The YouTube Formula. Derral Eves

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Now that the law had been involved, YouTube had to settle some things for copyright holders. First, they literally had to settle that hefty lawsuit (the terms of settlement were undisclosed), but they also had to settle how they would proceed from there, and the Content ID system was the answer. I can't stress enough how monumental this was to YouTube's success. YouTube likely would have followed the fate of the original Napster and been shut down if the Content ID system hadn't been implemented, and a lot of creators and businesses like you and me would be doing something else. It was a total game changer.

Ad Revenue Sharing

      In 2007, while the big copyright problem was simmering down, YouTube added two features that would make a similarly huge impact on its future. These features would be problematic in some ways, but also they would significantly change advertising and how creators could make a living from YouTube. Which features could be this consequential? (1) In‐video advertisements and (2) the Partner Program.

      Advertisements on YouTube have evolved a lot over time. They used to be display ads or they appeared underneath the content, but with these changes, ads would pop up right in the content where the viewer was looking. And now the creator of that content could be compensated via ad revenue sharing. This is how the YouTube Partner Program began. Creators became super motivated to make good content that would get more viewers watching, because now, more views equaled more money. Creators and businesses really wanted to be YouTube Partners!

Unfortunately, this also meant that creators realized they could use tactics to get people to click on their videos, even if those tactics were divertive. Their aggressive “bait‐and‐switch” strategies included misleading titles, sensational thumbnails, and superficial content that strayed from the original purpose of the video. They wanted to get people to click on their videos at any cost so they could produce revenue from the ads being integrated with their content.

      Let's not forget the first member in the YouTube ecosystem here: the viewer. This new ad sharing program created a big problem with viewer satisfaction. People began spending less time on YouTube because of the in‐your‐face ads and because of clickbaiting that hinted at what they were looking for but actually didn't satisfy that end at all in the content itself. In short, viewers felt tricked and unsatisfied.

      In addition, many YouTube viewers got angry at these “sell‐out” creators who ran ads in conjunction with their content. They even went so far as to join channel boycott movements against creators. Seeing ads today is just part of the online experience, but back then, it was such a big deal that it interrupted the ecosystem.

      As you can see, the integration of the Partner Program further complicated YouTube's delicate ecosystem. Keeping advertisers happy was an obvious priority because that's where the money came from, but YouTube also had to keep creators and viewers happy to achieve this, and the task was proving to be extremely difficult. Creators wanted their fair share in ad revenue without being labeled a sell‐out, and viewers wanted to watch content without feeling tricked or sitting through ads on every video.

      Let's pause here for a minute. Before we run away with all the problems the Partner Program created, I want to emphasize how monumental its existence was. Google had pioneered advertisement revenue sharing with its AdSense program, and they implemented that program with YouTube. They took it to another level going from display ads to video ads, because video ads were more effective. They could charge advertisers more money for video ads, so YouTube made more money this way. Because YouTube didn't create their own website content, they had to incentivize creators to make good content that would get people coming to the platform.

AdSense was the origin of advertisement revenue sharing. This was absolutely uncharted territory! It was like the great California gold rush, but it was the gold rush for digital marketing in the twenty‐first century. Companies had never offered a portion of their revenue to the general public before!

      YouTube said, more or less, “Hey folks, if you make good content that viewers will come and watch on our website, we'll share some of the advertisement money we get with you.”

      And creators were like, “Wait, really? You mean I can get compensated for my hobby? Potentially earning enough that I can replace my boring nine‐to‐five income doing something I actually like, and can make more money doing? Well, then I'm going to make the best darn videos you ever saw!” And the gold rush was on. The channel owners grabbed their pickaxes, installed sluice gates, and started panning for gold.

      So many creators, businesses, and advertisers saw the potential for massive payout with ad sharing, and they wanted in. The risk was that they might not actually make any money if they didn't get viewers, but the opportunity was worth the risk, and it paid off big for so many of them. This was a genius move by YouTube! They were enlisting a worldwide army of creators to do the grunt work to get visitors to their website for a piece of the revenue. Channel owners were ready to compete against each other for a chunk of the gold.

      Advertising companies could get into this market very inexpensively. They could track their market, get a lot of eyes on their product quickly without expensive campaigns, and they could do it for literally a fraction of traditional marketing cost. A lot of big brands and businesses gave it a snooty pass because they just didn't realize what they were missing in the beginning. They were too good for it.

One of my favorite examples of a YouTube advertising success story comes from a product called Orabrush. Orabrush is a tongue cleaner that was invented in the early 2000s by a guy named Robert Wagstaff, aka “Dr. Bob.” Dr. Bob had tried to market his tongue cleaner via traditional product‐pitching means, but the companies he approached wanted nothing to do with it. He even invested a lot of his personal money to run an infomercial. It flopped. So at the ripe old age of 75, Dr. Bob turned to a marketing class at his local university and asked if anybody had any bright ideas.

      My good friend Jeffrey Harmon was a student in that class, and he told Dr. Bob that he thought they could sell the product online with a YouTube video. He took on the tongue cleaner project with the promise of Dr. Bob's personal motorcycle as payment for the campaign. Jeffrey and some creative friends made their YouTube video for just a few hundred dollars, and it went viral. People wanted to know where they could buy Orabrush in their own locations, and distributors started to pay attention.

      An ad campaign like this had never been done on YouTube, but Jeffrey saw its potential. “We took a product from zero sales anywhere to worldwide distribution,” Jeffrey told me. “And we didn't do it with traditional marketing. It was 100% YouTube. We couldn't have made it happen any other way.” Orabrush became a multimillion‐dollar brand that is sold in more than two dozen countries in 30,000‐plus stores.

      For the record, Orabrush's YouTube channel has more than 38 million video views to date. For a tongue brush. Orabrush was acquired by DenTek in 2015.

YouTube leveled the playing field for a small‐town, old‐man inventor and a few college kids. They had access to the market that was simply unavailable to regular people before YouTube. It literally changed the trajectory of their lives. Jeffrey Harmon became cofounder and chief marketing officer at Orabrush and has gone on to cofound the Harmon Brothers marketing agency with his three brothers, where they have created extremely successful online campaigns for PooPourri, Squatty Potty, Purple, Lume, and many more businesses. Others who worked on the original campaign also have made successful careers out of the path that was set from Orabrush's beginning.

      Another friend of mine, Shay Carl Butler, began his YouTube career way back in 2006 and was one of the original Partners, so if anyone has a good handle on how the program began and how it has changed ever since, it would be him. “The YouTube Partner Program was so exciting in the beginning, and everyone who knew about it wanted a piece,” Shay СКАЧАТЬ