Nowadays, digital advertising is a great way for businesses, small and big alike, to tell their brand stories to hundreds if not thousands of people at once. Such a feat can only be achieved through the huge number of devices and marketing channels that digital advertising consists of. YouTube is one of them.
Our focus with this article will be how much does it cost to advertise on YouTube, Google’s own video-streaming platform. But first, before we get into that, we need to briefly explain what exactly YouTube advertising is and why it’s worth your time and money. Keep reading.
What is YouTube advertising?
To put it simply, before or during a video, Youtube plays an ad or more. That’s how the platform generates revenue and allows advertisers to reach their target audiences.
The most significant advantage to YouTube as a platform is the fact that people use it on a regular basis to look for both information and entertainment. To put it shortly, it has intent.
So, when trying to decide which ads to display to which people, YouTube puts into consideration information like search history (both YouTube and Google’s), previously watched content, age, location, sex, and more. YouTube then closely determines the intent of each and every user and displays ads that align with their interests.
As a business, you basically pay YouTube to display your ad or ads to the right people at the right time.
Why advertise on YouTube?
According to Statista, YouTube enjoys around 2 billion users who log in at least once every month. That’s more than a quarter of the world’s population using the platform. Youtube is only second to Facebook on the list of the most-used social media platforms.
On average, a considerable number of these users consume YouTube content on their mobile devices for more than an hour each day. And with the rising popularity of Smart TVs, more and more people are starting to watch YouTube on their TV sets instead of cable television.
There is also the fact that YouTube’s own search engine is second only to Google when it comes to the number of enquiries made. We assume that you see the (great!) potential of such a platform when it comes to advertising now.
If you’re reading this article right now, we assume that you are either:
- Someone who is handling the marketing department of a big company, and your boss is insisting that you utilise the marketing budget appropriately. And you have heard that YouTube may be more effective than cable ads, especially at targeting the younger generations.
- Or this, you own a small business, and you are looking for clever ways to utilise your minimal marketing budget in order to reach the right people and inform them of your products and services.
The answer to both these cases is digital advertising, more specifically, YouTube ads.
How much does it cost to advertise on YouTube?
When it comes to advertising on YouTube, you pay per video view. So how much does it cost to advertise on YouTube?
Well, a typical video ad will set you back anywhere from £0.01 to £0.03 per view, depending on the quality of your ad, your targeting, and your bidding goal.
In other words, if your YouTube ad campaign runs on a video ad that costs £0.20 per view, you would have to pay £2,000 for every 10,000 people that watch your ad.
The determining factors of YouTube Ad costs
As is the case with any digital platform that you can advertise on, there are numerous factors that come into play in determining exactly how much does it cost to advertise on YouTube.
These factors are:
- Ad types and formats
- Targeting
- Bidding
One important thing before we delve into these factors in detail, though: your only worry shouldn’t be how much does it cost to advertise on YouTube. You should also focus on properly setting up your campaign and assessing it to ensure that you make money out of it.
Ad formats
This is an essential factor to consider when asking “how much does it cost to advertise on youtube?”
Ads that run on YouTube come in numerous formats:
Skippable ads:
Skippable ads, also known as TrueView in-stream ads, can appear before, during or after a video. These ads take over the entirety of the video window and have a 5-second countdown before a skip button appears. Semrush claims that 94% of people skip these ads the moment the button appears. Yes, that does sound like a loss, but it really isn’t. You have basically managed to grab the attention of viewers for 5 seconds, a duration that can make all the difference in the marketing world.
Non-skippable ads:
These video ads run before a video can be viewed. They can last anywhere from 15 to 20 seconds.
Bumper ads:
Short and non-skippable, bumper ads can be up to 6 seconds long and must be watched before the video content appears.
Overlay ads:
Overlay ads are basically semi-transparent text or image ad boxes that appear on the lower 20% portion of a video while it’s playing. They have an “X” button in the top right that allows users to close them after they pop up.
Display ads:
These are the ads that appear to the right of the video content, above the list of video suggestions.
Discovery ads:
These ads are very similar to Google search ads in the way that they appear on the search results page of a YouTube search. They have a yellow box that says “Ad” besides the name of the content creator, a title and a thumbnail like any other video, a view count, and three lines of text.
Masthead ads:
A YouTube masthead, as the name already suggests, is a billboard that is placed on YouTube’s homepage for 24 hours. It’s capable of reaching well over 50 million different users in the span of those 24 hours.
Each of these ad formats has its own unique user experience. So, in order to reach the appropriate audience, you need to decide which ad format(s) best suit your needs. Let’s say, for example, you are looking to promote a huge fire sale that you are running on your online store. Can you afford to run a masthead ad?
Or are you just someone who is looking to make people more aware of your brand’s existence? If so, a skippable ad would be more appropriate for such a cause.
Which format should you use?
Picking and choosing between different ad formats is a delicate process that is based on both marketing goals and budget. We recommend that you test the different formats that you can afford, all whilst putting into consideration your goals and target audience until you find the sweet spot.
Basically, the bigger and more prominent the ad spot is, the more it will generally cost you. In other words, the average cost of a display ad is more than an overlay ad simply because the latter only covers up to 20% of the video screen.
Targeting
One of the great things about advertising on YouTube is the ability to reach your ideal audience by relying on suitable targeting parameters.
Most ad formats that show on YouTube run through the Google Ads platform. That allows you to set up your advertising campaigns as your see fit. All you have to do is to enter the Targets tab belonging to your video campaign.
There are numerous ways to target your audience, including:
- Demographic attributes: This includes factors such as location, age, gender, income, etc.
- Remarketing: You market your ads to people who have interacted with your content in the past.
- Interests and Topics: You target people based on what they are interested in. This is based on a number of different factors such as the content they consume on YouTube, their search history and more.
- Keywords: Your ads are shown to people based on keywords (words and phrases) they search for on YouTube. The people over at Ahrefs have an excellent blog post that shows you how to research keywords for YouTube ads.
You can set up multiple campaigns at once with different targeting parameters to test the waters. Go with whatever works with you best in terms of clicks and conversions.
Certain audiences are more expensive to market to than others. So, you need to be thorough with your targeting so that you don’t end up using all of your budget. For instance, if you choose to target an audience that many of your competitors are already targeting, you will end up paying more simply because there are more entities fighting for that specific ad spot.
There is also the fact that you want to make sure that you are reaching exactly who you consider to be your target audience. For example, the product or service you’re offering is targeted towards middle-aged men; the last thing you would want is some youngsters clicking on your ad and costing you more.
Bidding
The final amount you will spend on a YouTube campaign all comes down to how much you are willing to bid for ad placements. In other words, the answer to “how much does it cost to advertise on youtube?” depends on how many other users are bidding for its placement. Before you set your bid, make sure that your targeting parameters are correctly set up.
You are expected to bid on the cost-per-view (CPV) or the cost-per-1000 impressions (CPM). In both cases, YouTube only charges you if a user watches your ad for longer than 30 seconds (for long ads) or if they interact with the ad. If you are running an ad that is shorter than 30 seconds and the user watches the whole thing, it also counts as a view.
Moreover, some ad formats featured on YouTube can run on a pay-per-click (PPC) basis. In other words, it doesn’t matter how many users view your ad; YouTube only cares about those who click on it.
Once you feel like you are ready to set up your ad campaign, Google will ask you to bid a Max Cost Per View. Then, you will be shown a wide variety of bids with different costs attached to them, depending on your targeting.
New to Youtube advertising?
Let us help you kickstart your journey the right way. Contact us today and a Youtube ads expert will get in touch with you shortly.
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