At VidCon, Facebook and Snap are trying to echo YouTube's success with online creators

Key Points
  • Facebook and Snap are trying to echo YouTube's success with online creators.
  • Brand safety is more important than ever after ads were shown next to offensive content.
Googler, Writer and Cartoonist Jonathon Youshaei speaks at the YouTube @ VidCon Brand Lounge at Anaheim Convention Center on June 22, 2017 in Anaheim, California.
FilmMagic | Getty Images

In its eighth year, VidCon draws tens of thousands of fans, eager to meet their favorite content creators, which means it's become ground zero for brands — from Disney and Nickelodeon, to Dove Chocolates and Taco Bell — to try to reach them.

They're setting up shop at the Anaheim, California, convention center and hanging out samples, and in many cases connecting with YouTube celebrities they can partner with.

"YouTube is one of the largest places where consumers spend time and it's also where the largest ad inventory lies. So it's unavoidable for advertisers to work on YouTube," said Channel Factory CEO Tony Chen.

His company helps both content creators and brands on YouTube by helping creators dig into their analytics, and by pairing brands with content from some 5,000 creators representing about 3 billion video views. Channel Factory makes sure that ads are shown in the right context.

And context — and brand safety — are more important than ever. This year's VidCon comes as YouTube and Facebook have faced a slew of criticism for hosting hate speech, offensive content and fake news on their platforms. YouTube suffered a boycott by a number of big brands after a Times of London expose showed ads running alongside offensive content. Nomura Instinet estimates that boycott cost YouTube as much as $750 million.

YouTube has made many changes to prevent ads from being paired with inappropriate content, but some creators are feeling the pain. "Since three months ago we've seen some creators decrease in revenue as much as 80-90 percent," said Chen.

But stars with particularly safe content, like Rosanna Pansino, who has 8.5 million subscribers on YouTube, say business is booming. "I have not seen any decline," Pansino said. "My content, because it's baking videos, is very family friendly. Me as a person — I'm family friendly."

While VidCon was created for YouTube stars, and YouTube continues to be a title sponsor — this year Facebook and Snapchat are upping their presence on the show floor.

Snapchat's hosting a ball pit — the balls are its signature yellow, and handing out lemonade in a booth designed to be Snapped — and Facebook's Instagram is featuring an Instagrammable mirrored booth with hanging white swings.

Instagram's founder and CEO, Kevin Systrom, is speaking, and it's hosting a creator's lounge, along with new VidCon-themed masks in Facebook's app. This comes as Facebook pushes the importance of video, which Mark Zuckerberg called "a mega trend, on the same order of mobile." And Facebook is investing in original shows with professional content creators, which we should start to hear about more later this summer, as it pushes to keep up with Snapchat content (Snap earlier this week announced Time Warner will be investing $100 million in ads and content on the platform).

But the YouTube stars CNBC talked to say while they're investing more time in creating content for Facebook, Instagram, Snap and others, YouTube is still the core of their business. "YouTube is home," Pansino said.

"On Facebook the revenue that we make primarily comes from sponsorships and brand deals," said YouTube creator Keaton Keller. "I wouldn't say monetization has been a big thing yet. I'm hoping it [Facebook ads] finally catch up to what YouTube is. For the meantime it's just going to be sponsorships."

It's not just Facebook growing its presence here: This year the telcos have been ramping up their investment in the space, as they look to digital video content to drive data usage and differentiate their services.

Both AT&T and Verizon executives are speaking on stage. Verizon's Go90 mobile video service and the YouTube content channel it invested in — AwesomenessTV — are both sponsors, and Awesomeness has a huge branded Ferris wheel outside the convention center. The YouTube platform AT&T invested in — Fullscreen media — is also a sponsor, with a two-story booth on the show floor.

Disclosure: CNBC parent NBCUniversal is an investor in Snap.