Google owns YouTube. Therefore you advertise on YouTube using the Google AdWords network. As with any other type of Google AdWords campaign, the price of YouTube ads involves you bidding for ad placement. Therefore it is impossible to say how much YouTube ads cost definitively.
We have previously looked at YouTube ads from the YouTubers’ point of view in How To Make Money On YouTube. This post focuses on YouTube from an advertiser’s point of view.
- YouTube ads have an average cost-per-view of $0.10 – $0.30, and the views that you generate will count towards your overall YouTube viewer count.
- The average cost of reaching 100,000 viewers is around $20.000.
Summary: YouTube Ad formats, Targeting and Bidding
Why Would You Advertise on YouTube?
YouTube has a huge following – indeed it enjoys more than 1.5 million logged-in monthly users. They watch YouTube on mobile devices for more than one hour a day on average. With the current popularity of Smart T.V.s, there has also been a rapid rise in watching YouTube on television sets.
It is also hard to ignore the fact that the YouTube search engine is second only to Google when it comes to search use.
With the power of Google AdWords behind it, it should be no surprise that YouTube is now a favorite medium for advertisers worldwide.
The only difficulty from a budgeting perspective is that there is no explicit price rate for YouTube ads cost. However, this is not any different from many other types of online advertising. The general rule online seems to be that you bid for advertising space and the highest bidder is typically accepted.
Ad Formats to Consider
YouTube offers a variety of ad formats. These include:
- Display ads – these appear to the right of the feature video, above the video suggestions list – on the desktop platform only.
- Overlay ads – these are semi-transparent overlay ads that appear on the lower 20% of your video - on the desktop platform only. These can be either image or text ads
- Skippable video ads – the most common type of YouTube ad. These are the ads you see before during or after a video which a viewer can skip after 5 seconds
- Non-skippable video ads – these are video ads that viewers must watch before they can view the main video. There is an extended version, with 30-second ads, but YouTube is about to phase these out due to their unpopularity. Non-skippable videos are more typically 15-20 seconds in length.
- Bumper ads – these are non-skippable videos up to 6 seconds which a viewer must watch before seeing the main video
- Sponsored Cards – these provide content relevant to the video, for example, products featured in the main video
The video ads are sometimes called TrueView video ads. YouTube has simplified their ad naming recently. They have split their ad types into TrueView in-stream ads and TrueView video discovery ads.
The in-stream ads are those that appear as part of videos, i.e., the skippable and non-skippable video ads, and bumper ads. The video discovery ads, as the name suggests, are those ads that you use to help people discover your videos, mainly display and overlay ads.
In simple terms, you pay for a TrueView in-stream ad when somebody watches at least 30 seconds of your ad (unless it is shorter). You pay for a TrueView video discovery ad when somebody clicks on your ad thumbnail.
By far the most popular ad is the Skippable video ad. While non-skippable ads may sound lucrative to advertisers, they are unpopular with users.
Display ads can be less popular with advertisers because they do not encroach on the videos people watch. However, they can still generate positive results for your advertising campaign. As I referred to above, YouTube contains the world’s second largest search engine. This means these ads can act as an alternative to advertising on Google if you operate in a competitive niche.
If you promote a video here, you could end up paying a rate as low as 3 cents per view.
If you can determine the phrases in your niche that people regularly search for, you could create a video to match that phrase, promoting that video in a display ad. By doing that, your ads will appear as relevant to the searchers as other feature videos on YouTube.
The idea is to create videos that meet the needs of the searchers and then promote them with display ads.
Overlay ads are a great way to drive traffic to your own YouTube channel or website. For this to work on your YouTube channel, you first need to populate it with engaging, entertaining videos. You would also want to create a compelling welcome video to encourage people to stay the moment they clicked through to your channel.
Naturally, you can create overlay image ads that appear on anybody’s videos. You can gain added value, however, if they click through to your channel.
Skippable Video Ads
You only pay for those skippable videos that viewers watch for 30 seconds or more (unless your ad is shorter than that). So, you do not have to worry about paying for all those people who skip through your video as soon as they can.
This keeps costs down, but of course, you will not gain any benefit unless some people watch your ad, click through and then buy your product.
This makes accurate targeting very important for your ads.
Businesses use bumper ads when they want to deliver a short, memorable message to potential customers. As they are six seconds or shorter they need to be to the point.
You pay for bumper ads by impressions. They are charged by CPM – cost per thousand impressions. Hence you pay for a bumper ad each time your ad receives 1,000 impressions.
Targeting Your Video Ads
You will find a Targets tab for each of your video campaigns. It works similarly to how you would target different types of people when you buy AdWords in Google Search.
You use the Targets tab to narrow down the types of people to whom YouTube will serve your video ad.
To keep your YouTube ads cost down, but at the same time ensure that you receive enough clicks to make your campaign worthwhile, you will need to target only the correct people to see your ad.
The more targeting options you choose, the tighter your target will be. Two to three targeting options should be sufficient for most target groups.
You want to think in terms of keywords. What terms will your target audience likely use when they search for YouTube videos?
The more you monitor this, the less unnecessary expense you will have from people watching your videos but not being a likely person to go any further through the funnel.
At a high-level, if you sell a product aimed at middle-aged men, you will want to avoid targeting video search terms most commonly used by teenage girls. If you are targeting elderly women, you would have no interest in your ad appearing on any of PewDiePie’s videos, for instance.
You will want to include both positive keywords to focus on, and negative keywords to avoid.
You also should look at other targeting demographics. If you only sell your product in one country, you need to avoid advertising to the rest of the world. Similarly, you may want to limit your ad to countries where the majority of people speak English.
Your videos may be entertaining, but you do not want people watching them through who are never likely to buy your products.
Creating Your Video Ad
Businesses often find that video creation can comprise the highest proportion of YouTube video cost. This does, of course, depend on the level of sophistication and professionalism you are aiming for with your video ad.
If your video is low quality, then people will skip it at the 5-second point. A low-quality video does not reflect well on your brand, either.
It depends on the expectations of your target audience. Some firms can get away with a $5,000 home-made video. Others will look shabby unless they spend $100,000 and employ professional actors, crew and production values.
The more creative you can be with your video ad, the less reason there is for the viewer to rush to the Skip Ad button.
Remember that YouTube is not the same as broadcast t.v. A live tv viewer does not have a SkipAd button. While you may think you can save money by reusing your television ads, you are likely also to be foregoing income, with people choosing to bypass your ad.
The only exception is when you manage to create a cult ad. A few firms can upload their ads to YouTube as video creations, rather than paid advertisements. For instance, Air New Zealand has gained a reputation for their quirky safety videos. As such they do not to pay to advertise on YouTube. They have a thriving channel, where people search for their latest safety videos.
Of course, many of these videos are high-budget productions, including videos made by international film producer, Sir Peter Jackson, director, Taika Waititi, and some of the Hobbit and Lord of the Rings cast.
If you only have a small budget for video production (and don’t have famous friends to help you), you need to try a different approach to video production. You will probably have to learn to be comfortable in front of the camera.
YouTube does have tools to help you with your video production. They even have a scheme called Director Onsite to help businesses make professional videos. This project is currently under review and will be modified in early 2018.
The key to the level of your YouTube ads costs is the need to bid on ad placement. You are not given any set price for advertising on YouTube
You set yourself a daily budget of what you are prepared to pay for your YouTube advertising. Most businesses allow at least $10 per day for their YouTube advertising campaigns, and then raise this once they have experimented with various options. You only pay when somebody engages with your ad in some way. Perhaps they watch your skippable ad for 30 seconds, or they click on a Call to Action on a display ad.
Make sure that you do your targeting before you set your bidding options. The bidding suggestions that YouTube makes change as you alter your targeting.
In most cases, you bid by CPV – cost per view. This means that you are willing to pay up to your bid figure for each view (of 30 seconds or longer).
You will also set a maximum figure you are willing to pay per day. This ensures that you do not receive any nasty surprises should you find that more people watch your ads than you anticipated.
You will be asked to bid a Max Cost Per View. YouTube will give you a typical range of bids – these will, of course, depend on how much you have limited your audience in your targeting.
If you click on “Customize Bids Per Format,” you can split your bids separately for “In-Display” or “In-stream”. If you are more interested in “In-stream” advertising, bid more for this statistics than you do for “In-Display.”
YouTube gives you a projection of your predicted views/day for in-search, in-display, and in-stream. If these numbers do not match your intentions, you need to go back to your bids and adjust accordingly.
It will give you a predicted average CPV.
Optimization of Your YouTube Campaigns
Ultimately, your concern should not so much be about how much your YouTube Ads cost, but about what level of return you can earn from your YouTube advertising cost. This means that you need to keep an eye on your campaigns and then adapt them at regular intervals, to optimize their performance.
Neil Patel covers this in detail in How to Optimize a YouTube Ad Campaign. He shows how Gatorade managed to earn $13.50 for every $1 they spent on their YouTube ads.
The key to optimizing your YouTube campaign is reviewing your campaign statistics and understanding what they are telling you. The most important stats are the View Rate of your ads and the Click-through Rate. These stats show you whether people find your ads compelling and whether they are working as a campaign.
The most common problem is that your videos are not compelling enough. Although some firms give up at this point and write YouTube off as a marketing option, a better choice is to revamp your videos to make more compelling content.
Alternatively, you could select suitable influencers to work with, allowing them to create compelling content that highlights your product.
Sometimes your problem may be lack of exposure. This may be because opposition companies have outbid you for the best advertising positions. You could experiment by bidding higher, and then observing how your ads perform with a higher exposure.
You will find that you will often obtain the best overall results by being willing to increase the amount you are prepared to pay for your YouTube advertising. Skimping on costs may harm your overall ROI and bottom line.