Google announced today that it has acquired FameBit, an "influencer marketing platform for branded content." That is a lot of buzzwords packed together, so lets break it down. For a while YouTube creators have been making money not just from advertising revenue generated against their video views, but by partnering with brands that want to connect with its fans. Sometimes this means making videos with a product, flying a drone or drinking a soda and reviewing it. Sometimes its more subtle, like playing a video game or eating a snack without explicitly pointing out where it came from.
For many creators we spoke with, this income had become as important, if not more important, than the money they were earning through Google's advertising program. By acquiring FameBit, Google will take what had been shadow economic activity and make it part of the mainstream YouTube platform. That might make earning money through native advertising and sponsored content easier for video creators. Of course, at the same time, it helps ensure that Google / YouTube controls the value flowing to creators, and gets a piece of the action for themselves.
Economic activity being dragged from the shadows
Here's how Google put things in the blog post announcing the deal: "Creators will always have the choice in how they work with brands, and there are many great companies who provide this service today. This acquisition doesn’t change that. 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."
Once a creator reaches a certain number of subscribers they can apply on FameBit to work with brands. The company offers up a menu of options and creators need to contact the brand and explain why they are a good fit for promoting a certain product. In the future, you could see this becoming a series of check boxes right inside the YouTube software those creators use to publish.
Google may also be interested in shaping this process because the interaction between YouTubers and brands has raised some eyebrows among regulators. The Federal Trade Commission recently reached a settlement with Machinima, which works with a huge network of video creators, "prohibiting it from "misrepresenting that paid endorsers in influencer campaigns are independent reviewers." The settlement was a response to videos where YouTubers expressed positive views of the Microsoft Xbox without revealing that they had been paid to do so.
The FTC has been watching closely
The trend line in video advertising has been clear for a while. Ads are fine, but they work a lot better if they are integrated into the actual video and delivered by a creator that fans care about. The acquisition of FameBit makes it clear that Google sees the writing on the wall, and wants to own a piece of the pie.