In this post, I analyze five different methods to make money on YouTube. There are YouTubers ranking some serious cash on the platform, the most famous example being Felix Kjellberg, or as most people know him, PewDiePie. Felix made around $12 million pretax over 2015, that is some serious dough.
But exactly how do YouTubers earn money, what is possible for you and how can you use proven methods to your own advantage? In this post, I will try to provide an answer to those question and provide you with the basic know-how of how YouTube works. Like other online businesses, YouTube can be a good source of additional income, but it does not guarantee any success overnight.
Method 1: Make Money on YouTube with Affiliate Marketing
In previous posts, I have discussed affiliate marketing as a viable online business. Affiliate marketing can be very a useful source of income on a blog or through email marketing. However, there are also people who make serious money with affiliate marketing on YouTube.
You could upload videos to your YouTube channel where you explain certain products and add an affiliate link in the description of your video. Potential buyers might watch your video before they decide to make a purchase and when they do they could use your link.
Tutorial videos can be a great way to get started with affiliate marketing on YouTube. Tyler Moore explains his audience how to make a website and his latest video has almost 3 million views. In his videos, Tyler promotes HostGator as the hosting company of choice. With 3 million views there it is likely that a significant number of viewers use his recommendation, making his videos likely a good income generator. Tyler does not share how much he makes through his videos on YouTube, but I assume that he runs a very profitable online business.
How to be successful
Similar with an affiliate blog, using affiliate marketing to make money on YouTube will require both time and hard work to succeed.
If we look at Tyler, you can see that his earlier videos don’t nearly have as many views as his most recent videos, meaning he is doing this already for quite some time. His videos are also well over 2 hours long. Last month I created my own video on how to build a WordPress site with the Genesis framework, this video took me a lot of time to put together.
As you build your channel and increase subscriber numbers you will start to attract more people. Like with a blog, without an audience, it is hard to earn anything. Start with picking a good topic where you center your videos around and concentrate on getting good content out there.
From a technical aspect, it has become a lot easier to make tutorial video’s. I personally use ScreenFlow to make a screencast of my screen, I highly recommend this software to get started with affiliate marketing and tutorial videos.
Word of caution
As you know YouTube is part of Google and as your videos are hosted with YouTube you will need to comply with YouTube’s rules. If YouTube feels that you violate their terms they could close your account and you could lose all your hard work.
YouTube prefers to manage all promotion through their ad network and they have strict guidelines how creators should approach paid product placements and advertisements. However this does not mean that it is not possible to have any type of affiliate marketing on your channel, you just have to be aware of what you and what you can’t do.
I would advise the following:
- Don’t put affiliate links in the description of your videos, it is always better to drive traffic to a dedicated page on your website;
- If you don’t have a website, cloak the affiliate links or use a link shortener;
- Promotion codes are also a good thing to share, but not all affiliate programs offer these.
Conclusion affiliate marketing
Affiliate marketing can be a good strategy to make money on YouTube. Publishing videos on YouTube allow you to directly deliver value to your audience and they will be able to get a demonstration of what certain products could do.
If you comply with the terms on YouTube, your videos are always accessible. This makes this type of income somewhat passive once you have created the video. Compare it to a successful blog post that could generate income for years to come.
Method 2: Make Money on YouTube with Your Own Products
Why would you promote other people’s products when you could use YouTube to promote your own products. YouTube allows you to reach a big audience and you could use this to your advantage to promote your own products.
Promotion of your own products could also be through a demonstration video on YouTube if you check you will find that many companies make use of this kind of promotion. YouTube can be a great sales funnel where you create some sort of buzz and push people to your own sales page. YouTube allows you to promote one verified website directly in your videos and this is a big chance to drive more sales.
One of the best practices to boost your own products is if you could create a viral video. When Million Dollar Shave Club launched in the US they published a video that went viral almost instantly. Everyone picked up and shared their video, creating invaluable exposure for their brand.
How to be successful
While aiming to create a viral video to promote your brand seems tempting, I would advise that this should not be your main focus. No matter what online marketers try to let you believe, it is very hard to create a viral video. In my opinion, you should focus on building a following on YouTube, do some research and build organic traffic.
Make it very visible for people that view your videos what the added value is that your product or service provides, it should leave no question to them why they should buy your product. Now use cards and a verified website in YouTube to drive these potential buyers to a sales page. You can also include links to your sales page in the description of your video, but don’t be too pushy.
The stakes are higher at YouTube and there are many well-edited videos to be found, you have to make sure that your content is able to compete with that. You also want to make sure that the type of video you launch works well together with the type of product you want to push. For example, a screencast video to show the new iPhone probably won’t work, because people are interested to see the phone in action and not only the software.
Aiming at videos is a whole new ballgame. While it is relatively easy to make tutorial videos using screencast software and a microphone, making professional looking videos is much more technical. A good place to understand some of the basics of video recording and edition, check out Caleb Wojcik from DIY Video Guy.
When entering the YouTube space, I suggest you be cautious with spending money at first. It seems tempting to splurge on expensive equipment and software, but the truth is you likely won’t need it (yet). If you are really interested in YouTube as a promotion, check out some of the great tutorials out there to help you create your own first content on a budget. Honestly, most phone cameras are good enough to make a video look professional these days when you consider the right positioning and lighting.
Conclusion selling your own products
YouTube can be a great sales funnel to start promoting your own products and to push potential buyers to a sales page. Without considering equipment, promoting on YouTube is free and you could reach a big growth if you target and position your videos well.
On the contrary, publishing videos on YouTube can also quickly become expensive if you need professional help or equipment. Be careful what you spend your money and where your priorities lie to grow your brand. Make sure to make use of all the different opportunities to promote your website via YouTube, ultimately you want to own as much of the sales funnel as possible.
Method 3: Make Money On YouTube with Sponsorships
Another way to make money on YouTube is through sponsorships. There are different types of sponsorships that you can utilize and in this subchapter, I will discuss them with their pros and cons. A sponsorship in short is someone (partially) paying you to help you cover expenses and maybe more, to put new videos out.
3.1 Personal Sponsorships
Personal sponsorships are sponsorships that are not related to a brand or directly to a product. The easiest way to understand personal sponsorships would be to refer to them as a member/audience donation. YouTube allows your audience to view all your content for free, but you would actually be surprised to know how many people wouldn’t mind helping your channel grow by donating some money.
Some YouTube channels present their audience with the option to sponsor their content on a personal website. This is a good way to make some extra money when you already have a large following. However for some people the option to donate might feel like begging, at least, it does a little bit to me. Sure there is nothing wrong with people being able to financially support great content, but the word donation just bothers me for some reason.
There is a good chance you have heard about Patreon by now, Patreon has been around for some time but they are making bigger waves at the moment. Patreon helps your channel to grow by crowdfunding through their platform. Similar like Kickstarter, people have the possibility to support your videos on different funding levels, which give them different benefits should they do so. Patreon not only focuses on video creators but also on photographers, painters, designers, etc.
Personal sponsorship – Crash Course channel
We will now take a look at how Patreon could help you make money on YouTube while looking at an example of the Crash Course channel. Crash Course already has been around for some time, the account was created in 2006 but it wasn’t until January 2012 that they posted their first real video.
Ever since, they started, Crash Course has grown into a channel with over 3.7 million subscribers and total estimated views of almost 315 million. Crash Course has an estimated yearly revenue of €33.1K – €529.2K and is part of the PBS Digital Network. The aforementioned estimation of yearly revenue is based on ad revenue, but as you can see in the image above there is a button that says ‘Support us on Patreon‘.
On their Patreon page, you can see that they as of the time of writing, have 6412 patrons and a total of $29,256.95 monthly recurring support. These are serious numbers. But why do patrons support Crash Course when their content is available for free on YouTube?
As you can see on their Patreon page, there are different pledge levels, ranging from $1 per month to $1,000 per month. Different levels open different rewards for patrons who choose to pledge, $1 gets you exclusive updates and you support your favorite channel, whereas a thousand dollars gets you exclusive exposure and the benefits of all previous tiers. Besides patrons will have the feeling that they are supporting the brand and help it to grow into something bigger.
Responsibilities for Crash Course
Receiving almost 30k in recurring support for your channel might seem like a golden ticket, but truth is, patrons expect Crash Course to deliver and meet their expectations. Patrons have the possibility to cancel their pledge at any time if they feel that Crash Course is underdelivering.
For a channel their size it also means that meeting their audiences expectations, they would need a considerable number of people to support their episodes. They likely need writers, researchers, designers, editors, musicians and general production staff.
At this moment, the scale of what they are doing is reaching the size of a small network show. That, however, does not mean that you have to be big in order to be able to generate income from Patreon. There are smaller channels that are also doing pretty well.
3.2 Brand Sponsorship
Brand sponsorship is related to brands that support your channel or a particular video. In most cases brand sponsorship features content that is related to the brand, for example, Red Bull sponsoring extreme sports videos, you get the idea.
Now, in general, there are two types of brand sponsorships applicable: 1) direct sponsorships and 2) network sponsorships. Direct sponsorships pretty much self-explanatory and this includes big names such as Devin Supertramp, who has worked directly with big brands such as Ubisoft, Ford, and Intel. Devin shouts high production value movies that are always centered around the same topic, adventure & sports, and sometimes his projects are ad projects for clients that he publishes under his own name. Devin is part of a talent management program called Fullscreen.
A network helps you to connect with other YouTubers and gives you tools to help your channel grow. In some cases, networks can also help you with your advertising campaigns, but beware they do so at a cost. If you are connected to a network they will take a cut of your hard-earned money, there is a debate whether the value they provide warrants a cut in your profits.
How to be successful
If you want to be successful with sponsorships you need to be an established name in your niche. This can be any niche really and there are a lot of different niches on YouTube that are very popular. From beauty channels for women to game channels for children and men, really almost anything goes.
Sponsorship is different from ad sense as sponsorships are likely related to the entire video, instead of just an add showing at the beginning. That also means that you can’t have a ‘sponsor’ that shows an ad at the beginning of your video, this would have to be approved by YouTube or you risk shutting down your account.
Remember that sponsorships do not always have payment in the form of money, it is also highly likely that you receive a free product or service in exchange for demonstrating the product or service in a video. This is likely what also happens to a lot of beauty channels or technology channels.
In general the sponsor finds you, so in order to be successful, you first need to make a name for yourself.
As mentioned before it remains the question how useful networks really are and it is suggested by many big YouTubers that you should proceed with caution. Also, the guidelines for YouTube in terms of sponsorships are not entirely clear. Theoretically, you are not allowed any advertising outside their own Ad-Sense, but sponsorships are in the gray.
It is highly recommended to carefully check YouTube’s terms and agreements based on your personal situation and see what is possible and what isn’t.
Method 4: Make Money On YouTube with Google Ad-Sense
Google Ad-Sense is the advertisement network of Google. As soon as you have verified your YouTube account and you are in good standing with YouTube, you will be able to switch on monetization for your videos.
As you can see in the image above, my YouTube account is verified and in good standing with YouTube, I can choose the enable the option for monetization.
Now when you are monetizing your videos through Ad-Sense, the most important term is CPM, which means the ad rate per thousand views. So if you have a CPM of $4 and people watch your video 10,000 times, you will receive $40.
Google Ad-Sense displays advertisements depending on different niches, the more profitable and specific a niche, the more likely it is to have a higher CPM. So let’s say you make videos about certain muscle cars and parts, this is a very specific niche and one where people are likely to make a purchase, this will yield a higher CPM than let’s say a general news video. But like with everything you will have to balance these, so the muscle car video can have a higher CPM but is also likely to receive lower views than a more general video.
Now aside from the topic of your channel and videos, CPM is also related to where your channel is registered. A profitable niche in America will yield a higher CPM than the same type videos but registered on Kiribati, market size matters.
If you are looking to monetize your video’s, Google Ad-Sense is the most logical step. It is very easy to implement and with enough views, it can be very profitable.
As you can see in the image above, CrashCourse also uses ads to monetize their business. Using Social Blade, we can get a general idea what these ads generate.
As you can see in the image above, daily estimated earnings are significant.
How to be successful
In order to be successful with Ad-Sense, you will need two basic things. You will need to be active in a niche that has a high CPM and you will need to have an established audience. Another thing you will want to consider is that working with Ad-Sense should fit the type of videos you have.
If you are planning to make money on YouTube with other streams besides Ad-Sense, you will have to figure out these streams work together. If you are selling your own products, other companies advertisements hurt your potential customers experience.
Ad-Sense, similar like with blogging, works best with high-traffic topics. There is a reason why Tyler Moore that we discussed earlier, not uses Ad-Sense for the few videos he puts out, but that CrashCourse with an average of 400,000+ views per day uses Ad-Sense.
Probably the most important pitfall is that advertisements could potential annoy your audience up to a point that they don’t care about your content anymore. Because the entire program is managed by Google, you do not have any power over what kind of advertisements are shown.
If you do some background research you will find that most of the high-traffic channels on YouTube, in fact, use Ad-Sense to make money on YouTube, but that does not mean that it will also work for you. It is very important to understand your audience.
On the contrary, showing a small advertisement in order to be able to continue to provide awesome videos to your audience, is not a high price to pay.
Method 5: Make Money on YouTube with a Combination of Income Streams
Who says that if you are making money with YouTube you should focus on just one stream, there are a lot of different possibilities to combine income streams. This probably is one of the reasons of online businesses, because there are virtually unlimited strategies that you could use to earn extra money when you have some traction.
CrashCourse is an example that use Ad-Sense and direct sponsorship through Patreon
VitalyzdTV, a YouTuber famous for his prank videos, is estimated to earn between $3.6K – $58.1K per month with Ad-Sense, sells his own merchandise and likely his other sponsorship deals for this videos. He made a serious business out of pranking.
Marques Brownlee, a famous tech reviewer makes a very decent Ad-Sense income, probably receives a lot of the products he reviews for free aside from other sponsorships and is referring his favorite products as an affiliate.
What the examples above show us, is that all the big names never focus on one stream of income. They are always looking to diversify their income streams, not only to earn more money but also to protect themselves in case something changes with YouTube.
So there you have it, five different methods to earn money with YouTube. Creating your own YouTube is easier than ever before and it is something you can get started with right away. Similar like with a blog, YouTube can be a stage to engage with other online activities, which for me illustrates the power of online businesses.
It is very easy to set up your own channel and apply one or multiple of the above methods to your business. Also, know that you don’t have to make money on YouTube, I am not planning on making money with YouTube, I see it as a long-term lead generator for Tropical U.P and I know that Pat Flynn does not intend to make money on YouTube.
So what do you think about the above methods and do you have something to add to this list? I am looking forward to your comments below! Stay awesome!