YouTube Takes New Video Sales Model to Market

Online video giant now selling channel sponsorships

YouTube is pioneering a new ad model to support its batch of video channels—selling sponsorships rather than TV-style demographics. Ballpark value for the sponsorships (which include display, overlay and pre-roll) run to an annualized $4 million to $6 million, depending on the channel, with the pre-roll coming in on the high end of the industry average—about a $20 CPM.

Targeted marketing is very much in vogue for YouTube. Suites of channels have themes like Moms, Young Hollywood and Automotive. Keyword targeting is used for these packages rather than demo stats. And they work on a shared-revenue model. YouTube gives an initial grant for production, then splits profits from ad sales with creators after that first investment is recouped. Currently, Unilever is on board for its Young Hollywood channels. Toyota and GM are attached to the Moms and Auto verticals respectively.

Rob Weiss, CCO of EQAL, which is producing fashion and beauty channel U Look Haute (which debuts Tuesday), said he likes the flexibility of the model. “We have four shows, and another five or six planned over the next couple of months,” he said. “You have to constantly refresh the content.”

EQAL CEO Miles Beckett, of Lonelygirl15 fame, said he was glad to see more ready cash in the industry. “I think this would have happened earlier, but there was literally [an eight-month stretch during the downturn] where every company in the U.S. froze their marketing budgets.”

Youth, said YouTube’s video sales head Lucas Watson, is an asset he takes seriously. “[The channels] are going to have very strong appeal among a young audience already very loyal to YouTube.”