The DARK truth about YouTube sponsorships

The DARK truth about YouTube sponsorships play video
Written by: Dexxter Clark
Creators are often over the moon when companies reach out for the first time for a YouTube sponsorship on a small channel
Certainly I was when I got my first email. [email notification]

you can’t afford it 1 – watch time
But a sponsor-spot comes at the cost of watch-time, because viewers will click away and therefore you get less promotion by the YouTube algorithm.
Which you desperately need and can’t afford to loose as a small channel.

When you have 100K subscribers and the algorithm know who your audience is, it does matter as much.

With that being said, if you decide to do a YouTube sponsorship as a small channel, it makes most sense to put them at the end of your video, so viewers get value first before you force an extra ad on them.

you can’t afford it 2 - lawyer
When it comes to sponsorships it is wise to sign a contract with the brand, that lays out all the responsibilities for both parties.

From experience I can say that it is regretfully necessary to involve a lawyer for these kinds of contracts.
Often these kinds of contracts are often riddled with legal loopholes that are hard to spot as a novice, especially when there is a language barrier.

I’ve also learned that it’s always cheaper to involve a lawyer before you sign the contract.
But when a lawyer sneezes it will cost you north of E1000,- for a cheap lawyer.
And for a 4 minute phone call, they bill you 5 minutes.

Let’s say that a sponsored video will earn you E300,- as a small channel and a lawyer costs you E1564,- you will lose E1264,-
So, often sponsorships for just one video is not worth the hassle.
It makes more sense to do a package deal for multiple videos.

You can’t afford it 3 - administration/getting your bills payed.
Beware that negotiating brand deals eats up more time than you think and that the majority of these deals fall through.
When they do go through, you have to abide by the contract and some brands have strict brand guidelines.
You can’t always say what you want to say.

Also, you need to keep an administration for your tax agency.
And also from time-to-time bills are not getting payed.
... you legally have to remind them 3 times… yada yada
And still some companies refuse to pay.
Then you have to involve a lawyer…. That eats up time too, costs a lot of money.

All that time, energy and money you can spend on making YouTube videos and actually making money.
And I can say what I want about Google, but they always pay their ad money around the 20th of the month, no exception.

You can’t afford it 4 – evergreen content/ alternatives
Often brand deals cover a one time fee.
But a lot of YouTube videos are evergreen content which generates the brand money for the next 5 years to come.

I would say, include that into your fee, if you can’t, know that there are other monetization alternatives that are more evergreen and therefore more profitable.
I’ll talk about these alternatives in a minute.

You can’t afford it 5 – not Related to the channel
These sponsorship requests often come in the form of copy/paste emails that they send to hundreds of creators.
“We here at X are fans of your content, and we think that you are a good fit for our brand” and somewhere in the email is always the word “collaboration”.

Sometimes those are completely unrelated products, like in my case once a brand of hair dryers.

Offering unrelated products doesn’t make sense.
Personally, I would like to build a relationship with a brand so I can work with them again under the same conditions, which saves me hiring a lawyer and time negotiating.

A wrong sponsorship can also hurt your image as an expert.
An IT security expert promoting password managers is kind of strange.

To prevent damaging your image, Ipersonally investigate the product and company before you promote.
which, again, costs time.

You can’t afford it 6 - sponsoring products
This one is rather sneaky.
“We’ll send you a free product if you do a review”.
Which is often company speak for: “we would like free promotion, because we’re too cheap to sponsor your video”.

Be aware that the sales price of these “gifts” are often seen as income by your tax agency and that you have to declare that like if you received the money in cash for it.
Here in The Netherlands, you have to pay 25% corporate taxes plus a 40% income tax over that.
Thus, the “free” product costing you money.

And since giveaways are legally not allowed
Personally, I don’t see why you want to do a review this way, unless you wanted to buy the product anyway.

You can’t afford it 7 – malware
the reason why I wanted to make this video is because we recently have seen a surge in fishing and malware attacks on creators via the email address on their Channel about page. [broll]
These are often disguised as sponsorship requests.

It is wise to have separate emailaddress for your about-page and your google account so it is easier to spot these attacks.
It also helps to never-click on links in emails, because clicking it might get you infected with malware.
In goal of this malware is to gain complete control over your google account including adsense and your YouTube channel.

You can’t afford it 8 – confidence tricksters
There are also companies out there that never intend to pay for the “sponsorships”, after you’ve released the video there is something wrong with the video or they never respond anymore, and they know you can’t retract the video.

A company needs to have Return on investment, otherwise why would they want to sponsor?
With a little bit of napkin math with a conversion rate of 1 promille per view with a margin of 30% it should make sense for the company.
But that conversion rate depends heavily on the niche, the product and where your video is in your sales funnel.

I would say: ask sponsors for referals, and reach out to other creators and ask about the collaboration and their payment history.
And also that costs time.

Other YouTube monetization alternatives
I’m not saying that you never should do sponsorships, because they are still a viable source of income for big YouTubers.
I would recommend to focus first on getting a decent amount of views because it strengthens you bargaining position.

It hink there are some better monetization alternatives out there for small channels.

1. Affiliate
Affiliate marketing is by far the best “sponsorship”, Both parties get paid when the brand sells a product.

2. Patreon
If you get banned from youtube or get a copyright strike, you still have your patreon supporters.

3) coaching
You can help clients by providing payed coaching.

4) blog: monetize your blog.
My personal favorite: a blog that you can monetize with ads

5) own products
If you create a digital product like a book, a video course or a web application.
You have full control and, can keep all the revenue!

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photo author dexxter clark
Dexxter Clark
Music Producer / YouTuber

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