4 ways YouTubers adapted to the adpocalypse

YouTube's algorithm changes forced YouTube stars to diversify their businesses.

Welcome! I'm Simon Owens and this is my tech and media newsletter. You can subscribe over here or just click on this handy little button:

Mention the term “adpocalypse” to anyone who’s regularly uploaded videos to YouTube over the past few years and chances are they’ll understand the reference. The impact of it was so calamitous that even if you didn’t experience its effects directly, you still likely watched quite a few YouTubers rant about it.

Though it sounds like a singular event, the adpocalypse was actually the outgrowth of several controversies that hit the video platform in quick succession during 2017. That February, the Wall Street Journal reported that PewDiePie, YouTube’s biggest and most popular channel, had published videos with antisemitic jokes. Then a few months later, the Journal documented how ads for major brands were appearing next to thousands of videos that contained racist slurs. In November, a writer named James Bridle published an article to Medium that detailed incredibly disturbing content being targeted to small children. And then in December, Logan Paul, another popular YouTuber, uploaded a video shot in Japan showing the dead body of someone who’d recently committed suicide. 

As each successive controversy hit the internet, YouTube rolled out increasingly draconian policies that were aimed at shielding advertisers from appearing next to videos that were even remotely controversial. This involved algorithmic changes that affected millions of channels simultaneously, and because the triggers were so broad, it often resulted in non-controversial channels experiencing significant drops in revenue.

Within a few weeks, thousands of YouTubers were uploading videos complaining about the changes and offering behind-the-scenes looks at how their livelihoods were being affected. Popular channels like H3H3 and Philip Defranco announced that they had lost over 80% of their revenue, and some wondered if the adpocalypse spelled the end to independent creators who didn’t have the resources to ride out the storm.

But that was three years ago; since then, the YouTube community has shown remarkable resilience in its ability to adapt to this new environment, and we’ve seen creators, many with access to very few resources, manage to diversify their revenues and, in many cases, emerge stronger than ever. A year ago, The Verge published an article declaring that “the golden age of YouTube is over,” but it’s clear now that its death was greatly exaggerated.

And with the media industry at large experiencing a coronavirus-induced adpocalypse of its own, I think this might be a good opportunity to explain the four ways indie YouTubers pivoted their business models in the wake of the greatest upheaval in YouTube’s short history.

Expanding onto new platforms

It was a writer at Copyblogger who coined the term “digital sharecropping,” a neologism that basically explains that any creator who publishes content to a platform they don’t own is completely at the mercy of that platform in terms of how their content is distributed and monetized.

YouTubers still rely overwhelmingly on large platforms for distribution and monetization, but they decreased their risk exposure by expanding their content operations outside of YouTube.

Gamers, for instance, will live stream their gaming to Twitch and then take the recorded footage, edit it, and then upload it to YouTube. This is how Ninja became one of the most popular users on both Twitch and YouTube simultaneously. Beauty and lifestyle vloggers doubled down on Instagram, which in term allowed them to cash in on the massive spending growth in influencer marketing over the past few years. 

But perhaps the most impressive trend has been Youtubers’ embrace of podcasting. Not only have many of the platform’s biggest stars gone all-in on podcasts, but they’ve managed to reinvent the medium in ways that I never thought possible.

For instance, take Logan Paul’s Impaulsive podcast, which he launched in 2018. Yes, the podcast is available on all your standard podcast players and does well on them, but Paul also launched two new YouTube channels that operate separately from his main vlog. The first is the Impaulsive channel, where his team uploads in-studio videos of his podcast recordings. That channel has amassed 2 million subscribers and 160 million views thus far.

But even more impressive is his Impaulsive Clips channel. For that one, his team chops up his podcast episodes into thematic chunks, each one only a few minutes long, and posts them with catchy headlines. This exposes the podcast to a much wider audience by adding a layer of virality to it. Several top YouTubers including H3H3, Philip Defranco, and Joe Rogan have implemented this strategy, exposing their podcasts to tens of millions of new people who would have never encountered them through a traditional podcast app.

Launching merchandise lines

Among the different kinds of online content creators, YouTubers have some of the most loyal audiences, and many YouTube stars often leverage this loyalty to sell merchandise directly to subscribers.

In many cases, this means simply slapping a YouTuber’s logo or catchphrase onto items like t-shirts, hoodies, and coffee cups. This became easier once YouTube started partnering with merchandise companies to integrate stores directly into the platform itself. Now it’s possible for a YouTuber’s fans to purchase an item within the very same video it’s being plugged. There are now YouTube channels that sell millions of dollars a year of products directly through these merch platforms.

Some channels have been much more ambitious in their merchandise offerings, going so far to design and manufacture their own products. Last year, for instance, Shane Dawson collaborated with the beauty YouTuber Jeffree Star to roll out a new line of makeup products that sold out almost instantly and are projected to generate over $35 million in revenue.

Perhaps the most impressive YouTube channel on the merchandise front is Ryan’s World. The channel, with its 24.5 million subscribers, follows the adventures of 8-year-old Ryan Kaji as he plays with and reviews various toys. In 2017, Ryan’s family started selling distribution deals for a line of toy products that feature his likeness and logo. Those products went on to generate $42 million in 2018 and $150 million in 2019. “Collectively, the licensing deals have resulted in about 1,000 Ryan-related products sold in 75,000 stores across the globe,” reported Tubefilter.

Brand collaborations

One of the main reason that the adpocalypse was so calamitous for YouTubers is that YouTube owned the entire relationship with the advertisers, and therefore it had all the power in terms of deciding where ads were shown.

Direct collaborations between brands and YouTubers existed prior to the adpocalypse, but they’ve certainly increased over the last few years. Entire marketplaces have sprouted up that are designed to facilitate relationships between brands and creators, providing an easy mechanism for a brand to submit an RFP and have YouTubers respond to it.

These days, it’s pretty rare for a popular channel to upload video that doesn’t pause either midway through or at the end of the video to plug a sponsor. These operate much like podcast ads, where the host will give a personal plug (and often a discount code) for the product. According to a report from Tubular Insights, brands have flocked to these kinds of sponsorship deals because viewers are less likely to skip through them as they do with TV commercials and they’re impervious to online ad blockers.

Some of the most successful brand collaborations have involved giving a YouTuber complete creative freedom in crafting an entire video around the brand’s message -- a video that’s just as entertaining and shareable as any of the YouTuber’s non-sponsored content. One of the leading practitioners of this form of partnership is David Dobrik, a YouTuber with 16 million subscribers. 

Dobrik’s had an ongoing partnerships with Seat Geek, for instance, which allows him to surprise his friends with tickets to major sporting and entertainment events. “Something happens where the viewer associates the brand deal with something positive rather than it being a waste of time,” Dobrik told Digiday. “Now, when people see a SeatGeek promo, they’re like, ‘Oh, something cool is coming rather than, ‘Ugh, another ad that will waste my time.’” What makes these brand collaborations so successful, he said, is the complete handover of creative control. “You’re giving it to a YouTuber because YouTubers are personalities and they know their channels best. Don’t give them a script. Give them a couple of things they should hit but really let them make it their own because [if you give them a script] it’s not going to ever be as good as that person making it their own.”

Subscriptions and online courses

While merch sales allow for more direct monetization of a YouTuber’s audience, the manufacturing and shipping costs involved eat into that creator’s potential profits. By selling exclusive, premium content to their fans, they’re able to eliminate most of the middlemen and take home a greater portion of the revenue they’re generating.

One way they do this is by selling courses. Fitnesses YouTubers, for instance, sell at-home workout routines, often in the form of PDFs. Perhaps the most common form of online course are geared toward entrepreneurs, with business-oriented YouTubers selling instructional programs on how to launch a drop-shipping business or succeed with Amazon’s FBA program. One benefit of selling online courses is that you can usually charge at a higher price point, meaning you can convert a relatively small portion of your audience and still generate significant income. Online courses also allow a YouTuber to generate passive income, since once the course is released the creator doesn’t need to put additional effort into maintaining it.

Many YouTubers focus on generating recurring revenue and so have rolled out subscription products, often leveraging platforms like Patreon to do so. Philip Defranco, frustrated with the near-constant demonetization of his videos, made a major push into Patreon by debuting an entire news network on the platform; within days of launching his Patreon account he amassed over 14,000 paying subscribers. YouTube has actually rolled out some of its own products that allow viewers to give money to their favorite YouTubers directly, which in turn eliminates much of the friction that comes with sending an audience to an outside platform. 

Some have taken the online courses model and added a subscription element to it. In February, Jake Paul launched the Financial Freedom Movement, a $20-a-month course that teaches his young audience how to be “financially free from the 'societal cookie cutter life' 9-5 jobs we are all told to have."

***

In most of the use cases I’ve cited above, the YouTubers who implemented these diversification strategies have done so either by themselves or with very small teams. That they were able to do this with relatively few resources speaks to the resiliency of the YouTube community and its entrepreneurial spirit. Traditionally, media companies have walled off their content creators from business operations; but as we enter the uncharted territory caused by the coronavirus, perhaps this is a prime opportunity to give creators a seat at the table.

Do you like this newsletter?

Then you should subscribe here:

Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.