How To Make Money On YouTube 1.0
How To Make Money On YouTube 1.0
Table of contents
Table of Contents
Table of contents................................................................................................................................................................................2
Introduction.........................................................................................................................................................................................3
YouTube as a business......................................................................................................................................................................6
Ad revenue...............................................................................................................................................................................9
Brand sponsorships..............................................................................................................................................................10
Forms of sponsorships...................................................................................................................................................11
Media Kit..........................................................................................................................................................................13
Make an agreement.......................................................................................................................................................13
Golden triangle................................................................................................................................................................................14
1. YouTube.............................................................................................................................................................................14
2. Website..............................................................................................................................................................................14
3. Email list.............................................................................................................................................................................16
Taxes..................................................................................................................................................................................................19
Final thoughts...................................................................................................................................................................................20
In this book I talk extensively about how you can run a YouTube business.
I talk about my golden triangle for a YouTube business and insights on how you can grow them.
In fact, the free ebook that you are reading now, is part of my business strategy.
I’ll talk more about it later.
Running a business is also how the government sees it when it comes to paying taxes.
So I will talk about taxes later in this book.
It wasn't until January 2017 that I started the first YouTube channel for myself.
One of my hobbies is DJing and music production, so I started a YouTube channel about DJing and music
production.
Over the years I started and deleted multiple YouTube channels.
I experimented a lot and learned a lot about what works and how to market your content.
The interest and drive to get good at YouTube is what me drove to start a blog about YouTube.
You can find the blog here:
https://www.socialvideoplaza.com
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Two typ es of videos
You can make two types of content:
There is a risk here, if you release a streak of ‘bad’ videos, your views will plummet and so will your ad revenue.
You have no evergreen videos to back you up.
This type of video is a rat race, you need to put in the hours continuously, if you don’t, you lose.
The niche that I found: “laptops for music production” are short lifespan videos.
Those videos are only relevant for a couple of months.
I can see this in the statistics.
I have to keep making these videos over and over again in order to stay on top of the competition.
I don’t like that, I’d rather prefer making evergreen content.
When it comes to growth, it is much easier to grow with evergreen videos, because your grow exponentially.
Because your content is relevant for a longer period, every video adds up to your total views per month.
Instead of having 1 or 2 most relevant videos that generate the majority of your views (like short lifespan videos), it
can be 100 videos at the same time that drive your monthly views.
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Some products, like DJ equipment, have life cycles of 5-7 years.
It would be ideal to make a tutorial about these products.
That famous photo editing program that everyone uses, changed nothing in 15 years, so the information will
probably be accurate for the next 15 years too.
I shifted heavily towards evergreen content when I realized that it was just the clever thing to do.
You simply don’t need to work as hard to grow.
Even if you decide to quit tomorrow the content will still be watched in two years although the views will slowly die
down when you stop uploading.
If you lay multiple graphs of evergreen videos on top of each other, you have exponential growth.
If you combine that with the extra promotion you get by the increased channel authority, you have the potential to sky
rocket your growth.
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YouTube as a business
YouTube is a fun hobby: making and sharing videos online, but it has the potential to become part of a very
profitable business model.
It can be a business model around your YouTube channel or using YouTube as a lead magnet for your existing
business.
Both can be very lucrative.
Having a YouTube channel is the smart thing to do if you want to sell a product to the whole world.
In the book “Rich Dad Poor Dad” by Robert Kiyosaki, the author talks about assets and liabilities on the balance sheet
of a company.
Assets put money in your pocket and liabilities takes money out of your pocket.
The rich acquire assets, the poor acquire liabilities Robert says.
Assets are things like stocks, real estate and royalties.
Liabilities are things like debt (anything you pay interest on: credit card, mortgage, …).
A YouTube channel is the perfect example of an asset.
As with most assets Robert Kiyosaki talks about, they require an investment and most people are just too lazy or
scared to put in the time, effort or money.
But those who do invest will find out that YouTube is a goldmine for generating warm leads.
I talked earlier about the two types of videos: short and long lifespan videos.
I said that that evergreen content (long lifespan videos) are just the smart thing to do, here’s why:
A short lifespan video is a liability.
You need to keep investing time and money (staff and material) to keep producing content that earns you money.
An evergreen video is an asset.
It is still relevant in a year.
The time and money you invested keeps paying you money, be it via ads or selling your product.
The content will eventually pay for itself when you earn your investment back. After that it’s “free”.
But that “free” still generates money for you.
The same thing applies to sponsorships, you can charge more for evergreen content than short term content.
Multiple channels
If you choose to make a business out of YouTube, consider having multiple channels in the future so you have more
than one egg in your basket.
People that say that there always should be only one YouTube channel.
I strongly disagree, don’t bet with “money” you can’t afford to lose.
Having one channel leaves you vulnerable, you don’t own YouTube and have no say in what happens in the future
with YouTube.
You have to subject yourself to the graces of Google and their algorithm.
You wouldn’t be the first to lose a channel, because the algorithm all of a sudden “decides” not to promote you
anymore.
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You also wouldn’t be the first who’s account got hacked.
You also wouldn’t be the first to get a copyright strike that leads to channel termination.
It takes only 3 strikes in a library of 10.000 videos to lose your channel.
This can be as simple as an innocent copyright dispute with a record label that yesterday allowed you to use a song,
and today the boss of the label wants a new Ferrari.
If you have only one channel it can take away all your revenue in one single moment.
Make sure you have other revenue streams to support you, like selling a product online that also gets you leads via
Google or Facebook.
Always make a backup of your videos, in the worst-case scenario, you “only” have to re-upload them to a new
channel.
Multiple channels can be multiple YouTube channels, but also multiple social media to cross pollinate each other.
Your YouTube channel can pollinate your email list, Instagram, Facebook, Twitter and your website, but also the other
way around.
If you build an entire ecosystem around your channel then you can “fall”, but instead of breaking a leg you only bleed.
It still hurts, but you are quicker back on your feet.
Let’s take a look at two YouTube channels which cross pollinate each other:
A technology channel that makes 10 minutes videos with reviews, explaining tech problems and building computers.
The second channel is a tech news channel.
The same hosts appear on both channels, which creates familiarity.
The video format of both channels is wildly different, but they serve the same audience.
The channels can refer to each others channel to gain subscribers for the other channel.
If one channel goes down, the other lives.
I always recommend starting with one channel, see how it goes, learn and try to be successful.
Later create the second channel.
If you want to sell your product, you need to do that in a way that you still provide value to the viewer for free.
The principle of reciprocity applies: give value and you will receive value in return.
When you dedicate a whole video to the promotion of your product, do it only in a responsible ratio of videos, like
one in ten videos.
In nine videos you give value, in one video you target only the sale of your product.
If you only upload commercials to your YouTube channel, nobody will watch it, because nobody goes to YouTube
with the intention to be sold to.
Also, remember that YouTube doesn’t like when viewers leave the platform, be scarce with hyperlinks in your
descriptions.
When you provide value to viewers for free, it will be one big testimonial for your knowledge.
By showing your expertise, you gain trust.
Based on trust, you can sell a product.
For example:
A tutorial on how to use the paintbrush in that famous photo editor has value, selling the digital brushes you use in
the tutorials can be your business.
Another example:
When you talk on your channel about editing videos, you must be an expert in the field of video production (in the
eyes of the viewer).
For that reason, you can ask four times the fee of a normal video production.
Another example:
A YouTube channel with tutorials on how to solve IT problems.
Those problems are solved with your (software) product.
A solution to a problem could be: “how to count your cash register fast”
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How can y ou mak e
Ad revenue
It may not be a lot, but it’s still money.
Crowd funding
with sites like Patreon or Gofundme
Merchandise
t-shirts, caps, hoodies, mugs, mobile phone cases
Digital products
brushes for photoshop, script templates, ebook
Affiliate marketing
Link to products that you mention in your video.
For every sale you get a small commission free.
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Ad revenue
YouTube advertisement revue has a CPM (Cost Per Mille – money you earn per 1000 views) of 2 - 25 euro, depending
on niche, country that the video is viewed in, how much advertisers are willing to pay for ads in the auction, the video
topic and target audience.
A video viewed in India will earn you less than a video viewed in the United States.
A video with a teenage audience will earn you less than a video with a 40+ age audience.
Some videos on the same channel will have a higher CPM than others.
Videos with a wide target audience (gaming, vlogging, comedy, entertainment etc.) in general will have lower CPM
than a targeted audience (video editing, computer programming, photo editing, music production tutorials etc).
You only get payed if viewers click on the ad, not when viewing the ad.
So if the ad campaign of the advertiser is bad, you will earn less.
Targeted ads
Make sure that “display targeted ads” for your audience is enabled in your YouTube settings.
Targeted ads will help to increase CPM.
Advertisers are willing to pay more per ad on a targeted audience.
Fourth quarter
The fourth quarter of the year is the most lucrative period for a YouTuber, especially around Christmas when
everyone has time off from work and is able to watch more YouTube.
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The CPMs much are higher in the fourth quarter.
If you increase the amount of new content published in that period, you can make an extra buck.
If you publish a video once a week, look if you can double that.
If you publish 3 times a week, see if you can do it daily.
Brand sponsorships
Brand deals are the most lucrative revenue stream for YouTubers.
A brand pays you to mention their brand or product in a video.
Fashion channels for example are famous for their brand deals:
The creator does a try-on haul of their products, mentions the brand and hyperlinks the products worn in the video.
I only see a negative value for me and most brands have done nothing to convince me otherwise.
Those brands come to you because big channels said “no”, and you may be so naive to say “yes”.
They basically ask: “I want free promotion in exchange for you hurting your channel”.
It’s your job as small creator to actually see that bigger picture.
A small creator has already “problems” generating views for their videos, and can’t afford any damage to your small
track record.
• reason 1:
If I make a video about an unknown product, just a handful of people will actually click on the video when it goes
live, instead of my whole potential audience.
That is a huge red flag for the algorithm that the topic is not interesting.
• reason 2:
With a small channel, your main source of “income” is YouTube search.
Nobody will search for an unknown product.
If nobody searches for the topic, it’s another huge red flag for the algorithm that your video is bad.
If a couple of videos bomb a couple of times in a row, the algorithm starts to think that your content in general is bad.
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You will do more damage to your channel than good by honoring those requests.
Both you and your sponsor are not happy.
The video is free promotion for them, a whole lot of work for the creator and a 99% chance it will bomb.
Again, why would I do a free review for your unknown product?
Negotiations
You have to negotiate a price that works for you and the brand.
Most brands turn to social media because it’s a fairly cheap compared to traditional media.
Running an ad in your local newspaper can cost you $300 for a post stamp size ad that is thrown away tomorrow.
The production costs for a full blown television ads are high.
Hiring an actor alone can cost you $600-800 a day (even as a low level actor I charged that amount of money).
On top of that the brand needs to pay for editing, location, producer, set dresser, hiring props, hiring lightning
equipment, hiring camera, hiring sound equipment and the production company has to make a profit too.
After video production ended, a brand has to buy a spot on the air, can cost over $10K per placement.
As a content creator you do everything for them in one package: production, camera, acting, editing and distribution.
It’s wise to mention that the brand may not see a big impact on their sales immediately.
Maybe a viewer who sees the video today, will buy the product in a week when they need it.
Evergreen videos will still be watched in a year and generate a sales for the sponsor in a year.
For television ads they have to buy a spot over and over again for exposure, YouTube is free in that regard.
A sponsorship extending over more than one video is the easiest and cheapest solution for both brand and creator.
Both parties have to do the negotiations only once, pay once and it’s less work.
On top of that, the brand is cheaper off per video.
Sponsoring just one video doesn’t make any sense from a marketing perspective: buying an ad once on television is
not effective.
An effective marketing technique is repetition.
Buying 100 ads is effective, because people see the same message over and over again, which builds trust because
people get familiar with the product.
Most brands do seem to miss that point however when it comes to YouTube.
Forms of sponsorships
Sponsorships exist in a few forms.
Money
The simplest form is to charge money for one or more videos.
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Affiliate links
The YouTuber links to the website of the manufacturer and gets a little bit of money when a viewer clicks the link and
buys the product.
Amazon has an extensive affiliate program for social media influencers.
Affiliate links can be very lucrative in the long run.
A video that you made two years ago, can generate an affiliate sales today,
Free products
A brand can send you free products to use.
Personally, I find that the least attractive form of sponsorship, unless it involves products that you would have bought
anyway.
I know a YouTube channel that did a multi-video brand deal for $200 per video, the channel at the time had only
13,000 subscribers.
Another YouTube channel between 10K and 20K subscribers asked 400-500 dollar for a video.
I also heard $80K deals are made for less than 100K subs.
There are big creators with 10 million subs that made a $300K brand deals.
Did you spot that the $80K deal is much more lucrative compared to the 300K deal?
If you would make a formula to determine your price, you should base it on your average video views.
Multiply your average video views by your magic number.
Your magic number (aka your price) makes all the difference to the outcome.
It is very common to use CPM in these formulas, which is the price per thousand views.
That means also that you have to divide the video views by a thousand.
The formula becomes as follows:
Sponsorship price per video = (Average views / 1000) X CPM.
This is also the formula that Grapevine mentions in their article on prices for sponsorship deals.
They advise a CPM of $20 - $30.
Grapevine’s take on the formula measures the average views of your last ten videos.
I don’t agree with that viewpoint, because it applies to short lifespan content, not evergreen content.
You can only judge channels on their last ten videos where actuality (like vlogs and news) is their bread and butter.
On channels where evergreen content is their bread and butter (like tutorial channels), you have to take more videos
into your formula and even exclude your last ten videos (because they didn’t reach their full potential yet).
The ads of the sponsor will still be seen in three years with evergreen content.
If you are interested in the article, I hope it’s still online by the time you read this, you can find it here:
http://blog.grapevinelogic.com/how-much-to-charge-for-a-video-sponsorship/
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Media Kit
A media kit is a document to give a potential sponsor insight into your YouTube channel.
In a media kit you show what you are worth, what you are trying to accomplish and who your target audience is.
The (potential) sponsor can judge if a sponsorship deal with you is a good fit for the brand.
The media kit is a billboard or sales pitch for your brand, so make it visually attractive.
You have to stand out against other influencers.
The easiest way to make an attractive media kit, is to make a PowerPoint presentation and save that as a PDF file.
Use the same layout as your YouTube branding.
Consistently update your media kit, your statistics change all the time.
The bigger YouTubers have dedicated staff members to find good brand deals.
Make an agreement
Always make up a (small) agreement.
You draft up those agreements to never use them (hopefully), you make those agreements to prevent
misunderstandings.
I heard of sponsorships going south, because one party screwed over the other.
Somewhere in your YouTube career you probably will have one or more disagreements with a sponsor.
An agreement avoids that and makes clear what both parties can expect.
My advice is to pay a lawyer to make an agreement, especially when the deals are getting big.
A good lawyer looks subjectively (in your advantage) at the contract and spots potential loopholes..
Lawyers are expensive, but the money you pay upfront to make an agreement can save you ten times that amount
when you have a disagreement.
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Golden tr iang l e
When it comes to running an online business, use what I call “the golden triangle”.
The components in the triangle complement each other perfectly and can cross pollinate each other
1. YouTube
The first angle of the triangle is YouTube itself.
YouTube is the only social media platform where content lives “forever”.
The content you post on the Facebooks, Instagrams and Twitters are irrelevant tomorrow.
YouTube is an evergreen sales pitch machine that delivers warm leads at your doorstep.
If you make a YouTube video, you can talk 24/7 to the whole world while you are sleeping, at the hairdresser, under
the shower or kissing your wife.
By giving value for free, you establish authority and create trust (“that guy knows what he is talking about”).
The next step is to cash in on that trust by creating a product or service to sell to your YouTube audience.
Refer your audience to your website or webshop to make the sale.
2. Website
The second angle is your website.
A lot of YouTubers are missing out on the extra opportunities that a website provides.
Hosting and domain name will only cost you as little as $50 a year.
A website can be as simple as a WordPress website with all your videos
Not having a website is a crime against your own success and wealth.
See your website as a means to attract extra traffic to your YouTube channel in an inexpensive way.
A website is a crucial part of your ecosystem, just like a mailing list and other social media are.
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I have two websites that feed back into my YouTube channel.
The two websites have different goals.
I deliberately choose to fill them with different content, because Google doesn’t like duplicate content on websites.
One website is my personal website for my Dexxter Clark brand, this is going to be broader in the future than only
music production.
Here I have a blog with all my videos with a little description per video, a description you normally would type in your
description box on your YouTube video detail page.
The other website is specific to music production and selling my product: a sample pack and course.
To get traffic from Google I make full blown blog posts out of my video scripts (and add a relevant YouTube video to
the blog post).
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3. Email list
• Backup
Bear in mind that you don’t own YouTube.
If YouTube decides they want to go another direction, or they delete your channel for whatever reason (copyright
strikes?? community strikes?? Fall out of grace of the algorithm??), then you are out of business.
Building a fallback via email is a useful way to reach your fans and customers when your YouTube channel is
gone.
The second reason why I love email because it doesn’t penalize you for sending people away, in fact it’s the
opposite, it rewards you.
All social media do penalize you, also Google when it comes to your website.
There is no harm done when the marketing strategy you took for the email campaign doesn’t have the desired
effect.
The potential of an email list is huge, especially a large one.
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Asking people to subscribe to your mailing list doesn’t work (anymore).
People receive a lot of (spam) emails on a daily basis.
Having a compelling offer however, does work!
That compelling offer is a freebee in exchange for the viewers email address.
When I started my first YouTube channel, I was two years in when I started my email list.
In hindsight, that was way too late.
I should have started the list when I started the channel.
With that experience in my pocket, when I thought about starting a new channel, I also thought about the freebees to
give away and wrote an ebook before I even shot the first video.
Those free accounts have a limit in the number of subscribers, but to start out and try it, it’s perfect.
If those are too expensive and you are tech savvy, you can install php scripts like ccMail, phpList, poMMo, webinsta or
OpenNewsletter.
Studies have shown that an email opening rate of 40% is high and CTR of 3-4% is average, with a max of 10%.
I hope you see that you need a big list to make a significant impact.
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Taxes
I start this chapter by saying that I’m not a certified accountant, nor claiming to be.
I’m writing this chapter from the experience of being an entrepreneur living and operating in and from The
Netherlands since 2004.
The Dutch law applies to my situation, but it maybe different for your situation and your country.
Bear that in mind when you read this chapter.
Tax laws can be very complicated, always consult someone that has the credentials to advise you.
A good accountant will pay itself back in the long run, it's their job to know the rules to let you pay the least amount of
taxes within the scope of the law.
Every citizen has to pay income taxes over the money they earn.
This applies to employees, although you might not see it because your employer pays your taxes for you.
Also at the end of each year, you need to tell the government how much you earned in total and you have to pay
taxes accordingly.
This is no different for a self employed individual or a business, although it may work in a different way.
When you earn money with YouTube you are seen as a self employed business owner by law.
I can’t imagine any country having a different approach.
You will always pay income taxes!
If you buy something you have to pay VAT (Value Added Taxes) on the product you buy, but you can ask that money
back from the tax agency.
If somebody buys something from you, you need to add VAT to your selling price and collect the VAT for the tax
agency.
Later you pay that VAT to the tax agency once every 3 months.
That applies also to brand deals and YouTube add revenue.
The company that you have a brand deal with and Google (=YouTube ad revenue) is your customer.
Are you still here?
How much VAT you pay (if at all) depends entirely on the tax agreement between the two countries.
It can be different from country to country and it depends also if you are selling or buying from individuals or
businesses.
For example:
In The Netherlands, I get payed YouTube ad revenue by Google Ireland.
Because Ireland and The Netherlands are both in the EU, I don't have to collect VAT from Google directly, the
governments of Ireland and The Netherland will sort that out internally.
But if I would do a sponsorship deal with a company in the Netherlands, I need to send an invoice with VAT and I have
to pay that VAT to the Dutch government.
I also have to pay income taxes over that.
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In total I pay 21% (VAT) + 33% (income tax) on the service that I sell, that is 54% of the money that I collect from my
customer.
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Final thoug hts
Coaching
If you want to pick my brain about YouTube or other business related topics, or you have a question, you can book a
coaching call:
https://www.socialvideoplaza.com/en/youtube-coaching
-Dexxter Clark
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