Monday, April 23, 2018
Business

YouTube stars use product placement to get paid

YouTube stars are borrowing an idea from Hollywood's Golden Age: product placement.

Think how General Motors sponsored comedian Bob Hope's variety show, Revlon backed the 1950s game show The $64,000 Question, and Milton Berle hosted the Texaco Star Theater. They all made money by infusing products and brand names right into the shows.

Taking their cue from TV pioneers, the minds behind viral videos on YouTube are making deals with sponsors who pay from $5,000 for single videos to nearly $1 million for larger campaigns.

"We couldn't run the business without brand deals," Rhett McLaughlin said. "They're realizing that creating engaging content with their brand integrated is more effective than making a commercial."

McLaughlin and Link Neal, who have 5.4 million subscribers combined on their YouTube channels Rhett & Link and Good Mythical Morning, have signed 15 brand deals in the past 18 months. They have worked with major companies such as Buick, Choice Hotels and Gillette.

"A television spot is temporary, but product placement lasts forever," said Mark Owens, executive vice president of the Branded Entertainment Network, which connects brands to projects. The service is owned by Bill Gates' Corbis Corp.

Only 2 percent of U.S. ad budgets is spent on product placement, according to data provider PQ Media. But that is starting to change as dollars drift from television to digital entertainment.

In a March survey of 313 online media buyers from Outrigger Media, a New York City firm, 208 had planned or bought media on YouTube in the past year. Buyers were 49 percent more likely to say their online video dollars were transitioning from traditional television budgets.

Nestle Purina's Friskies cat food hooked up with Benny and Rafi Fine of YouTube act TheFineBros, whose channel has more than 9 million subscribers. They approached Friskies about an April Fool's feature called Cats React to Viral Videos, which has gotten more than 7 million views, nearly 250,000 likes and more than 37,000 comments.

In the video, in which cats stare blankly into space or paw playfully at set props, the Friskies logo doesn't appear until about four minutes into the five-minute video. The product placement lasts only a few seconds, when an orange cat is seen nibbling at a dish of wet food, then the brand name appears once more in a title card at the end.

"Had that been just a huge commercial, it would not have gone viral," Benny Fine said.

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