Events, Concerts, and Appearances

One of the reasons YouTube has been such a perfect launchpad for entertainers and creators is the degree to which creators can interact with their audience. No surprise, then, that live events, talks, concerts, and appearances are such a popular way for YouTubers to capitalize on that interaction. Playlist Live drew 8,000 attendees, Vidcon drew 12,000. Bufferfestival (full disclosure — Brendan is on the board) had 6,000 attendees in its first year. Phil DeFranco’s “DeFranco Does” talks have drawn thousands of attendees worldwide.

Direct Sales of Ads

We’ll explore this one in more detail in a later post. Basically, if you’re averaging 1.5 million views per month, you’re eligible to direct-sell your ad space. If you’re up for the added legwork, doing so could pay off: after YouTube and networks take their cut, there often isn’t much ad revenue left over for creators. Sell it yourself, and you get a larger slice of the pie.

Conclusions

Louis Pasteur once said that “fortune favors the prepared mind.” If you’re a YouTuber hoping to make a living from your channel, you could do worse than to have this as your motto. Maybe nothing you do will ever go viral — that’s fine. A smaller, consistent fanbase is more important in the long run than one big flash in the pan, if you’ve set up multiple revenue streams rather than relying on a share of ad revenue alone. And if you do ever get lucky enough to go viral, you’ll benefit a lot more from it if you’ve planned ahead — if you’re consistently encouraging viewers to subscribe, if you’ve got fresh content ready to keep those new subscribers, if you’ve got a shop full of merchandise ready to go, and if you’ve got a dossier on your channel ready to go should an interested brand come calling, you’ll be poised to fully capitalize on your moment in the sun.

Thanks to Sarah Fama for helping edit and research this post.

You can read about my talk here. Overall, I’ll be sharing the tactics to create and promote shareable content. It should be a lot of fun, I’m currently working on pulling some data to help support the narrative of YouTube being the most powerful social network. Hoping to be sharing that on the blog some time soon.

Anyway, TNW always has amazing speakers and thought-leaders. Honestly, I never thought I’d be able to be one of them.

Here are a few of my favorite keynotes from previous years.

TIM FERRIS: How To Master Any Skill By Deconstructing It

Keynote Ryan Holiday at TNW Conference Europe 2013

YouTube is an amazing marketing tool – a hybrid social network/search engine/content host. However, it changes constantly, so I’ve gathered a list of my favorites resources here. You can also get email updates with the latest tools and resources here.

THE BASICS
Getting Started (YouTube)
2013 YouTube Marketing Guide (KissMetrics Blog)

MANAGING YOUR CHANNEL
SEO Basics/Tagging, Titling, Description (YouTube)
Video Thumbnails (YouTube)
In-Video Programming (ReelSEO)
Featuring Channels & Cross-Promotion (YouTube)
Creating a Playlist (YouTube)
How to use YouTube Annotations (YouTube)
Channel Art Templates (Canva)
Tips & Tricks (Vlogging Pro)

ANALYTICS TOOLS (Free)
Syncing YouTube and Google+ (YouTube)
How To Use YouTube Insights (ReelSEO)
Channel Statistics (VidstatsX)
Channel Statistics (SocialBlade)
Top Viral Ads Chart (Unruly Media)
Video Shares, Tags, & Stats (VidIQ Chrome Extension)
Channel Level Stats (Channel Meter)

ANALYTICS (Paid)
Brand & Rights Management (Zefr)
Influencer Identification (Tubular Labs) –
Enterprise YouTube Tracking (Visible Measures)
Campaign Tracking (TubeMogul)
Influencer Identification & Optimization (VidIQ)
A/B Testing for Channel Optimization (VideoLC)
Management & Monitoring (ChannelMeter)

YOUTUBE PAID MEDIA/TRUEVIEW
About YouTube Ads (YouTube)
How to run a Campaign (AimClearBlog)

BLOGS COVERING YOUTUBE
ReelSEO
New Media Rockstars 
TubeFilter 
VideoInk
Zefr
ReelnReel

YOUTUBE MCN’S (Multi – Channel Networks)
AwesomenessTV
Alloy Entertainment
Big Frame
Collective Digital Studio
Discovery Digital Media
Forefront.TV
Fullscreen
Machinima.com 
Maker Studios
My Damn Channel
Style Haul 
TasteMade

If there’s a resource you think I should add to the list, please email me or leave a comment below. Also, get updates with the latest tools here.