A VC’s top 10 takeaways from VidCon

We spent 3 days with 25,000 tweens — here’s what we learned!

Last week, we attended our first VidCon, an online video convention for creators, fans, and the media industry founded by Hank Green and John Green. We were a bit late to the party — the conference started in 2010 with 1,400 attendees, and has since ballooned to 25,000+ people. It’s now widely recognized as a key destination for brands to reach the Gen Z demographic.

As early stage consumer investors, we saw VidCon as a great opportunity to better understand the online habits of today’s teens. They may be young, but they’re often influential early adopters of the next big brands, social networks, and content distribution platforms. According to Nielsen, Gen Zers now make up the largest percentage of the population (27%), and consume an average of 30 hours of digital content weekly.

We bounced around between the conference’s three tracks, which each attracted different audiences — Community (millennial/Gen Z fans), Creator (aspiring influencers), and Industry (media and finance executives). We also spent time in the Expo Hall, which featured booths and lounges from brands ranging from Instagram to Snickers to Audible (check out TubeFilter’s review here) — even Invisalign sponsored a ferris wheel and a giant candy dispenser.

For anyone who couldn’t make it to Anaheim (or got stuck at TanaCon), we recapped our top ten takeaways from the week, grouped into key categories.

For VidCon week, the outside of the Anaheim Convention Center was plastered with promo materials for upcoming original content from YouTubers — including Liza Koshy’s Liza on Demand, and Joey Graceffa’s Escape the Night, which are both hosted on YouTube Red.

Creators/Influencers

1.Creators are companies. This won’t come as a surprise to anyone who read our post on the rise of influencers, but being a successful creator is big business. As gamer StacyPlays (1.8M subscribers) said on a panel about brand deals, “We’re all companies at this point.” Though social media stars may get started making webcam videos in their basements, many eventually hire teams of agents, managers, and staff who handle editing, social posts, brand engagements, and production schedules. The creator still ultimately owns his or her brand, but just like traditional celebrities, day-to-day decisions are abstracted away from them to people who can monetize their image.

One of the strongest influencer brands for Gen Z at VidCon was that of 15-year-old JoJo Siwa (pictured above as part of the Nickelodeon display). Siwa, a former Dance Moms star, is now a YouTuber, singer, and author, and is signed to Nick’s talent label — she performed at VidCon’s Night of Dance and at the Night of Awesome.

Grant Thompson, “The King of Random,” is a perfect example of how a creator turns into a brand. He started YouTube has a hobby, but ended up leaving his job as a pilot to make videos full-time for his almost 10M subscribers. He now employs a team of 13 people that serve as a full production company and help him find new ways to monetize his content.

2. Struggle for authenticity. Brands are tempted to script influencer posts, but creators don’t want to feel like they’re shilling a product. Benny Fine (Fine Brothers Entertainment, 17M subscribers) includes a clause in contracts that allows him to ignore 50% of edits that brands propose. Creators are more positive on longer-term partnerships that integrate the brand naturally, like a video series or a channel takeover. If fans feel a like brand is enabling content the creator otherwise couldn’t make, they’re more likely to have a positive association. Kurt Schneider (10M subscribers) said he only works on brand campaigns that feel consistent with “what fans expect” from him, and where he can make the brand the “hero” of the video in an authentic way.

Schneider cited his Candyman brand video with M&M’s as a successful example of an influencer/brand collaboration — it looked like something he might normally make, got a great reception from his audience, and the like/dislike ratio was in line with his non-sponsored content.

On the topic of authenticity, producers of YouTube Red series Escape the Night said they’ve found success in treating influencers like stars, not actors. Fans want to see influencers appearing as themselves, not as another character. Escape the Night is what showrunner Adam Lawson calls a “surreality” show — influencers are placed in a historical setting and have to complete challenges to make it back to the present. While the show has a group of background actors with scripted lines, the influencers were completely unscripted and were asked to just respond naturally to the action around them.

3. Creators should do good. Along with CPO Neal Mohan’s product announcements, YouTube’s annual keynote featured two creators — music producer Kurt Schneider, who boasts 10M+ subscribers, and therapist Kati Morton, who has a relatively modest 360k subscribers. YouTube’s decision to highlight Morton, whose videos help people worldwide struggling with mental health issues, illustrates a repeated theme that creators should make a positive impact on the world. Jennifer Wiener from Fullscreen Media, an agency that manages influencers, said that the most successful creators focus on a message of “empowerment, diversity, and inclusion,” and highlighted that younger viewers “want to do good and see others doing the same.”

This theme carried through the Community track sessions for young fans — we counted more than 25 sessions on topics like racial equality, sexuality, feminism, and cyberbullying, including: “Body Image, Gender, Presentation, and Online Video,” “We’re Here: Talking about Marginalized Identities,” and “They See Me Trolling: How to Create a Kind Community.” The trailer for the upcoming movie based on Angie Thomas’ The Hate U Give also premiered at VidCon, and the brand’s popular booth encouraged visitors to “Spread Love” by putting up positive messages on a public board.

Photos of The Hate U Give booth at VidCon. Courtesy of @cathhick.

Brands and Monetization

4. Pre-roll ads are passé. It’s no surprise that teens hate pre-roll ads. Ads are also an inconsistent revenue stream for creators, as they have to rely on the platform’s algorithm and CPMs are low. Smart creators diversify their revenue through subscriptions for premium content, brand partnerships, and merch/live shows. In a panel on monetization, Hannah Hart (2.5M subscribers), Burnie Burns (9.5M subscribers via Rooster Teeth), and Philip DeFranco (6.2M subscribers) all emphasized that they’ve focused on non-ad revenue — Rooster Teeth has 300k+ paying subscribers for its SVOD service, while merch and live shows have been crucial for Hannah and Phillip.

Nielsen’s Amanda Tarpey released data at VidCon on SVOD growth in households between 2017 and 2018 — their data shows growth across all generations, with strongest adoption for millennials and Gen Z.

YouTube’s product announcements at VidCon focused on making it easier for creators to monetize beyond ads, including channel subscriptions and merch shelves that live directly below videos. The company also released early stats on some of its other monetization initiatives — 50% of channels using FameBit doubled their revenue in the first three months of 2018, and 65% of channels using SuperChat have more than doubled their livestream income.

5. Who “owns” the fans? Though many creators are grateful to YouTube for launching their careers, there’s an underlying tension around who “owns” the relationship with fans. This issue has become increasingly important as YouTube recently required users to “opt in” to notifications for new videos on channels they’ve already subscribed to (which resulted in a significant drop in views for many creators), as well as stricter monetization policies.

Hannah Hart voiced her frustration with the new notification policy, noting that it created unnecessary friction for fans to access her content. When asked about the best piece of advice she’s received, she responded: “Don’t build mansions in someone else’s backyard.” Burnie Burns also warned creators against relying too heavily on one platform, arguing that the demise of Vine illustrated the importance of moving your audience to a destination that you control. Philip DeFranco took more aggressive action when he launched his own app, DeFranco Now, in May 2018 after comparing YouTube to an “alcoholic, negligent stepfather.” It was DeFranco’s last year at VidCon, as he plans to start focusing on his own events.

Frustration with YouTube and VidCon motivated the launch of TanaCon, an alternative conference organized by YouTube influencer Tana Mongeau. The event, which was held in Anaheim the same week as VidCon, was born out of Mongeau’s frustration that VidCon wouldn’t feature controversial creators like herself. Though TanaCon was poorly organized and eventually shut down, Mongeau was able to attract more than 20k teen fans as well as huge creators like Shane Dawson, TheGabbieShow, Casey Neistat, and Miranda Sings.

TanaCon sold 5,000 tickets but was reportedly mobbed by another 15,000 teens eager to meet their favorite YouTubers. Photo courtesy of @SocialBlade.

6. Engagement > views. To generate real value from campaigns, many brands have set the following priorities for influencers they partner with: (1) engagement (likes, comments); (2) views; (3) subscribers. As purchase behavior continues to shift towards mobile and social platforms, influencers have a huge ability to drive sales, but it’s key that viewers actually watch and engage with the content, and use it to make purchasing decisions.

The increasing focus on engagement over reach was echoed by brands and publishers, whose KPIs for content have shifted away from pure views. Jay Holzer, Head of Linear Programming at Tastemade, mentioned that his team primarily focuses on watch time over number of views — they want to ensure they are building a real connection with viewers who will return to their page. Similarly, NBC worked with 40 music YouTubers for a The Voice campaign — while they tracked views, they specifically focused on boosting search traffic for The Voice, which was up 170% over the course of the campaign.

7. Brands need to catch up on e-sports. The rapid rise of e-sports caught many brands by surprise, and they continue to struggle with how to reach these viewers in an authentic way. It’s a valuable demographic — viewers often stream hours of content with no break and are eager for opportunities to emulate the gaming lifestyle. Brands need to think of creative ways to establish a value-add presence in the space — Perrin Kaplan of Zebra Partners cited IKEA’s new ergonomic furniture for gamers as an example of this.

HyperX and Allied Esports partnered on a mobile touring arena that made a stop on the VidCon Expo Hall floor — conveniently located next to the Axe (yes, the body spray company) Gaming Lounge.

Other industry experts encouraged brands to think more strategically about which games best fit their ethos and not scramble to sponsor top hits like Fortnite. UEG’s Lauren Flanagan said that the current environment reminds her of youth soccer, where “everyone is chasing the same ball up and down the field” rather than spreading out and pursuing different properties. VidCon did feature a case study of one successful partnership in the space — Hot Pockets ran a social campaign in 2017 where they dedicated most of their marketing budget to 20 gaming influencers, and saw a 6–7% lift in business.

8. Gen Z wants interactive and Instagrammable experiences. Wandering around VidCon’s giant Expo Hall, we quickly realized that almost every booth had two things in common: they were interactive, and they were optimized for Instagram. At the very least, this meant a trendy wall to snap a photo against (Facebook had mini photo-rooms dedicated to this), but most brands got a little more creative. Hubert’s Lemonade had a ball pit filled with lemonade floaties and a claw machine of merch, while Nickelodeon built a giant obstacle course. Brands weren’t shy about encouraging social posts, putting up signs with a hashtag and request to share on Instagram.

A few of the brand booths in VidCon’s expo hall. Clockwise from upper left: Ugly Dolls, Hubert’s Lemonade, United Airlines, and Califia.

It’s easy to make a physical booth interactive, but how can content creators do the same for YouTube? Chase Landau, VP of Partnerships at pocket.watch, said that the company’s creators focus on videos about things that kids can replicate at home. How-to videos on cooking, building things, and gaming are often the most popular content. In another interesting example of interactive content, Twisted Food launched a delivery-only restaurant that allows viewers to order the food they see in the company’s viral Facebook videos.

Social and Entertainment Platforms

9. Platforms are responsible for content. UGC platforms often struggle with balancing freedom of speech and creating a safe community. At VidCon, many creators voiced the opinion that YouTube and other platforms should be doing more to ensure that users aren’t exposed to harassment or inappropriate content. On a panel titled “Why 2017 Sucked for Online Video,” vlogger Jana Hisham criticized YouTube for leaving up Logan Paul’s “suicide forest” video for 12+ hours, and argued that real people (not bots) should review and approve featured or trending content.

Tech execs have historically disagreed with the idea that they are responsible for user content, but it seems the tide is beginning to shift. At Twitch’s keynote, co-founder Kevin Lin said that the company has a “responsibility to create a safe environment for creators and fans.” Trolls, be warned — platforms are making strides to rein in the Wild West of the Internet.

10. Platforms converge to multi-format video. YouTube, IG/Facebook, Snap, and Twitch are in a race to become the primary destination for video. YouTube is encroaching on Instagram with the launch of a “Stories” product for casual, short-form videos. Meanwhile, Instagram made waves with the launch of IGTV, which allows users to create longer-form, YouTube style videos. Facebook VP of Product Fidji Simo said that her team is working to encourage more creator content on Facebook Watch due to consumer demand. And while Snap has lagged in creator videos, the company had a big VidCon announcement — the Snapchat Shows feature will be opened up to creators, starting with a makeover show from Patrick Starrr of Face Forward.

You can catch the full YouTube keynote above — other than YouTube Stories, some of the biggest announcements were the launch of monthly memberships, expanded merch opportunities (including a partnership with Teespring), and a new Premieres feature for the live debut of pre-recorded videos.

Creators have mixed feelings on the idea of platform consolidation. Some seem exhausted by the challenge of producing content to fit the demographic, format, and viewing habits of each platform, and would welcome the ability to focus on one. Others, especially newer creators, appreciate the ability to publish across many platforms and figure out where their content “hits.” NBA Entertainment SVP David Denenberg said the NBA has benefited from platform diversity — they can livestream a game on Facebook, post highlights on YouTube, and do player Q&As on Instagram. Denenberg said the NBA works with social platforms to produce the best content for viewers —after a contact at Facebook recommended videos with tighter angles, the NBA installed new cameras in arenas and saw engagement increase 2.5x.

Thanks for reading — we hope you found this post to be helpful! If you were at VidCon this year or in past years, we’d love to hear your feedback below, or you can reach us on email at [email protected] or on Twitter @venturetwins.

Like this post? Clap for it to help more people see our story, and share it with your friends!

Interested in reading more content from us? You can subscribe to our weekly newsletter, Accelerated, for more insights on millennial and Gen Z trends.