This Video is Worth $13,568.99

Before this video loaded, you probably watched an ad and/or one will appear right about... now. How did this exact ad get on this video? And, what you really want to know, how much money do these things make?

Okay, there are three players in this game. Creators who create videos, advertisers who make the ads, and YouTube, who plays matchmaker, matchmaker, making the match. Now, unlike old dying media, where a dude in a room could place ads on predictable known content at a leisurely schedule, YouTube doesn't work like that.

Can't work like that, because on YouTube, there is no schedule. At any moment, a wild viral video can appear. On a normal day, 65 years' worth of video are uploaded to YouTube, and people watch a billion hours of video. It's an endless waterfall of random content that just keeps growing. Hiring enough humans to categorize all of those videos and match ads to them would be impossible.

This is a job for bots. The moment each new video is uploaded, YouTube's bots get to work, looking at the title, the keywords, the captions, the comments, the controversy, all to make their best guess as to what category it belongs in. Meanwhile, advertisers tell their own bots what category of videos they want their ads to run against, and what kind to avoid.

And here is where YouTube earns their money: between when you click on a video and when it plays, a YouTube bot holds an auction, announcing the categories it's guessed the video is in, opening the floor to all interested advertiser bots to place their bids. The winning advertiser bot is the one with the ad that will most likely make YouTube and the creator the most money at that instant.

But that's not necessarily the highest bidder; different ads pay in different ways. For example, skippable video ads, the advertiser doesn't pay if the viewer skips as soon as they can. The advertiser only pays if their ad is clicked or watched. A super high bid means nothing if the ad is super boring. No clicks equals no dollars for YouTube or the creator.

So, there's a bias against boring: the auctioneer bot will prefer a lower bid for an ad with a higher click rate than a higher bid for an ad with a lower click rate. But boring is in the eye of the beholder. So, in addition to YouTube's bots trying to guess what the video is about, there are bots that try to guess what the viewer is about.

Looking at their watch history and device and activity to try and guess their age, chromosomes, income, location, and interests. This information, too, is part of the auction, and the advertisers can instruct their bots to only bid to specific demographics in specific locations, in specific categories, and only up to specific amounts.

So whatever ad you saw before this video didn't plan to be there; it was the result of bot guesses about the video, and bot guesses about you, and bot bids for your attention at that exact millisecond. Watch videos from this channel on the device of someone demographically different, and you'll see different kinds of ads. You should try it with this video on at least two or three or four... look, watch this video on a lot of different devices.

Anyway, if you want to know how much advertisers pay YouTube and creators, there isn't one answer. It's all an insta-auction and varies wildly by video category, the viewers, the time of year, advertising budget, how many auctions are happening at that exact moment, and how full they are. It's millions of matches a minute of supply and demand.

Channels with prized demographics may earn five times as much per view as other channels. But... you and I both know there's still some kind of average number. Something to use as a ballpark, and that's what you want to know. On average, this number, how many Benjamins?

Okay, a reasonable estimate is one view is worth one quarter, one quarter of one penny, one quarter of one penny, split between YouTube and the creator. which is the first time a penny has proven too great a measure of value. So, a better way to think about it is 1000 views generates about $2.50 of advertising dollars.

YouTube then splits that money between the creator and themselves, fifty-five - forty-five. About $1.40 for the creator and $1.10 for YouTube. Or, if you want to think big about it, every million views is $1,400 for the creator, and $1,100 for YouTube. Again, on average.

Particular channels might be splitting 50 cents per thousand or 4.50 per thousand. It all depends on the auction. So, that's how it works. A Niagara of content, sorted and sold by bots, to bots, for humans to watch.

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