The Cost of Advertising on YouTube

Since 2005, YouTube has been the preferred video platform for topics ranging from baby and cat videos to product tutorials and even movies.

YouTube is now the 2nd most utilized search engine behind Google, and it’s easy to understand why. Just think about your typical day spent online. You probably spend at least 30 minutes checking out some game highlights, watching a short news clip, or studying a quick how-to video.

If you want to talk about traffic volume, YouTube has it. YouTube users watch more than 1 billion hours of videos per day. From an advertiser’s standpoint, this is a potential goldmine.

Have you thought about YouTube ads yet?

Why Advertise on YouTube?

For advertisers that have relied on Google ads but aren’t happy with the rising ad costs and low conversions, YouTube is a great alternative.

Not only does YouTube have heaps of active daily users, but it also has affordable ad costs for many different ad types. You can also think of these ads as being Google ads on Youtube, in that you control these ads from your same Google account.

In 2020, 60% of marketers claimed to increase their marketing budget for YouTube, thanks to robust growth on the platform.

Users across most (if not all) niches gravitate towards YouTube at one point or another to engage with video content that teaches and informs them. The most popular user demographic is age 35 and under, but not by much. 73% of Americans between 36 and 45 also use YouTube.
What’s even more interesting regarding user demographics is that only 16.4% of traffic comes from America. 9.2% of YouTube viewers are in India, and 4.8% of viewers are from Japan. This distribution points to the global reach of YouTube and how it can be a viable marketing option across many countries.

Advertisers can tap into any demographic on YouTube by quickly placing ads across popular channels and videos in different niches. However, your ad placements will be much more effective if you determine what channels your customers will likely follow.

Let’s say you have a golf apparel brand. YouTube has millions of hours of golf-related content and several key influencers who have 100,000s to millions of subscribers. If you were to advertise on their channels, you would expose your brand to a substantial audience.

YouTube ads are well within reach for most low to medium-budget marketing campaigns. The average cost per view is around 10 to 30 cents, and everyone who views your video ad will be counted towards the video’s YouTube viewer count. The average cost of reaching 100,000 viewers is roughly $2,000, which is a bargain compared to most Google ads campaigns.

Furthermore, the way audiences consume YouTube content has helped publishers get more value for their ad dollars. For example, smart TVs have enabled more households to ingest YouTube videos without having to fire up a computer. As a result, video publishers who have high-quality videos with good production value can make a more significant impact on these larger screens.

So, how do YouTube ads work?

Types of YouTube Ads

YouTube gives advertisers several options based on how they want to reach prospective audiences. Because the robust Google ads platform backs YouTube, it has become a trendy place for advertisers across industries.

Let’s dig into the nuts and bolts of these ad options and see which ones may be best for your next campaign.

Also important to note, your YouTube ad videos must be hosted on your account. So, if you don’t already have a YouTube account, it’s time to create one. Once created, you’ll need to connect it to your Google Ads account.

Each video ad you create, regardless of type, requires a headline of up to 25 characters and a two-line description of up to 35 characters.

The platform will provide you with up to four thumbnail options, but they will also give you the option to create a custom thumbnail.

Skippable in-stream ads

The most common type of YouTube ad is the skippable in-stream option. These ads may appear before, during, or after a video, and a viewer can skip them after 5 seconds. In-stream skippable ads can be up to 6 minutes long.

The key to winning over your audience with skippable in-stream ads is to make the content as captivating as humanly possible right away. You have to wow and amaze viewers within 5 seconds. It’s no easy feat.

The most successful skippable in-stream ad campaigns are those that provide a wild proclamation at the beginning, not something untruthful or inappropriate, but a message that entices users to stay glued to the video ad and learn more about the product.

Skippable in-stream ads are likely your best option if your brand or product offering is relatively unknown.

Non-skippable in-stream ads

Non-skippable ads play before, during, or after another video. Viewers aren’t given the option to skip your ad, and these videos can last between six and 15 seconds.

The advantage here is clear: people are stuck with you whether they like it or not. They can’t simply “opt-out” of your ad. They are forced to watch it in its entirety. Because of this, the ad costs are higher.

Non-skippable in-stream ads are ideal for larger brands, those that are willing to spend more in an effort to generate the additional brand and product awareness.

These video ads are most similar to commercials you’d see on TV.

Video discovery ads

These ads appear as a thumbnail next to other videos on YouTube. They can show up at the top of the YouTube search results page, the suggested videos section area, or in the homepage section of your YouTube mobile app.

When setting the visibility settings for your discovery video ad, set the video to either public or unlisted. This can be changed within the privacy settings.

If your video is 100% engineered for the ad and not for organic views on your channel, you may want to keep it unlisted.

Bumper ads

Bumper ads appear right before the main video starts. A YouTube bumper ad is a six-second long, unskippable video that works best for brand awareness campaigns.

The primary benefit of YouTube bumper ads is that they are cost-effective since Google uses a cost per thousand impressions to charge for them. And because there is a countdown timer showing viewers how long the ad will be, they are far more likely to stay around to watch the ad.

Like with all YouTube ad options, bumper ads vary in price. On average, advertisers spend between $1 and $4 per thousand views.

Outstream ads

Outstream ads appear away from YouTube. These are mobile-only ads that show up on partner sites and apps, playing automatically on mute when they appear on the screen. Users are usually able to unmute with a simple tap and can either scroll past or dismiss when an ad appears.

You might be thinking, “why would I want my YouTube ads to show outside of YouTube?” Firstly, this technology offers a native ad viewing experience that tends to perform better among viewers. Anytime you can show your video ads and not disrupt the user’s normal viewing experience, they are far likelier to respond positively.

Secondly, because outstream ads start as muted, they won’t irritate the user and provoke them to bounce from the website right away. It’s 100% the user’s choice whether or not to listen and watch the ad.

Finally, outstream ads lend themselves to the mobile-first nature of how we consume technology today because they appear in-line within the content on the app.

Masthead ads

Masthead ads spread across the top of YouTube’s homepage, taking up some of the most sought-after real estate on the planet.

Because this is precious territory, masthead ads come with a hefty price tag of $300,000 to $400,000. Probably outside of most small to medium-sized business marketing budgets.

Like outstream ads, these videos play initially without sound. Users have the option to unmute them or click on a call to action button that transfers them to the website. To learn more, you’ll have to contact Google’s sales team.

Video Targeting

The effectiveness of video ads lies in targeting. YouTube makes things easy by giving advertisers robust audience targeting options to finetune their campaigns.

Some of the top audience targeting methods include:

Demographic group targeting: Picking age, gender, parental status, or household income of your intended audience.

Interest targeting: Find people who have interests related to your brand or niche. You can pick from a number of available audience categories to reach people who have relevant interests.

• Affinity segments: Find people who have an affinity for your niche or similar products.
• Custom affinity segments: Drill down even further by targeting audiences who are more tailored to your brand. Custom affinity segments would allow you to target audiences who are interested in a subset of your niche; for example, instead of targeting people into “women’s clothing,” you would target people into “women’s workout clothing.”
• Life events: Life milestones can be targeted too. This is especially great if you offer a product or service related to moving (high school graduate moving to college), getting married, or having a child.
• In-market segments: Choose from in-market audiences to find customers currently researching your products and considering buying a product or service like the one you offer.
• Custom segments: Reach viewers as they are in the process of making their purchase decision. This information is gathered based on the keywords the audience has recently searched on Google.com.

Your data segments: Target viewers of your past videos, videos ads, and YouTube channel as a whole. You can show ads to individuals who have previously interacted with your mobile app or website.

Customer match: Use your first-party online and offline data to connect with customers across Google and YouTube platforms.

Similar segments: When you want to replicate your top-performing audiences, similar segments are your ticket to success. You can match audiences that are identical to your existing viewers.

What Determines YouTube Ads Costs?

Understand how much YouTube ads cost to know how your dollars should be spent. With an average cost per view of 10 to 30 cents and an average daily budget of $10, YouTube ads are attainable to most business types.

Most advertisers will pay every time someone views their ad. However, you can set a maximum amount you want to spend on views so that you won’t spend too much money on your campaign.

If number crunching isn’t your thing, it may be a good idea to hire an experienced advertising team who can help you adjust your budget accordingly.

Producing a high-quality video will also help to reduce your ad costs. If your ad has a high click-through rate, you will end up saving money.

Another pro tip is to enhance your landing page. A/B testing your sites’ landing page will ensure it’s optimized for the highest conversions from your video ads, which will improve the quality of campaigns and lower your ad spend.

As far as knowing when your ad will appear, this is primarily based on your targeting settings and budget. YouTube will find the sweet spot between placing your ad on the most relevant video and achieving your budget limitations. Of course, like all other ad platforms, your best chances of getting an ad placed are when you’re willing to raise your budget. But like we’ve said before, YouTube usually has a lower cost to entry than other ad platforms, so you’re unlikely to have to spend too much money on a given campaign.

How Much Does It Cost to Advertise on YouTube?

If you are a small business owner who’s thinking that YouTube ad costs are still too high to entertain, be aware of the ROI factor.

When YouTube ads are crafted to meet the user in the right moment, whether they are in the awareness or consideration stages of their customer journey, advertisers will benefit from a more positive ROI overall.

Small business owners running YouTube ads for the first time will realize that there are distinct differences between ads that target a cold audience vs. a warm audience. The best way to see what types of campaigns are most effective is to A/B test them.

Goals and Optimizing YouTube Campaigns

The success of your ad campaigns comes down to setting the right goals. For example, is your video ad meant to summon awareness of your brand? Or, is it intended to showcase a specific product or process?

When you set goals from the outset of a new campaign, you can better understand your KPIs and accurately benchmark the progress of your ads.

YouTube ads are not a set it and forget it venture; they require consistent testing and reassessment to get the most bang for your buck.

If all this seems overwhelming, it’s perfectly normal. That’s why it’s helpful for most small and medium-sized business owners to offload their Youtube advertising endeavors to a talented and experienced marketing agency.

At Blue Laser Digital, we have years of experience overseeing successful ad campaigns of different scales. We work within your YouTube advertising rates and offer dedicated customer service when you need it most. In addition, we can show you how to master the platform and achieve more new leads to your website than before.

Ready to master video ads? Contact us today to get your YouTube ads campaign running now!