YouTube is going into ecommerce business with the introduction of new shopping features to the world’s biggest videos site, as the company seek to diversify revenue streams during a slowdown in digital advertising.
YouTube’s short-form video offering “YouTube Shorts” was launched in 2020 to compete against rival TikTok and now users will be able to buy products as they scroll through videos according to Michael Martin, YouTube Shopping’s general manager to the Financial Times.
Lyor Cohen, Head Of YouTube Music, the sites premium stream platform recently announced that they surpassed 80 million subscribers. This is a 30 million member increase from the 50 million that was announced last year.
As YouTube rolls out “commission schemes” for influencers to sell products through links in videos, the effort is to attract creators — users who make content on YouTube.
“Our goal is to focus on the best monetisation opportunities for creators in the market,” say Martin, who joined the company six months ago.
Ad sales revenue for YouTube showed a decline at their parent company’s Alphabet’s last quarterly earnings.
Social commerce is the next frontier of social media websites which allows scrollers to purchase products directly from the websites as Meta and TikTok have also entered the so-the market over the past few years.
Mckinsey consultancy reported that China where the highest consumers on social media where they spent $352bn on social shopping last year.
According to Martin, who joined Google this year from Nike where he was head of ecommerce in Greater China, YouTube plans to roll out its two pilot shopping schemes over 2023.
YouTube will also pay creators 45 per cent of the revenue made through displaying ads between videos on Shorts from early next year.
Meanwhile WMV reported that MrBeast, YouTube’s richest creator is seeking a 10-figure valuation for his multiple money-making ventures. If he’s successful, that would be the first influencer-led businesses to reach such a valuation.
MrBeast (real name Jimmy Donaldson) is the fifth most subscribed creator on the video platform with a subscriber count of 107 million, but he earns the most money according to—Forbes estimates. Forbes says that Donaldson earns $54 million per year for his extravagant content alone.
He’s known for daring challenges with his friends and experimenting with dangerous stunts on himself, giving away money to his friends, and strangers. which always come with eye-wateringly rich prizes. He has also given away cars and houses.
The Mr. Beast empire extends beyond entertainment and into MrBeast burgers decliners and, a physical restaurant for his burger chain, then there is a snack brand called Feastables. The social butterfly is working on a Netflix show according to Fortune.
MrBeast’s search for brand valuation comes a month after Kanye West’s ex-wife Kim Kardashian announced her venture on called SKKY Partners. The popular reality star posted on social media: “I’m pleased to announce the launch of SKKY Partners with private equity veteran Jay Sammons as co-founder and co-managing partner, along with Kris Jenner who will serve as partner at our firm.”
SKKY Partners is looking to take the Kardashians media brands and products under one private equity firm.
Capitalizing on the Founders’ collective experience investing in and building large scale consumer and media businesses, along with Kardashian’s global reach and unrivaled social influence, the firm will make both control and minority investments in growth-oriented, market-leading consumer and media companies.
SKKY’s target sectors include consumer products, digital & e-commerce, consumer media & entertainment, hospitality and luxury. The Founders’ understanding of the power of great brands, social influence, globalization and the importance of environmental, social and governance excellence will enable SKKY Partners to elevate and leave each company in which it invests better than it was before.
“I have been privileged to spend my career partnering with the founders and leaders of some of the most influential and culturally groundbreaking consumer brands of our time,” said SKKY Partners Co-Founder and Co-Managing Partner Jay Sammons. “Now, in partnership with Kim and Kris, I look forward to building SKKY into the leading private equity firm that backs the next generation of innovative, disruptive consumer businesses and brands.”
MrBeast’s Feastables reportedly made over $10 million in revenue in its first few months, while the YouTuber claimed on Twitter that his burger chain “has shared over $100 million in revenue with restaurants across America.”
YouTubers with high-valued businesses
If Donaldson raise the $150 million that he seeks in a funding round for his YouTube channels and various other businesses, according to a report by Axios citing anonymous sources- it would value the businesses together at $1.5 billion.
It would be the first institutional investment into Donaldson’s overall portfolio; Feastables separately raised $5 million in January at a $50 million valuation.
Donaldson would be the first creator of his kind to reach such a valuation, although not the first YouTube creator to attract investors. The company that owns YouTube kids’ channel CoComelon, Moonbug Entertainment, was acquired for $3 billion by Candle Media in 2021.
Meanwhile, the company that manages MrBeast, Night Media, has raised $100 million and teamed up with the Chernin Group to form Night Capital, which aims to boost creators by having them sell retail products to their communities.
Success in the so-called social commerce market typically hinges on the relationship between creators and their followers where a huge personality can drive sales. In China, the popular influencer Austin Li sold more than $1bn worth of goods in a single broadcast on Chinese shopping platform Taobao last year according to the Financial Times.
“It is very much an endorsement model, versus a more traditional advertising model or a paid-placements model,” Martin said.
This form of shopping through products recommended by creators was proving popular among YouTube’s younger, Gen Z users, who favoured “queryless video-based interactions”, meaning they did not want to actively search for products, he said.
“That is the way they prefer to consume information about products, and Shorts are inherently shoppable from that perspective,” he added. YouTube’s Shorts channel alone now has more than 1.5bn monthly users, surpassing the 1bn users TikTok last publicly announced.
Stay with WMV, for more on the developments of YouTube’s social commerce.
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