Online Video Auteurs: Keep Your Day Jobs, Part 2

Henry Blodget | December 30, 2007 6:28 AM

perez-hilton.jpg
Perez Hilton tells TVWeek his videos on Google's YouTube generated 25 million views over the past three months and netted him a whopping $5,000 in revenue. That's a 20-cent CPM. (It's an even lower net CPM for Google, by the way, assuming a payout ratio of more than 50%. So those counting on a near-term YouTube blast-off to drive Google's growth should put that into their pipes and...).

Now, this is very hard to believe and Perez is mad at YouTube, so for the sake of argument, let's hypothesize that Perez is either mistaken or full of it and his videos only generated 2.5 million views. That's a $2 CPM. Let's further hypothesize that YouTube will triple its net payouts over the next few months. That's a $6 CPM.

No matter how you look at it, the message to professional online video producers from this data point is similar to that of our Revver video analysis: Keep your day jobs.

Meanwhile, when Google announced that it would start selling video ads on YouTube it said it was aiming for a $20 CPM. No doubt some of Perez's videos are unfit for advertiser consumption, but the numbers here are still startlingly low. What gives?

See Also:
Analyzing YouTube's Revenue Potential
Economics of Online Video: One Tough Business
Economics of Online Video 2: Unit Economics
Economics of Online Video 3: $5 Net CPM = Keep Day Job
Economics of Online Video 4: Revver P&L
Why Hulu is Screwed, 1
Why Hulu is Screwed 2: Bad Economics                                

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8 Comments

SerJi (URL) said:
Thanks.
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Mike Rundle said:
The point has been completely missed in this article. Perez doing video shows on YouTube doesn't do anything for his bottom-line but it brings more people to his site which is the real moneymaker. It increases his brand recognition and exposure, which he capitalizes on.

Look at PerezHilton.com. Look at the right sidebar. Each one of those BlogAds costs many thousands of dollars per month, with the most highly-visible ads going for between $18,000 and $30,000 per month. If people are looking to do videos and create a business around their YouTube video impressions than they are morons.
Nate Westheimer said:
J, it doesn't matter really. There's a glut of video content -- premium and non-premium (though less of one for premium -- which means no one will sell completely out of their video inventory. Also, if you're only running one ad per 3 videos (a commonly accepted rate) then I think you should divide your CPM into all three of those impressions. Why make up special rules because it's a video ad? You got three people to visit your site and only got to run one ad. Your fault. Your media.
J said:
How many of the 25m (2.5m) views had ads running with them?

All of them?

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