In most recent news, several U.S. companies have chosen to pull their advertisements from YouTube due to their ads being placed near content promoting terrorism and extremism. Some of these businesses are Johnson and Johnson, Verizon, and AT&T. A YouTube account with extreme views that ran these companys’ ads was that of American white nationalist David Duke.
YouTube has been in the media a lot recently with the release of controversial material such as the Anti-Semitic references from PewDie Pie and JonTron’s Alt-Right comments. So, how will these ad drops affect you and maybe even your favorite streamers and why are advertisements important for YouTube?
As gamers, it’s not unusual to get on YouTube to check in on streamers, commentators, game reviews and game theories. Often these channels are supported by advertisements, but now that some of these ads have been pulled what does this mean?
Well, YouTube streamers that rely on their channel for income rely on advertisements, but it takes a lot of views to make a small amount of money. According to Investopedia, in 2013, YouTube channels could make $7.60 per one-thousand views. This means that the owner of the channel would have to set their channel to allow advertisements to be displayed before their videos, and for each one-thousand views (those watching would need to see the ads) the YouTube owner could generate income.
I am sure that you are wondering what they make per one-thousand views now, but it is hard to pin point this number unless you know how much their income is. Quora explains how to calculate ad revenue for a channel.
Now, back to the most recent news regarding companies pulling out from ad participation. These companies are ending their ties with YouTube because they don’t want their businesses associated with these extreme views, but most users like JonTron and PewDiePie rely on ads for money.
Will this effect YouTube?
Many are unaware that YouTube doesn’t make or lose a profit, but with businesses deciding to pull ads, the company could see a loss in profit for the first time, which could mean trouble for YouTube. Google, who owns YouTube, is one of the largest advertisement sellers and the company generated more than $22 billion in ad revenue during the fourth quarter of 2016.
Will channel owners suffer?
A lot of internet users use ad-block to avoid long ads and save phone data, and when ad-block is used, YouTube channel owners do not generate ad-revenue. So, prior to businesses pulling out, ad block was used by 26% of desktops users alone, which means that YouTube channels were already losing a minimum of 26% of revenue. Now that these businesses have chosen to abstain from supplying ads, YouTube will lose revenue from those businesses. With the loss of that revenue, YouTube channel owners could see a decrease in how much they make per view. If they were still receiving, $7.60 per one-thousand views, that amount would most likely decrease.
How will users suffer?
Once channel owners start to lose revenue, they will lose funding for creating content. Some might even lose motivation to create content if they lose the ability to generate adequate amounts of revenue to live off of. Once content ceases to be created, users will have no reason to be on YouTube.
Summing it up
With YouTube and channel owners relying so heavily on advertisements, this sudden pull out from big companies, not only in the U.S. but also in Europe, is going to have a major impact, but mostly the impact will probably be felt by YouTube first since the company’s revenue would fall and then channel owners ad revenue per one-thousand views would decrease, and once both parties are effected, YouTube users will suffer by loss of content from channel owners.
Who would have thought an ad could mean so much?