It’s been a week since my last video on YouTube’s demonetization of many small channels due to “invalid traffic” and YouTube is still silent as to why some small creators are losing anywhere from half to nearly all of their revenue. In my latest video I take a look at what is the likely cause of this problem and why YouTube isn’t talking.
My suspicion is that YouTube is currently under scrutiny from three major stakeholders, and unfortunately, creators aren’t on that list. First, there are YouTube’s advertisers. Over the summer, a company named Adalytics released two significant studies that questioned some of Google and YouTube’s advertising practices. Although YouTube and parent company Google have denied these claims, the evidence from these studies suggests that these issues might be why revenue is getting clawed back.
One of the studies by Adalytics focused on TrueView skippable in-stream ads. These are the ads you see when you start a YouTube video, which you can choose to watch or skip. If you watch the ad, the advertiser pays. However, over the past two and a half years, YouTube has been selling these ads not just on their platform but also on other websites.
Adalytics and some industry insiders believe that many of these ads aren’t even being viewed by people. They’re running in the background on a website or sometimes not displayed to a person at all. This might be because YouTube doesn’t have as much ad inventory available for advertisers on YouTube itself, making YouTube-only placements a more expensive advertising option compared to other ad supported platforms like Hulu and Netflix.
Another factor is YouTube’s restrictions on how ads can run. Videos deemed “made for kids” can’t run certain types of ads. This reduces the available inventory. Also, YouTube is stringent about which channels can run ads. Many channels and videos are deemed “not advertiser-friendly,” further limiting ad inventory that YouTube can offer advertisers. For some reason advertisers are ok with their ads appearing on platforms like Netflix and Hulu next to content that they would not be comfortable with on YouTube.
Then there’s the issue of YouTube Shorts. These short videos are drawing viewers away from the more profitable long-form content that YouTube’s advertisers want to pay for. Creators who are able to negotiate brand deals on their own are far more motivated to make low-effort Shorts vs. longer form videos that require a greater time investment.
Another concern raised by Adalytics is about the placement of ads on “made for kids” videos. The study suggests that YouTube might be bending the rules by detecting when an adult is watching one of these videos and showing them adult-targeted ads. This was likely done in an effort to increase the amount of inventory they could sell to advertisers.
But here’s the problem: what if YouTube’s adult-detecting AI gets it wrong and a kid is the one actually watching? The Adalytics report suggests this is happening and advertisers are very unhappy. One advertiser said they’d be looking for refunds:
“Google has failed advertisers, again. There is no reasonable excuse for ads running on content intended primarily for kids other than to extort advertisers through a toddler-enabled click farm. The observations around Pmax (Preschooler Max) are damning given the hard sell Google is putting on us to trust their so-called AI black box. We’re overdue real transparency and Google needs to be made accountable – refunding us for all ads on this content and explaining themselves to the FTC.”
This is problematic because kids might still end up clicking on these ads, leading to potential legal issues. It is against the law in the United States to track the online behavior of children under the age of 13.
This in turn creates a “fruit of the poisonous tree” situation. And here’s how I think this is playing out: A kid gets served an adult ad on a “made for kids” video. They click on the ad and now an advertiser is collecting data on that individual. That account then starts viewing other ads on non-kid videos and additional data is collected and additional targeted advertising is directed at that account. But the entire account is poisoned at this point – and any ad views are likely going to be deemed invalid.
If YouTube is looking to refund advertisers for this traffic they’re going to have to follow those accounts across all of the videos they watched in an effort to make these advertisers whole. And it’s likely the creators getting hit with this are appealing to younger audiences hence the great impact. The only open question is why this seems to be hitting smaller creators more than the larger ones.
All these challenges come at a time when Google, YouTube’s parent company, is facing a lawsuit from the U.S. Department of Justice accusing them of being a monopoly. This is a significant case, and Google’s entire business could be at risk.
I recently spoke with Sarah Kimmel, a fellow creator who runs a channel called Family Tech. She shared her frustrations with the current situation on YouTube. Like many, she’s seen a significant drop in her revenue with zero communication from YouTube. She emphasized the need for transparency from YouTube. All she wants, like many of us, is clarity.
In conclusion, these are challenging times for creators on YouTube. Many factors are at play, and it’s crucial for YouTube to communicate and support its creator community. They