FEATURE:

The business model of the Internet is changing as more people install tools to block advertisements, and this is forcing content creators into situations where they need to cross the line from neutral commentator to paid spokesperson.

Roostr.tv is a company that acts as an intermediary that connects mobile game studios with YouTube video personalities looking to make more money. It is a marketplace where developers can pay YouTubers to make content featuring their mobile games. Each Roostr.tv partner gets a unique link as part of their advertising campaigns, and they get paid a set amount for each person who installs the game using that link. For developers, this creates a way to avoid paying $ 4.23 on average for a new player that may not spend a lot — or anything — on their game. That’s a record high rate, according to industry-tracking firm Fiksu. And Roostr claims that it can take that ad buy and turn it into players who tend to have a higher lifetime value.

Earlier this month, the advertising-network company Chartboost acquired Roostr.tv. This enables studios with iOS and Android games to use Chartboost to find video stars willing to promote a game in addition to using Chartboost’s other tools for standard mobile advertising, generating money by selling ad space, and analytics. For YouTubers, developers, and Chartboost, Roostr is a path to generating revenue from the $ 30 billion mobile gaming business, and it’s an idea that is growing in popularity because it’s getting harder for people who make video content to eek out a living thanks to software like Adblock Plus.

“Publishers are going to run tests [with Roostr] in Q1 and Q2 of this year,” Chartboost chief executive and cofounder Maria Alegre told GamesBeat. “And the expectation is that by Christmas, everyone is going to be using YouTube marketing.”

Fewer people watching ads

The rise of a marketplace like Roostr is the latest indicator that online video is changing.

In October, Google launched YouTube Red, which is a premium version of its Internet video site that is only for subscribers. It eliminates ads and gives you access to exclusive shows for $ 10 per month. One of YouTube Red’s biggest stars, personality Felix “PewDiePie” Kjellberg (who generates unpleasant sounds while playing games in front of a camera), explicitly said that adblockers are the reason for YouTube Red.

“I think what many people still don’t realize is that: YouTube Red exists largely as an effort to counter Adblock,” PewDiePie wrote in his blog. “Using Adblock doesn’t mean you’re clever and above the system. YouTube Red exists because using Adblock has actual consequences.”

The biggest of those consequences is a reduction in the CPMs (cost per 1,000 views) that marketers will pay to YouTube and the video creators. And that dropping value leads to the creation of services like YouTube Red and Roostr.tv.

“It’s not a secret to anyone that the CPMs people have been earning are dropping lately,” Roostr.tv content producer Elena Nizhnik told GamesBeat. “So a lot of gamers that are doing this full-time have been looking for additional ways to get supplemental income. If it’s not direct sponsorships for gear or something brick-and-mortar, many have been looking at doing deals with mobile publishers.”

An estimate from anti-adblock service Pagefair claims that 198 million people use software to black ads on the Web, and that number is growing rapidly. Nizhnik says she makes YouTube videos herself, and the dropping CPMs are affecting her.

“I’ve seen how my earnings have been dropping this year compared to last,” she said. “So many people are using Adblock. And you only monetize the views where Adblock isn’t on.”

Enter Roostr.tv

Once it approves a streamer, they can go into their Roostr control panel and see the developers that are running campaigns. If the creator sees a game and company they want to work with, they can accept it and start getting paid.

This is a decent deal for developers because the people who download their games from a Roostr YouTube campaign tend to have a higher lifetime value. And with rising costs for player acquisition in traditional channels like video ads in other games, studios and publishers are looking for any tricks to get a bigger return on investment.

Smaller developers benefit in a different way. Many will have an easier time reaching YouTube stars with Roostr. It’s hard for a lot of upstart studios to build relationships with people like PewDiePie, but they might have an easier time reaching someone like famed Hearthstone player Jeffrey “Trump” Shih, who livestreams and makes YouTube videos. But even then, the developers will need to spend a lot of resources reaching someone like that. Maybe he only wants to text at a strange time of the night.

But when a developer uses the Roostr platform, they can reach 10 people who are certainly smaller than PewDiePie (everyone is), but the studios are accessing them in a more efficient, automated way. That’s important because smaller studios don’t need to hire a several people to manage an army of YouTube creators.

For the creators, Roostr is a path to some really big paychecks. And the company makes sure to make that clear.

“The effective CPMs are $ 50 to $ 100, and it’s crazy compared to what they’re making on YouTube alone,” Chartboost chief executive and cofounder Maria Alegre told GamesBeat.

The effective CPMs (eCPMs) on YouTube are in the range of $ 2 to $ 3.

To highlight the difference, Nizhnik gave a hypothetical example where someone is making $ 5 per install (CPI). Now, most YouTube veterans are not familiar with the concept of a CPI, but that’s why Roostr breaks it down as an eCPM for them. When they see that 10 people out of every 1,000 viewers installing the game is equivalent to a $ 50 eCPM, they flip.

“So there’s always a marketplace to go to check if there’s anything out there that you are interested in,” she said. “[If there’s a game] that fits with your audience and you would play anyway, why not also get paid for it?”

Once the creator chooses a campaign, the developers only have mild demands.

“Maybe if the publisher is specific about their geographics, they’ll say that they’ll only pay for people from here or there,” said Nizhnik.

That happens a lot because publishers often want players in the United States and Canada, where the markets are open to new games and the average revenue per player is high.

But that’s the only real restriction. Roostr.tv’s publisher partners do not force the YouTubers to say nice things. Instead, Roostr encourages the creators to act natural — but isn’t it unnatural to get paid to play a game?

Acting natural vs. your livelihood

With a lot of YouTube creators make videos full time, it’s easy to see how many of them would want to generate as much money from Roostr as possible. To do that, they need to get people to use their download link. It would follow that they’d want to make the game look as fun as possible while minimizing its shortcomings.

This creates a conflict of interest that would cause a problem for someone like a journalist or a professional critic. If it appears like a person has a reason to avoid giving a full opinion or a reason to hold back criticism, a reviewer would likely have to pass on covering that product.

Of course, most YouTubers are not journalists or critics. They are entertainers. But at the same time, most of them build their personal brands on trust. That’s the ingredient that makes them so valuable to game companies. Roostr emphasized that point.

“When a game developer posts something about their game [to social media], they get some engagement with it,” said Nizhnik. “But when a gamer, with approximately the same number of followers posts the same message, they get such a bigger response. Because people say ‘that’s the game developer — of course they’re going to say their game is the best. But this guy that I love who has similar taste is saying I should check it out. I’m going to listen to them.’”

But when we posed the idea that YouTubers could erode their valuable trust over time by turning too many of their videos into commercials, Alegre and Nizhnik countered that by claiming they have faith in the people making this content.

“The biggest thing for YouTubers is to grow their audience and to be authentic to their viewers,” said Alegre. “And they understand if they prioritize short-term gain, they will lose out on long-term engagement with their audience. So the smart YouTubers are gonna prioritize that and say whatever comes from their heart.”

“People who are doing this full-time, they realize a short-term paycheck is not going to help them do this for the next decade,” said Nizhnik. “So saying only positive things for a game that is indeed flawed won’t work.”

That’s something that Nick Neri, better known as YouTube personality NickAtNyte, agrees with.

“I do not feel pressure to be fake or only positive,” he wrote in an email to GamesBeat. “Because of how selective I was about which games I would pick.”

Nick also said that he hasn’t worked with Roostr much recently.

“I rarely work with Roostr at this point,” he said. “I did a bit in Q3 and Q4 of 2015, and the campaigns I did work with were good. [But] I lately do not post videos from their site simply because I have no interest in them.”

About the FTC’s disclosure guidelines

But accepting money for making a video isn’t only about a nebulous idea of trust. It is also something that the Federal Trade Commission pays attention to and regulates.

Last year, YouTube multichannel network (MCN) Machinima settled with the FTC after it paid people to make videos to promote Microsoft’s Xbox One without disclosing that they were part of a promotion. Cases like this prompted the FTC to clarify what is expected of YouTube and other video creators.

Here’s what FTC advertising practices associate director Mary Engle said about disclosing a sponsorship deal on YouTube (via Gamasutra):

“Generally speaking, if an advertiser or a marketer is paying someone to write favorable reviews, the reviewer needs to disclose that and that disclosure should be clear and conspicuous, and should be upfront and easy to see where the viewer won’t miss it.

What we say is that it should be easily seen or viewed (or heard in the case of audio) by the consumer or by the viewer. It should be made within the endorsement message, and within the review. We don’t prescribe particular words or phrases that need to be used, but some people might say ‘this is a compensated review’, or ‘I got this free to try.’”

Put simply, the FTC expects YouTube creators to verbally and visually indicate that they are getting paid to promote something as clearly and as early in a video as possible. Reelseo, a website for video marketers, puts it like this in a blog post:

“There is no hard and fast rule to how you must say/write your relationship, but the fact is that you must state it in a manner that is clear to all readers/viewers.”

Back in 2012, the FTC released a video that explained how this works for anyone writing blogs or making YouTube content. You can watch that here. The animated GIF to the right, which is from the video, illustrates how the FTC expects disclosure at the very beginning of whatever sponsored content you make.

You can see that it expects bloggers to immediately write something along the lines of “A company gave me money or a product to talk about it, here are my thoughts.”

But YouTube creators frequently fail to adequately disclose promotions

Roostr is highly sensitive to the FTC’s rules.

“The YouTubers have to disclose that they are making a sponsored video,” Alegre said without us even having to ask about it.

But after our conversation, we checked some of the YouTube videos that are involved with Roostr campaigns, and a number of them fail to fully live up to the guidelines and best practices set out by the FTC.

Check out this video where YouTube creator JackFrostMiner, who specializes in Minecraft, hypes up Monster Castle. This is a sponsored ad where he is trying to get people to click on his affiliate link:

This 23 minute clip doesn’t mention that this is an endorsement deal until about 80 seconds in. Maybe that counts as “upfront,” but he makes a lot of positive statements about the game in that first minute or so. He also asks his viewers to join his clan in the game. All the while, if you’re watching on YouTube, JFM’s Roostr link is the first thing you see in the description — and that text doesn’t mention this is a sponsorship unless you click “Show More” and read where he talks about his “sponsored link above” buried two lines down.

The FTC isn’t rigid. It just wants promoters to eliminate potential confusion. It wants disclosures that live up to the spirit of the truth-in-advertising laws that guide the federal regulatory body.

In another video, JFM acknowledges the nature of the sponsorship in a rather vague way:

“If you choose to use that link, it helps out my channel,” he says. “And I greatly, greatly appreciate all of the support.”

Again, this might satisfy the FTC, but it might not. Someone watching and listening to this may not fully understand how clicking a link helps out JFM. The FTC made it clear that it doesn’t prescribe a certain phrase that everyone has to use, but it did suggest something along the lines of “I am getting compensated for a product in this video.”

In yet another JFM video, one he uploaded Monday to promote Shop Heroes for iOS and Android, he failed to indicate he was in a financial partnership with the developer of the game for 25 minutes, which is right before the clip ends. This is another instance where he only briefly mentions that it “supports” his channel. He does also mention the relationship in the description, but it isn’t before or even near the link and you have to click the “Show More” option to see it.

When I brought these videos up to JFM and asked about them in the context of what the FTC has said about disclosure, the video creator seemed surprised and concerned.

“I had no idea that there were specific rules and stipulations regarding the manner in which I went about disclosing that a video is sponsored,” he told GamesBeat. “I am glad you reached out to me about this, because clearly I haven’t been doing things right.”

Since talking with him, JFM has said that he will go back and update the descriptions to make sure that he tells everyone his link is sponsored in the first line or two. But the creator further clarified some of the thinking into how YouTubers disclose when they’re getting paid.

“The thing about YouTube is there is a stigma regarding the financial success of content creators,” said JFM. “Most viewers really dislike the fact that sponsored videos exist. The reality is, as long as uploading one sponsored video is more profitable than a full week of generic YouTube video advertising, it will not stop.”

And that’s the primary issue. YouTube created a place where smart, entertaining people could make a decent living, but adblockers have reduced the value of these kinds of videos so drastically that it is nearly financially irresponsible for someone like JFM to refuse to make videos as part of promotional deals with developers. So instead of avoiding them, he has fit working as a spokesperson into his job description.

The most egregious failure to disclose comes from Michael “Molt” Holt, who has done a few videos with Roostr.tv, and in one for the fighting game Marvel Champions, he never mentions anywhere in the video or description that he is getting paid or that the link he is sharing is from a sponsor.

Molt is one of the highest profile YouTubers that specializes in mobile games, and this demonstrates that it’s not just smaller channels that have trouble figuring out how to disclose.

We’ve asked Molt for a comment, but he has not returned our request at this time.

Another clip, from EthanGamerTV, a young boy who mostly makes videos for user-powered Roblox, features the game Dungeon Boss. At no point in the video does the host acknowledge that he (or his legal guardian) are benefiting financially from this video:

The only in-video indication that you get that you are watching a commercial is a bit of text that pops up on screen at about 100 seconds and is only visible for a few ticks of the clock after that. And the disclaimer happens as action is popping off from all corners. It seems very unlikely that viewers will look away from the game or Ethan’s reactions to read a quick pop up message.

It’s even more blatant in part two of Ethan’s Dungeon Boss play. The same message about downloading the game from his “sponsored link below” pops up a full 9 minutes in. It fades out 5 seconds later.

We’ve requested a comment from EthanGamerTV’s business contact, but we have not had a response.

Even NickAtNyte has had issues with disclosure. In one of his videos featured on Roostr’s homepage, he goes through the entire playthrough of Monster Castle without mentioning that he is getting paid. There is also no text in the video signifying his deal.

After we brought this up to Nick, he made the video private. It’s no longer available for viewing. But we did capture the first 50 seconds to help illustrate how he pitches his link without informing the viewer that he is a paid spokesperson:

It’s likely that Nick made a mistake.

“I make my best effort not only in Roostr content but all sponsored and compensated content I’ve posted in the past to give clear and verbal and visual clarification about what they are being presented,” he said. “If there was any FTC error in the production of content, it was not intentional.”

In his defense, Nick has made pretty clear disclaimers in a lot of his other Roostr videos, like the one for World of Tanks. And in his Angry Birds 2 video, he mentions that by downloading that game through his link you are showing developer Rovio that you like his content and support his channel. That’s less clear, but it’s still something.

And Nick has a text-book case of disclosing how the relationship between himself and a developer works in his first video promoting the Clash of Clans-like game Dawn of Steel:

But NickAtNyte still has live videos where he asks people to use his link without explaining at all that he is getting paid for it. In his Clicker Heroes promo, he never verbally mentions he is in an endorsement agreement for the game, and he only has an in-video text message pop up at the very end:

Clearly, inconsistency like this is an issue. We’ve seen JackFrostMiner disclose his Roostr connection to various degrees across multiple videos. But then he’ll use a completely different structure for disclosure for a game like Portal Knights, where he puts a mention upfront in the description and the video. When we asked him about this, he said that these were rules strictly dictated by his agreement.

“This deal was with Fullscreen’s Influencer Plus program and they laid out specific guidelines on what to cover within the video,” he explained. As far as I know this is a very new program.”

The truth is that most people entering into these deals don’t get why they need to inform their viewers about a paid relationship. If everyone understood that this is a tool to help consumers feel like they know when something is getting sold to them, you wouldn’t get vague, buried references to “support.”

None of this even touches on these influential people putting Roostr links on livestreaming sites like Kamcord, Mobcrush, or Twitch where hours can go by without disclosure. And many even throw their links up on Twitter without using the “#ad” hashtag that the FTC suggests.

When we followed up with Roostr.tv about the shaky track record of disclosure by some of its partners, the company provided GamesBeat with the following statement on the issue:

“We are aware of the FTC guidelines for disclosures and our terms with creators require them to comply with all applicable laws.”

Multiple video creators confirmed to GamesBeat that Roostr asks them to make disclosures. That isn’t in question, and that’s all that the company has to do. It’s up to the streamers themselves, who trade in trust with their viewers, to properly make those disclosures. And since many are young people doing this as their first real job, it’s obvious that they are still learning.

That’s why the FTC doesn’t actively seek out people violating these rules. The guidelines and ambiguous threat of legal action exist, but they are a last resort meant to compel regular people in extraordinary situations to try to do better when it comes to transparency.

And most YouTubers will probably get better and better at disclosing the longer they do this as their profession.

More information:

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