How much do YouTube ads cost?

Google owns YouTube. Therefore, you advertise on YouTube through the Google AdWords network. As with any other type of Google AdWords campaign, the price of YouTube ads requires you to bid for the ad placement. Therefore, it is impossible to say definitively how much YouTube ads cost. This blog looks at YouTube from the advertiser’s perspective.

The average cost of YouTube ads is $0.010 – $0.030 per view, and the views you generate count towards your total YouTube audience. The average cost of reaching 100,000 viewers is around $2,000.

Why should you advertise on YouTube?

YouTube has a huge following – in fact, there are more than 2.1 billion logged-in monthly users. They watch YouTube on mobile devices for more than an hour a day on average. With the current popularity of smart TVs, YouTube usage on TVs has also increased rapidly.

It is also hard to miss the fact that the YouTube search engine is second only to Google when it comes to usage.

With the power of Google AdWords behind it, it should come as no surprise that YouTube is now a popular medium for advertisers worldwide.

The only difficulty from a budgeting perspective is that there is no explicit price for the cost of YouTube ads. However, this is no different to many other types of online advertising. The general online rule seems to be that you bid for an ad space and the highest bidder usually wins.

1. Ad formats to consider

YouTube offers a variety of ad formats. These include:

• In-feed video ads – these are the videos you see next to related videos in YouTube search results and appear on the YouTube mobile homepage. They appear as a thumbnail of your video with text and always invite you to click to watch the video.
• Skippable video ads – the most common type of YouTube ad. These are the ads you see before, during or after a video that a viewer can skip after 5 seconds.
• Non-skippable video ads – these are video ads that the viewer must watch before they can see the main video. Non-skippable videos are typically 15-20 seconds long, depending on regional standards.
• Bumper ads – these are non-skippable videos up to 6 seconds long that a viewer must watch before they can see the main video.
• Overlay ads – these are semi-transparent overlay ads that appear in the bottom 20% of your video – on the desktop platform only. These can be either image or text ads.

The in-stream ads are the ads that appear as part of videos, sponsored videos that appear in monetised organic content, i.e. the skippable and non-skippable video ads, and bumper ads. In-feed video ads are the ads that allow you to discover your videos by displaying them next to YouTube content that is most likely to be viewed by your target audience.

By far the most popular ad is the skippable video ad. While non-skippable ads may be lucrative for advertisers, they are unpopular with users.

2. Aligning your video ads

For each of your video campaigns, you will find a Targets tab. It works similarly to targeting different audiences when you buy AdWords in Google Search. You use the Targets tab to narrow down the types of people YouTube will serve your video ad to.

To keep the cost of your YouTube ads low, but at the same time make sure you get enough clicks to make your campaign worthwhile, you only need to target the right people to see your ad. The more targeting options you choose, the tighter your target will be. Two to three targeting options should be enough for most audiences. Think about keywords. 

What terms is your audience likely to use when searching for YouTube videos?

The more you monitor this, the less unnecessary cost you will incur from people who watch your videos but are unlikely to go further down the funnel. If you are selling a product aimed at middle-aged men, avoid using the video search terms most commonly used by teenage girls. If you are targeting older women, you should include both positive keywords that you want to focus on and negative keywords that you want to avoid.

You should also consider other target demographics. If you only sell your product in one country, you should avoid advertising to the rest of the world. Likewise, you should limit your advertising to countries where the majority of people speak English. Your videos may be entertaining, but you do not want them to be watched by people who will probably never buy your products.

3. Creating your video ad

Businesses often find that video creation can be the biggest part of YouTube video costs. Of course, this depends on how sophisticated and professional you want your video ad to be.

If your video is low quality, it will skip after 5 seconds. A low-quality video also does not reflect well on your brand. It depends on the expectations of your target audience. Some companies can get away with a $5,000 homemade video. Others look shoddy unless they spend $100,000 and employ professional actors, a team, and production values.

The more creative you make your video ad, the less reason there is for the viewer to click the “Skip Ad” button. Remember that YouTube is not the same as a television show. Even if you think you are saving money by reusing your TV ads, you are probably also giving up revenue when people skip your ads.

The only exception is if you manage to create a cult ad. Some companies can upload their ads to YouTube as a video creation instead of running paid ads. Air New Zealand, for example, has earned a reputation for its quirky safety videos. That’s why they do not have to pay for advertising on YouTube. They have a thriving channel where people search for their latest safety videos.

4. Bid

The key to your YouTube ad cost is the need to place bids for ad placement. There is no fixed price for advertising on YouTube. You set a daily budget that you are willing to pay for your YouTube ads. Most companies spend at least $10 per day on their YouTube ad campaigns and increase this amount after trying different options. You only pay when someone engages with your ads. Maybe they watch your skippable ad for 30 seconds or they click on a call to action in a display ad.

Make sure you do your targeting before you set your bidding options. 

• The bid suggests, YouTube makes changes when you change your targeting. In most cases, you’ll bid according to CPV (cost per view). This means that you are willing to pay for each view (of 30 seconds or longer) up to the amount of your bid. 
• You also set a maximum value that you are willing to pay per day. This ensures that you do not get any nasty surprises when you find that your ads are seen by more people than you expected.
• You will be asked to bid for the maximum cost per view. YouTube will give you a typical bid range, which of course depends on how much you have narrowed down your audience when targeting.
• If you click “Customise 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 statistic than for “In-Display”
• YouTube will give you a projection of your expected views/day for “In-Search”, “In-Display” and “In-Stream”. If these numbers do not match your intentions, you’ll need to revisit your bids and adjust accordingly.

This will give you an expected average CPV.

5. Optimising your YouTube campaigns

At the end of the day, you should not care so much about how much your YouTube ads cost, but how much you can earn from your YouTube advertising costs. This means keeping an eye on your campaigns and adjusting them periodically to optimise their performance.

The key to optimising your YouTube campaign is to review your campaign statistics and understand what they are telling you. The most important statistics are the view rate of your ads and the click-through rate. These stats tell you if people are finding your ads interesting and if they are working as a campaign.

The most common problem is that your videos are not compelling enough. Although some companies give up at this point and write off YouTube as a marketing option, it is better to revise your videos and create more compelling content.

Alternatively, you could select suitable influencers to work with to create compelling content that highlights your product.

Sometimes your problem is lack of awareness. This may be because competing companies have outbid you for the best promotional positions. You could experiment by bidding higher and then watching how your ads perform with higher exposure.

You will find that you often get the best overall results if you are willing to increase the amount you are willing to pay for your YouTube advertising. If you skimp on costs, it can hurt your overall results ROI and your bottom line.

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