Startup 'Famebit' Connects YouTube Stars With Advertisers For Product Placements In Videos

Matthew Frederick, 26, of Los Angeles, is an Internet personality known as "Matthias" who lives off the comedic YouTube videos he creates every week for his loyal fan base of more than 350,000 subscribers. His videos generate ad revenue split between him and YouTube, and his fan base makes him an attractive target for small brands that want to reach a young audience and are willing to pay to be included in videos.

Every so often, Matthias will dedicate one of his videos to a brand that sponsors him, including their product as part of his comedy so as to get the brand’s message across while still catering to his fans. "My personal choice is the Executive because it's got six blades. Just like bacon -- the more slices the better," Matthias says in “The Endless Beard,” a video he made to promote Dollar Shave Club, a small company that delivers razor blades by mail. At this point, Matthias has made more than a dozen brand-paid videos, but it wasn’t until last summer that he began to post sponsored content with any frequency.

That’s because even though Matthias has a large audience, he is one of thousands of YouTubers with subscriber counts that go into the hundreds of thousands. That makes it difficult for marketers to find content creators who are right for their brands and their products. Other than working with a multi-channel network -- the YouTube equivalent of a music label -- and paying a hefty fee to sponsor a YouTuber with millions of followers, brands don’t have many options.

And that’s why Matthias now works with Famebit, a 13-person startup based in Santa Monica. Famebit has developed an online service that makes it easy for small and mid-size brands to connect with YouTubers who have modest yet sizeable followings so that together they can create sponsored videos.

Brands go on Famebit and make postings detailing the campaigns they’re interested in doing, including what their product is, what kind of YouTubers they’re looking for and how much money they’re willing to pay. Content creators then submit proposals to brands with information about their channels and their idea for how they could fit products into their videos. Once a deal is struck, the brands hand over the money to Famebit, which keeps it in escrow until the video has been completed. At the point, the brand gets their promotion, the creator gets their check and Famebit walks away with a 20 percent commission for facilitating the connection.

“These may not be the biggest YouTubers or the most known, but at the same time, they still carry that same weight in terms of conversions for a brand because the audiences they have -- whether they see them as a celebrity, they seem them as a trend leader or a knowledgable friend -- they look up to them,” said Agnes Kozera, Famebit co-founder and chief operating officer.

Brands have been paying YouTubers to place their products in their videos for years, but until Famebit came along, this was a practice that was typically reserved for stars with followings in the millions. It has also required brands to work through multi-channel networks to get videos done, preventing them from working with the content creators directly. Famebit's service makes it possible for brands to work with directly with YouTube stars, regardless of their audience size, to get videos created.

Matthias said he goes on Famebit two or three times a week to see if there are any brands who might be a good fit for him. He describes Famebit as a sort of dating site where brands and YouTubers can discover and court one another.

“You get a feel for a brand before you even have to propose something to them,” he said. “Otherwise, brands have a hard time finding channels on their own that are willing to do brand promotions, that are even right for them or that even have good viewership.”

Besides helping small brands connect with YouTubers, Famebit also makes it easier for marketers of all sizes to launch YouTube campaigns quickly since everything is done through an online service, not an agent. They can also use their budget to get several videos uploaded through numerous relatively-known YouTubers rather than limiting themselves to one or two videos posted by a YouTube megastar.

“Self-service platforms are the answer,” said Famebit Co-Founder David Kierzkowski, adding that it made sense to go to multi-channel networks in the early days of YouTube, but now, brands no longer have to do that.

Since launching in June, Famebit has grown its service to include more than 6,000 content creators and over 1,000 brands. In total, YouTubers have submitted more than 50,000 proposals, 10,000 of which have been accepted and gone into production. Famebit’s model, which is also used by others like Reelio and Grapevine Logic, is designed to democratize the process of connecting brands and YouTubers.

Famebit is "a natural evolution of people trying to monetize YouTube,” said Kate Ritchie, senior marketing manager at Outrigger Media, which has a product called OpenSlate that scores YouTubers for the purpose of helping brands find content creators they may want to work with.

"Famebit is the first of this kind [of YouTube advertising,] but it definitely won't be the last,” Ritchie said. “More and more people are going to be finding ways to help YouTubers make money, especially ones who aren't involved with [multi-channel networks]."

Besides Dollar Shave Club, other brands that have used Famebit to deploy marketing campaigns on YouTube include Redken and Directv. ESalon, a Santa Monica company that makes and sells customized hair dye formula, turned to Famebit to find YouTubers who specialize in giving beauty tips to raise their brand awareness and educate consumers about their product. Women can go on eSalon and answer questions to get formula made specifically for their hair. It’s a product that takes some explaining, which makes a seven-minute video on a popular YouTuber’s channel the perfect marketing avenue for eSalon.

“We don’t have a ton of followers [on our own YouTube channel]. That’s why for us it makes a lot of sense to do a deal with someone through Famebit because they already have a significant number of followers,” said Graham Jones, eSalon’s chief operating officer. “As soon as they upload the video, we get instant exposure.”

Famebit has been around for less than a year, but the company has seen tremendous growth and it has garnered decent support from investors, raising $1.5 million in seed money thus far. And though the company has not revealed any exact figures, it says it is already turning a profit, which is always a plus for any young startup. Famebit likely won’t replace giant multi-channel networks like Fullscreen and Maker Studios, but it is making sponsored content a reality for small brands and content creators.