YouTube Is a Lousy Place to Make Money There are reasons for small businesses to spend resources on video, but revenue isn't one of them.
By Susan Solovic Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
A friend who's an avid fly fisherman occasionally posts videos of his exploits on YouTube. He'll never forget two things about his little hobby:
- The time a fellow fisherman recognized him out on the stream because he had seen his videos (it happened just once), and
- When Google deposited $100 to his bank account that he earned through the ads that run at the beginning of his videos (this also happened only once, in about three years).
Granted, the YouTube audience of middle-aged men who while away their spare time watching fly-fishing videos online is rather small when compared with other YouTube demographics, but few of us are going to make any significant change through Google's AdSense program on YouTube.
So the question becomes: What piece of the puzzle does a YouTube channel provide in the success of a small business?
In a small way (a very small way) I think my fisherman friend's first point above gives us an indication of how useful YouTube can be to a small business owner. Even without trying, he achieved a measure of branding success. He was recognized.
For him, fly fishing is just a hobby. However, if he decided to become a fishing guide, for example, he could post a significant number of videos on YouTube and probably do a good job getting his name out to his most valuable prospects.
If establishing your authority has any place in your marketing strategy, creating a good YouTube channel with fairly deep content is a great idea. Jason Calacanis, whose videos are very popular on YouTube, recently put it this way in a New York Times article: "YouTube is an awesome place to build a brand, but it is a horrible place to build a business."
Related: There Are No Participation Awards in the Real World
In fact, you might want to steer clear of even joining Google's AdSense program and running ads on your videos. According to those who have been working hard at generating revenue via ads, the odds are heavily stacked against you.
First, Google takes a big cut out of the ad revenue; some estimate it at 45 percent. Second, the downward pressure on ad rates is enormous. Finally, so many content creators are competing for eyeballs that it's almost impossible to get enough views to generate real money.
With all of this negativity as a back drop, why would you want to bother cheapening your small business' videos by running ads that aren't going to impact your bottom line anyway?
Of course, using your YouTube videos to sell your own products and services is a different story. Discovering the right blend of informative content to promotional content within a video can pay big dividends for your small business. Further, as I said above, establishing your position as an industry or product authority is always to your benefit.
One final note: Google won't deposit money you've earned from YouTube ads until the balance due hits $100. That's why it took my friend a few years to reap his handsome profit. He tells me his current balance is $27 and he's praying that he lives long enough to see it hit the magic $100 mark again! His views have been falling off.
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