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We got a lot of Youtube threads on here but I wanted to make one specifically on using Youtube to grow your business.
Out of all the free platforms, I think Youtube is hands down the best for real business growth.
I will add in a lot of what I have learned growing the Fox Web School channel on this thread but I will just kick this thread off one big lesson...
Adsense (video clicks) versus the lifetime value of a new customer.
The most common way people view the profitability of growing a Youtube channel is the money you get paid for video views.
Since Youtube stars, with millions and millions of views, get paid a lot it can seem like the best way to get profit. Or it can at least seem like getting a lot of views and subscribers should be your main goal.
That doesn't have to be the case.
It is possible to make millions from Youtube with a much lower view and subscriber count.
In fact - a Youtube channel with even 1,000 subscribers can be making some serious money.
To get into how this is possible let's just quickly break down some Youtube business models...
The main one (mentioned above) is to MAX video views with highly viral/shock/entertaining content.
We all know this model - a prank video with 100 million views, a gamer with a daily audience of 10 million people, a DIY wilderness channel with 500m views.
The idea here is simple. They get paid for the ads that Youtube runs before their videos and since they have a lot of views they make good money.
The business math is: adsense rate (cpm) x million of views = profit.
(CPM is an abbreviation for Cost per Mille, where “mille” stands for a thousand views)
To learn more about CPM rates on Youtube this is a great article: How much does YouTube pay for 1,000 views in 2020 — CPM rates
The average CPM on Youtube right now is around $2 (per 1,000 views).
A lot of people think it is a fixed rate for everyone but that is definitely not the case.
My channels CPM is...
Why my channel is so much higher than average is that it is very specific, high-value content.
Imagine you a large business who offers a simple solution to make a website and you have a monthly subscription model (like Wix or Squarespace)...
You have the option to run ads on a channel specifically for people who design websites (my channel) or you could run it on a random top crazy bike stunts video with 100m views.
An easy choice as to which one will have the best ROI.
But there will be others thinking the same thing too... so the price to advertise on these smaller niche channels goes up a lot since there are fewer videos with fewer views to run ads on. As an advertiser, you got to compete with other advertisers for a select few channels in your ideal target niche.
Takeaway > Niche-specific channels with a "buying audience" make way higher CPM (this is important for later).
So with my channel - since my web design content is so specific and my audience are people who are willing to pay well for relevant web design services and products my CPM is 24 times higher than normal. That is good but since I get low average video views (compared to a massive channel) I will never make millions with ads directly.
On the other hand, think of a business considering running ads on a video like "Crashing My Lambo Prank":
- The views and audience on a video like this would be so random (all ages, countries, income, interests, engagement levels)
- The viewers have little to none buying intent (it is just quick entertainment)
- There is no urgent need to get them to leave Youtube even if they were interested. Getting someone interested and motivated to leave Youtube can be hard when they just clicked on a funny viral video.
That means that while people will still run ads on these types of viral videos the value of each view is way less than other specific niche channels with more buyer intent.
In general, the businesses who run these types of ads will have a massive ad spend and a global audience - someone like Disney or Coke.
The overall lesson here for us is - viral videos make the most from Youtube Adsense overall but specific niche videos attract the best customers/buyers.
---
I will wrap up this post for now and continue it again soon but here is a final thought...
As a business owner would you prefer to have:
- A video with 1,000,000 views but with an audience that noone wants to buy anything so you only make the basic CPM (@$2CPM that is around $2,000)
- Or a video with only 10,000 views but around a specific topic that you just happen to also offer a great paid solution for???
...Let's say a solution with an average customer lifetime value of $1,000.
Which is more likely to be most profitable...?
Out of all the free platforms, I think Youtube is hands down the best for real business growth.
I will add in a lot of what I have learned growing the Fox Web School channel on this thread but I will just kick this thread off one big lesson...
Adsense (video clicks) versus the lifetime value of a new customer.
The most common way people view the profitability of growing a Youtube channel is the money you get paid for video views.
Since Youtube stars, with millions and millions of views, get paid a lot it can seem like the best way to get profit. Or it can at least seem like getting a lot of views and subscribers should be your main goal.
That doesn't have to be the case.
It is possible to make millions from Youtube with a much lower view and subscriber count.
In fact - a Youtube channel with even 1,000 subscribers can be making some serious money.
To get into how this is possible let's just quickly break down some Youtube business models...
The main one (mentioned above) is to MAX video views with highly viral/shock/entertaining content.
We all know this model - a prank video with 100 million views, a gamer with a daily audience of 10 million people, a DIY wilderness channel with 500m views.
The idea here is simple. They get paid for the ads that Youtube runs before their videos and since they have a lot of views they make good money.
The business math is: adsense rate (cpm) x million of views = profit.
(CPM is an abbreviation for Cost per Mille, where “mille” stands for a thousand views)
To learn more about CPM rates on Youtube this is a great article: How much does YouTube pay for 1,000 views in 2020 — CPM rates
The average CPM on Youtube right now is around $2 (per 1,000 views).
A lot of people think it is a fixed rate for everyone but that is definitely not the case.
My channels CPM is...
Why my channel is so much higher than average is that it is very specific, high-value content.
Imagine you a large business who offers a simple solution to make a website and you have a monthly subscription model (like Wix or Squarespace)...
You have the option to run ads on a channel specifically for people who design websites (my channel) or you could run it on a random top crazy bike stunts video with 100m views.
An easy choice as to which one will have the best ROI.
But there will be others thinking the same thing too... so the price to advertise on these smaller niche channels goes up a lot since there are fewer videos with fewer views to run ads on. As an advertiser, you got to compete with other advertisers for a select few channels in your ideal target niche.
Takeaway > Niche-specific channels with a "buying audience" make way higher CPM (this is important for later).
So with my channel - since my web design content is so specific and my audience are people who are willing to pay well for relevant web design services and products my CPM is 24 times higher than normal. That is good but since I get low average video views (compared to a massive channel) I will never make millions with ads directly.
On the other hand, think of a business considering running ads on a video like "Crashing My Lambo Prank":
- The views and audience on a video like this would be so random (all ages, countries, income, interests, engagement levels)
- The viewers have little to none buying intent (it is just quick entertainment)
- There is no urgent need to get them to leave Youtube even if they were interested. Getting someone interested and motivated to leave Youtube can be hard when they just clicked on a funny viral video.
That means that while people will still run ads on these types of viral videos the value of each view is way less than other specific niche channels with more buyer intent.
In general, the businesses who run these types of ads will have a massive ad spend and a global audience - someone like Disney or Coke.
The overall lesson here for us is - viral videos make the most from Youtube Adsense overall but specific niche videos attract the best customers/buyers.
---
I will wrap up this post for now and continue it again soon but here is a final thought...
As a business owner would you prefer to have:
- A video with 1,000,000 views but with an audience that noone wants to buy anything so you only make the basic CPM (@$2CPM that is around $2,000)
- Or a video with only 10,000 views but around a specific topic that you just happen to also offer a great paid solution for???
...Let's say a solution with an average customer lifetime value of $1,000.
Which is more likely to be most profitable...?
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