Google Acquires FameBit To Lure More YouTube Ad Revenue

YouTube statistics claim to have over a billion users, hundreds of millions of hours spent on YouTube and racks up billions of views. However, it looks like this doesn’t always convert to lots of profit. According to a Business Insider article from February 2016, while revenue increased from 3 billion dollars to 4 billion dollars in 2104, it is still only barely breaking even.

As YouTube has figured out by now a key way to reign profit is to get even more viewers and view time directly on the site and not from YouTube videos embedded on other sites. For this YouTube is already paying top dollar to the most famous and popular YouTubers to create even more appealing content viewers would want to tune into just like switching on the TV for your favourite show.

The acquisition of FameBit is another prong in the strategy to increase YouTube revenue, YouTube content and YouTube advertisers.

FameBit is a more affordable marketplace that will match brands who wish have videos created for platforms like YouTube by popular YouTube stars. If a brand wants to be featured in a superstar YouTuber’s video it will usually be through a multi channel network (MCNs). The MCN will negotiate the deal with its contracted content creators (the YouTube superstars). Other services may include digital rights management, monetization, target audience development, cross-promoting, funding, product development, brand sponsorship collaborations, and additional influencer marketing opportunities. Some of the biggest MCNs are Vevo, Machinima, StyleHaul. More prominent Indian MCNs include Culture Machine, Qyuki, #fame and Nirvana Digital.

This gets very expensive going into many hundreds of thousands of dollars. In comparison, FameBit allows smaller brands to pay more modest sums to collaborate with YouTubers of modest popularity with subscribers in the range of 50,000 to 500,000 (not so much superstar YouTubers with millions of subscribers).

This acquisition will help YouTube capture the smaller scale advertisers as well.
In the official YouTube blog, Ariel Bardin, vice president for product management said:

"Nine years ago, YouTube launched its Partner Program with the goal of helping creators earn advertising revenue while connecting their innovative content to audiences around the world...last year alone, the top 100 advertisers have increased their spend on YouTube video ads by 50 percent."

"As brands continue to embrace the value of YouTube, they’re also taking their investments one step further, partnering with creators on branded content opportunities such as product placements, promotions and sponsorship."

"Today, we’re excited to announce that Google has acquired FameBit -- a technology platform company that helps creators and brands find and work with each other through sponsorships and paid promotion. We believe that Google’s relationship with brands and YouTube’s partnerships with creators, combined with FameBit’s technology and expertise, will help increase the number of branded content opportunities available, bringing even more revenue into the online video community."

"…Our hope is that FameBit’s democratized marketplace will allow creators of all sizes to directly connect with brands, as well as provide a great technology solution for companies like MCNs and agencies to find matches for their creators and brand partners.”

The California – based startup was founded in 2013, by Agnes Kozera and Dave Kierzkowski. It received seed funding of 1.5 million dollars in 2014 from investors like Science Inc., 500Startups, DeNA, and Machinima founder Allen DeBevoise.

In the same year it was reported that FameBit was responsible for brokering 1,200 video campaigns for about 200 brands. At the time the company, was working with some 3,000 up-and-coming YouTube stars and expected 500 videos commissioned in a month and a run rate of 5,000 videos per month. It was also reported that FameBit charges 20 percent commission on and expected to 3 million dollars in revenue for the year.