VidCon: Big brands, teenagers, and YouTube stars collide

Cashing in on YouTube
Cashing in on YouTube

VidCon at the Anaheim Convention Center is swarming with teenagers shrieking over the biggest stars on YouTube. And for the first time YouTube is bringing 100 brand representatives to the event, including EA, Mattel, and AT&T.

The goal: Help brands overcome concerns about user-generated content, and lure them to buy into YouTube's Brand Partner Program. The video-sharing company is touring the show floor and hosting sessions with creators to talk about brand strategy. Vidcon, the largest digital video convention in the world, attracts 18,000 content creators, fans, and increasingly advertisers.

YouTube is projected to hit $7.2 billion in gross ad revenue this year, according to eMarketer, and it pays about half that to its content partners. That makes some of the biggest stars here at Vidcon, like Pewdiepie, millions of dollars a year.

Attendees rolling around at Vidcon in Anaheim, California on June 27, 2014.
Harriet Taylor | CNBC

One of those star content producers is Devin Graham, who goes by the name Devin SuperTramp on YouTube. He has more than two million subscribers watching his videos focused on extreme sports, adding a million new subscribers last year.

"It keeps growing faster and faster. Advertisers are seeing that so they're contacting Fullscreen and YouTubers like us to do videos with them," Graham said.

Read More YouTube to launch paid music service amid criticism

YouTube network Fullscreen, which represents Graham, is a sort of management company for YouTube talent and advertisers. It's raised $30 million from backers including Comcast Ventures, Chernin Entertainment, and WPP, and is drawing acquisition interest from a range of companies that include Yahoo, AOL and Time Warner.

"The brands are creators too," says Fullscreen CEO George Strompolos. "The brands want to create more content to touch consumers, and ultimately want to find ways to reach audiences, and particularly young audiences."

Read More Yahoo looking to buy YouTube content provider for $250 million

And brands are out in force on the show floor—from Kia, which has a bright purple car and a DJ handing out sunglasses, to Peanut Butter & Company, which is handing out samples and featuring its videos demonstrating recipes, to the makeup products of YouTube star Michelle Pham.

Even cable news network HLN hasa booth, offering free manicures. Why? "It's a great way to reach 14-year-old girls," said one of the women manning the waiting list for a polish.

All that interest from big brands is drawing an increasing number of media giants. NBC's "The Tonight Show" with Jimmy Fallon has a huge booth and NBC's EVP of Entertainment announced new plans to find digital video stars. The network says it's starting a competition for YouTube stars and undiscovered talent, to win a six-episode series on NBC.

And it's not just those brands and Google looking to cash in on digital video. Disney recently bought multi-channel network Maker Studios for $500 million, Dreamworks Animation acquired Awesomeness TV, whose YouTube target focuses on teens for $33 million.

Read More The biggest winner in Disney's YouTube deal: Not Disney

Yet this conference comes as YouTube stars increasingly look to move outside the platform to earn higher ad rates and a bigger piece of the pie, rather than having to split ad dollars with Google.

Maker Studios recently launched its own video hub Maker.TV and Defy Media and Fullscreen are also trying to help talent find other distribution channels.

"These are the stars that captured the hearts and minds of the new generation," says Fullscreen's Strompolos. "Right now it's about creating as much value as we can online, in some cases we help bridge the gap between online and television, online and film."

To keep its content creators happy, Thursday afternoon at Vidcon YouTube CEO Susan Wojicki announced news tools to help creators craft and manage their videos. Perhaps most important she revealed a new way to raise funds, through a Kickstarter-like service embedded into YouTube called "Tip Jar."

—By CNBC's Julia Boorstin