Can you imagine being under the age of ten and raking in six figures a year? When Forbes released the highest paid YouTuber’s of 2019, readers were shocked to discover an 8-year-old making $26 million in one year. This undoubtedly begs the question: how are YouTubers able to make so much money?
Understanding YouTube’s Popularity
To understand where exactly all this money is coming from, it’s first important to understand just how big YouTube is. It actually ranks as the second most popular site for daily visits, ranking only after Google.
It’s largest demographic is teenagers and young adults, who find they’re able to stream a tremendous range of footage, some of which includes movies and tv shows, music videos, tutorials, and news clips. A video on almost any subject or topic can be found somewhere within YouTube’s realm, meaning it quite literally has something for everyone.
Another big factor to YouTube’s popularity is the frequency with which it pops up in general search engine results. Anytime someone enters words or phrases into the Google search bar, a stream of relevant YouTube videos pop-up near the top of the search, easily directing users to the videos.
Popularity Leads to Profits
The single biggest source of income for individuals or companies with YouTube channels is paid advertising. This can be done in a few different ways to bring profits into the pockets of YouTubers and their channels, which mostly consists of sponsorships, PPC advertisements, and affiliate marketing.
When an increase in traffic leads to an increase in revenue, it’s easy to understand how online content generates a profit, which lends itself to the bigger question: why are those profits so high? Why are so many people, especially younger people, so easily making six figures a year? There are a number of factors that translate to incredible profits in social media advertising.
Targeted Marketing and Complex Algorithms
Marketing and advertisements on social media really took shape when Facebook posted its first banner ad for Chase bank in 2006. Even before that, in 2003, Google developed AdSense, it’s cross-platform advertising program that allowed site developers to profit from posting paid-for advertisements. They’ve expanded this further to include a wider variety of advertising and marketing on sites for users. Now, when you type something into Google, the first three items that appear are subtly marked “Ad”, because Google allows advertisers to pay for top search results.
The modern trends of entertainment and content consumption have been rapidly shifting in the past few years. More people than ever have smart phones and access to the internet. 2019 became the first year where people were using the internet more than they watched television. When more people are online than in front of the television, it means there’s even more money to make in advertising online. This trend led to significant changes in how much and at what cost advertisers target online consumers. In the United States alone, social network ad spending is expected to reach $43 billion, which is an increase of over 20% from 2019.
With billions of advertising dollars in a saturated market, those YouTubers who can create engaging and original content can bring in massive profits. Google algorithms only heighten this prosperity by directing even more traffic to the best content. These factors have led to some YouTubers getting paid tremendous amounts of money by Google.