There are quite a few ways to make money on YouTube and one of the quickest growing streams of revenue for many YouTubers is through paid product placements. Marketers are finally catching on to the fact that YouTubers can reach over a billion viewers and they want in! This is great news for YouTubers because brands are willing to pay good money to advertise through their channels.
What does paid promotion mean on YouTube?
Paid promotion can mean many different things across different websites. However, paid promotion on YouTube is a little different than on other social media due to the main content on the website being in the form of videos.
Paid promotion on YouTube refers to YouTube influencers and personalities who use their videos to promote a product or company. YouTube paid product placement can be highly lucrative for the YouTuber who knows their audience and has a large fanbase. However, it’s not for everybody. Let’s take a look at the pros and cons of paid promotion on YouTube below:
As you can see, paid product placement is a double-edged sword. Done correctly, it can cause your revenue streams to skyrocket. However, if done wrong it can cause you to lose subscribers and even shut down your channel completely.
Different types of product placement
When it comes to product placement, there are a few different types. This includes:
1. Passive Placement
Passive placement is one of the most common types of product placement. A passive product placement is one that doesn’t make the product the center of the video. Instead, it mentions the product in passing and often provides viewers with a link to buy or check out the product themselves.
Passive placement is an awesome way to start with paid product placements because it is the most natural way to advertise products. It’s best to use products that fit contextually within the video and your channel’s theme — a good YouTube product placement example would be a makeup blogger who provides links to the products they use.
2. Active Placement
Active product placement is the riskiest type of product placement and is often good for the YouTuber who has a clear idea of who their audience is and what they like. An active product placement makes the advertised product the center of the video.
This is often done through review videos or how-to tutorials, such as a gamer reviewing a video game. Active product placement is effective if the product is something that your audience already uses or that you know they will be interested in. However, certain demographics consider active product placement distasteful, so make sure you do your research before diving in.
3. Sponsored Films
Sponsored films are short films or videos that are completely focused on the brand you partner with and what they’re offering. These films are meant to evoke emotion and be entertaining — they often focus on a problem that the YouTuber has to solve with the help of their product and incorporate it into a fun storyline.
Sponsored films are paid product placement that is easy to consume. The product isn’t the main focus here — the story is. If the video is fun and engaging, your audience often won’t even mind that they are being advertised to. Take a look at this sponsored film featuring celebrities such as Gordon Ramsay, Cardi B, and Rebel Wilson.
Should you disclose product placement?
As of December 5th, 2018, it’s not a matter of if you should disclose product placement on YouTube; you need to. YouTube has recently updated their ad policies to require that YouTubers must post a disclaimer on videos that include paid product placement. This is in compliance with the Federal Trade Commission (FTC).
Note that there is a difference between being paid to promote a product and being sent a free product with no expectancy of promotion. While the FTC recommends that you disclose all information that could influence viewers when buying a product, it is not legally required.
Be aware, there are pros to disclosing product placement and endorsements such as:
- Increased trust among your viewership
If you neglect to tell your viewers that you have received a free product, things could go bad if anyone ever finds out. You could face repercussions such as:
- A bad reputation
- Viewers unsubscribing from your channel
- Diminished trust from your remaining viewers
When reviewing other people’s products, whether it is a paid product placement or an endorsement, it is best to do so strategically and honestly. Lying to your viewers is a good way to make sure you’re blacklisted within that segment of the internet.
If you’ve had some trouble with paid product placement and noticed you start to make less money from ads check out our recent guide on why your YouTube earnings are going down.
You’re not limited to product placement
Product placement can be an effective way to make money when done right, but it’s not your only option. A good business plan includes several revenue streams and the most effective one by far is to sell your own digital products.
For those of you who don’t know, digital products are products you can sell online that don’t have a tangible form. Take a look at Ryan Nangle, a YouTuber with over 147,000 subscribers who teaches users about cinematography. Not only does Ryan make money through his YouTube account, but he also makes money through FX plugin packages he offers on YouTube store on Sellfy.
Digital products have a leg up over product placements because you don’t have to qualify yourself to a brand to get started. Check out Decap, a #1 Billboard chart producer who has worked with artists like Spose and Joyner Lucas. Decap started off making beats by himself and now sells his drum beat kits through his Sellfy storefront without having to worry about pitching himself to a brand.
Another one of the great things about digital products is that often you need very little capital to get started! You simply create it and then upload it to an e-commerce website such as Sellfy.
An added plus is that once a digital product is created, it is a passive revenue stream. You can just leave it alone and continue to make money off of it.
Selling digital products may be the best way to make money on YouTube but it isn’t the only way. If you’re interested in other monetization methods, check out Sellfy’s article “10 Creative Ways To Make Money As A YouTuber That Isn’t Ads”.
Have you used paid product placements or digital products as part of your YouTube business plan? Leave a comment and let us know how it went!
Ritvars is the marketing lead at Sellfy.