WrapPRO Special Report: Partner Incentives Helped Boost Ad Revenue Over $28 Billion, Making It a Dominant Player in the Creator Sector
“Revenue share programs succeed because they gamify creator compensation,” Flynn Zaiger, CEO of digital marketing agency Online Optimism, told TheWrap. “By paying creators more than half of the ad revenue generated by their content, YouTube is helping to retain creators longer.”
Content creators are really at the heart of YouTube’s business. Over the years, the Google-owned video hosting platform has become a place where people learn to cook, stream curated music or listen to live events. The platform has over 2 billion global users per month and a staggering 500 hours of video are uploaded every minute. This translates to one billion hours of YouTube videos watched every day around the world.
The main difference is that YouTube’s partner program is based on video ad revenue sharing, compared to a creative fund on other platforms which has a capped amount to distribute. Created in 2007, YouTube’s partner program offers a 55% split of advertising revenue to creators and keeps the remaining 45%, with no limit on how much a creator can earn. This year, YouTube said the number of channels worldwide earning more than $10,000 per year increased by 40% year-over-year, showing that emerging creators are also joining.
“YouTube has been amazing at fueling the creator economy,” said Victor Potrel, vice president of platform partnerships at digital studio TheSoul Publishing. “This approach to revenue sharing has been key in positioning YouTube as the leader in the online video space.”
YouTube said it paid creators more than $30 billion between 2017 and 2020 – $7.5 billion per year on average – while rivals lag behind by investing hundreds of millions to billions in paid creators . TikTok and Snap have creator fund programs with payouts in 2021 ranging from $250 million (Snap) to $200 million (TikTok). Facebook and Instagram’s parent company Meta declined to provide payout amounts for 2021, but pledged to pay out more than $1 billion to creators by the end of 2022.
“YouTube has a long history of paying creators directly – at scale,” a YouTube representative told TheWrap. “Almost 15 years ago, we launched the YouTube Partner Program, a one-of-a-kind open monetization program that anyone who qualified could sign up for and start earning. In fact, we share more half of the revenue generated with creators. Today, YPP continues to be one of the biggest drivers of the creator economy globally.”
Although YouTube didn’t provide a yearly breakdown of payments from 2017 to 2020 or numbers for 2021, the company appears to have pumped more money into paid creators than Facebook, Instagram, Snap and TikTok combined. Many of these players haven’t shared publicly how much they’ve paid creators over the years, and many of their creator funds have been launched in recent years.
On other social sites, a major downside for creators is the limited revenue available as more creators join the pool, as companies typically draw fixed budgets for these programs. Now, some platforms, such as Instagram TV and Snap Stories, are beginning to introduce revenue-sharing options for creators as they follow in YouTube’s footsteps to attract and retain top talent.
“Each platform has its own value proposition for the creator economy,” said Ryan Detert, CEO of influencer marketing firm Influential. “YouTube has undoubtedly paid the most money over the years from their advertising [program].”
This approach pays off for YouTube. After all, if creators earn more, so does YouTube, a win-win for everyone. Even after emerging from the pandemic boom to 2020, YouTube’s ad revenue has skyrocketed from around $15 billion in 2019 to over $28 billion in 2021. Last year, the parent company YouTube/Google company Alphabet reported annual revenue of over $257 billion, up 41% year-on-year, driven largely by its cloud and web services.
A Google advantage
As well as partnering with creators far longer than many of its younger rivals, YouTube is backed by tech giant Google/Alphabet. In 2006, Google acquired YouTube for $1.65 billion and began expanding overseas, launching the mobile app and introducing video ads the following year. Today, many well-known influencers and content creators have gotten their start on YouTube through its Affiliate Program, which has helped push the platform forward as a major content player.
“YouTube has developed a modern take on how they see creators… Creators are essentially businesses,” Ali Fazal, vice president of marketing at creator management platform GRIN, told TheWrap. “Through many of YouTube’s efforts, whether it’s VidCon or recent perks that were announced like profit sharing, they’ve consistently made an effort to help creators grow as businesses. and that’s why it’s well known as a network where creators can make a living and build a brand.
YouTube’s features also provide certain benefits to creators. Raquel Pinto, digital PR expert at Limelight Digital, is also a TikTok creator and said YouTube helps creators get noticed because the platform is optimized for search. Since YouTube has been around longer than other sites, she said, its algorithm is more fine-tuned to deliver content to a target audience.
“It really works like a search engine,” Pinto said. “By optimizing the title, thumbnail and description of your video… you will be able to increase your chances of being pushed by the platform. YouTube videos are also ranked on Google, which means if you create a high-value video, you can achieve a top spot in Google.
From a brand perspective, YouTube is also a resource for building businesses because there is no link limit in the description. This allows creators to promote themselves, whereas in short video content the description space is more limited.
“The longevity of a YouTube video far exceeds that of an Instagram or TikTok post,” Pinto added. “Also, since videos are much longer in terms of time, it gives the creator a chance to dig deeper into the details of a brand’s product or service and make it resonate more with viewers.”
This is part 1 of a WrapPRO series on Battle Over Content Creators.
Wednesday: How YouTube is winning the fight against content creators | Graphics
Thusday: Why YouTube – with its deep pockets – isn’t the ideal solution for all creators
Friday: How social media platforms are racing to win the short video market away from TikTok
