How Much Does YouTube Advertising Cost?

Table of Contents

• Introduction
• Additional Costs Associated With YouTube Advertising
• Here’s Why YouTube Advertising Is
  Worth The Cost Involved
  • An Incredible Reach
  • Precise Targeting Options
  • Superb Tracking Capabilities
  • Powered By Google Adwords
• Factors That Influence The Cost Of YouTube Ads
  • Targeting Settings
  • Bidding On YouTube
• When Does YouTube Charge An Advertiser?
  • YouTube Ad Formats
    • In-Stream Ads (Skippable)
    • In-Stream Ads (Non-Skippable)
    • Video Discovery Ads
    • Bumper Ads
    • Outstream Ads
    • Masthead Ads
• How To Make The Most Of Your YouTube Advertising
  Budget
  • Invest In High-Quality Video Production
  • Create Short Videos
  • Never Stop Testing
  • Invest In High-Quality Landing Pages
  • Pay Attention To YouTube’s Metrics
• Conclusion

Introduction

While many advertisers tend to overlook it, the reality is that YouTube is one of the best platforms to advertise products and services. Besides being the second largest search engine on the web, YouTube also boasts some truly powerful ad formats that, when used right, can drive unmatched engagement with your prospects.

The way ads are presented on YouTube makes them more likely to make an impact, when compared to ads on other platforms. For instance, in the search engine search results and on social media platforms like Facebook and Instagram, users have the option of simply scrolling past the ads presented to them.

While a similar option is available for users on YouTube, it is just one ad format. Most ads in other formats appear within the interface of the video that the user is watching, making them much harder to miss than ads on other platforms.

As soon as it is established that YouTube is a great platform for online advertising, another question emerges- how much does it cost to advertise on YouTube?

On average, the cost per click for YouTube ads is around $0.30. The average cost per view, similarly, ranges between $0.10 and $0.30. Some ad formats, like YouTube’s Bumper Ads, are charged exclusively on the basis of cost per thousand impressions. The cost per thousand impressions on YouTube, on average, is between $1 and $4.

A good strategy to maximize the impact of your YouTube advertising dollars is to start off with a small budget, like $10 per day. Then, once you have a little insight on how your targeted audiences are interacting with your ads and which formats are working well, you can eventually increase your budget to scale your results.

With that said, unlike most other ad formats on other platforms, there is an additional cost associated with using YouTube Ads.

Additional Costs Associated With YouTube Advertising

Besides paying the platform for views or impressions or clicks, another cost associated with advertising on YouTube is the cost of producing the ad. As you may have guessed, almost every ad format on YouTube uses video to communicate the marketing message. Meaning, having a delightful, engaging, and high-quality video ad is a basic necessity of advertising on YouTube.

While the cost of producing a YouTube ad can be controlled with the application of some creativity, advertisers must account for this cost in their advertising budget. Because without a quality ad, no matter how many views or clicks you pay for, your ads will not be able to make the desired impact.

Now you may be wondering that if advertising on YouTube involves so much investment of time, money, and effort, is advertising on the platform even worth it?

Let’s find out.

Here’s Why YouTube Advertising Is Worth The Cost Involved

For advertisers that can afford to invest in high-quality video ads, YouTube is a superb advertising platform. Here are a few reasons behind that claim:

An Incredible Reach

YouTube boasts a monthly audience of over 2 billion logged-in users. That’s almost a third of the entire population of our planet! Factoring in the fact that it isn’t necessary to make a YouTube account to view videos, it is safe to say that the monthly user base of YouTube is much bigger than the 2 billion figure.

In the US, more people use YouTube as compared to social media platforms (and popular advertising platforms) like Facebook and Instagram. Nowadays, with the increasing popularity of smart televisions, YouTube is now available on a completely new range of devices. As compared to the other popular video streaming options available on Smart TVs, like Amazon Prime Video, Netflix, and Hulu, YouTube is free. This means, more people will be watching YouTube in the coming years.

This, in turn, means, regardless of the industry you are operating in and regardless of your advertising objective (brand awareness/conversions), there is a good chance that you will find success with YouTube Ads if you use them right.

Precise Targeting Options

YouTube brings together the targeting capabilities of search engines and those offered by social media platforms, giving advertisers an unmatched amount of control over who views their ads.

Advertisers can segment and target audiences based on demographic attributes such as age, gender, and location. Moreover, it is also possible to target users based on their online behavior, their interests. YouTube even allows advertisers to target specific keywords and topics with their advertisements.

These targeting options, when used correctly, will allow you to ensure that your advertising dollars are only spent on showing your ads to users that are most likely to make a purchase from you.

YouTube even has a platform dedicated to helping advertisers identify the attributes that define their ideal audience. The Find My Audience tool will not only allow you to create a target audience profile, but it will also even let you download that profile and connect it with the YouTube Ads interface.

Superb Tracking Capabilities

Almost every major online advertising platform gives advertisers access to a wealth of data that they can use to serve their ads in a more impactful manner. However, the issue is often that the data provided by the platform is so complex that beginner advertisers are not able to make sense of it.

This is not the case with YouTube. YouTube makes it easy, even for beginners, to track the performance of their ads. The platform even sends out real-time insights to advertisers. These insights can be used by advertisers to optimize their strategy on the fly, installing them in a better position to drive great results.

Powered By Google Adwords

This advantage is specific to advertisers that already have at least some experience with the Google Adwords platform. YouTube Ads, since YouTube is owned by Google (now Alphabet), are also controlled on the same platform. Meaning, if you are already active on Google Ads, there will be little to no learning required to get started with YouTube ads.

So now we know that YouTube is an awesome advertising platform. However, besides the cost of producing a video ad, there are a few other factors that influence the cost of YouTube advertising. These are:

• Targeting settings
• Bidding
• Ad formats

Let’s begin learning about these in a bit more detail:

Factors That Influence The Cost Of YouTube Ads

Just like other online advertising platforms, bidding and targeting play a crucial role in deciding the actual cost paid by an advertiser on YouTube. However, an additional influential factor on YouTube is the ad format(s) selected by the advertiser.

Since there are quite a few ad formats available on YouTube, the entire next section of this article is dedicated to ad formats. In this section, we will learn about the other two factors that influence the cost of advertising on YouTube:

Targeting Settings

As mentioned in the previous section, YouTube offers some incredibly powerful targeting options for advertisers. Besides the ability to target specific keywords and demographic attributes, advertisers also have the option of targeting audiences that follow specific channels on YouTube.

As a rule of thumb, the more niche your targeted audience is, the higher will be your cost per view or cost per click. The industry also plays a role in deciding the final cost per click or view. If, for instance, you are targeting audiences that are related to finance-related content, you may end up paying a higher cost per click as compared to the cost you would incur if you target an audience interested in fashion and retail.

Another factor that matters here is the kind of competition enjoyed by the audience. If a large number of advertisers are competing for the attention of an audience, it is safe to expect a higher cost per click or view.

Bidding On YouTube

Just like many other ad platforms, YouTube also employs a bidding system. Meaning, competing advertisers must bid on the price they are willing to pay for a click or a view from their targeted audience.

The bid you select, in conjunction with your daily budget, dictates the number of views or clicks your ad will get, and the amount of time your total budget will last. For instance, if your bid is $1 and your daily budget is $10, and your total budget is $300, your ads will run for about a month, drawing in 10 clicks per day. In this scenario, you will also get access to real-time insights that you can utilize you improve the ROI of your ad expenses.

However, that’s in an ideal scenario. In the real world, you are competing with the bids of your competitors. If despite developing a great ad and backing it up with a handsome budget, you are not receiving enough clicks and views on your ads, then there is a good probability that your competitors’ bids are higher than yours. For this reason, it is not recommended for advertisers to be judicious with their daily bids.

If your ads are not getting the attention they deserve, you may have to up your daily bid, which will have a direct impact on how long your total budget will last.

At this point, it is also important to understand how YouTube decides when to charge you for a view.

When Does YouTube Charge An Advertiser?

In most cases, YouTube advertisers are charged every time a viewer watches their ads. YouTube counts a ‘view’ every time a user watches an ad for 30 seconds. If your ad is shorter than 30 seconds, you will be charged for a view every time your ad is viewed by a user completely.

In the case of certain other ad formats, you may be charged on the basis of clicks and/or a thousand impressions on your ads.

Let’s find out how YouTube charged advertisers based on their preferred ad formats:

YouTube Ad Formats

YouTube offers advertisers a wide variety of ad formats to choose from. Each ad format obviously delivers ads in a different manner and thus, is charged at different rates and in different manners.

Here’s a little more about each ad format on offer on the YouTube advertising platform:

In-Stream Ads (Skippable)

This is the original ad format that YouTube first introduced when they enabled advertising on their platform. Until recently, these were called TrueView ads but the name was changed to Skippable In-Stream ads.

As a user, you may already be familiar with In-stream ads. The skippable ones offer the viewer tha option to ‘skip’ the ad after 5 seconds have passed. The length of the ad itself can range between 15 seconds and 3 minutes. Traditionally, these ads only appeared at the beginning of a video but now, they can be shown at the beginning, or in the middle, or at the end of a video.

The most popular time duration for in-stream skippable ads is 30 seconds. However, since users have the option of skipping these ads after 5 seconds, it is important for advertisers to create ads that quickly grab the user’s attention.

In some cases, despite having an incredibly interesting ad, users may still decide to skip over your ads. To still make the most impact with your ads, you must ensure that the ad title clearly outlines what you are offering. This way, if a user absolutely needs to watch the video they came for, they can still look up your website or offer later on.

For in-stream skippable ads, advertisers are charged on the basis of views. A view is counted whenever a viewer watches your ad for 30 seconds or interacts with it. If your ad is shorter than 30 seconds, a view is counted whenever a viewer watches the ad completely.

In-Stream Ads (Non-Skippable)

As the name suggests, these ads are almost exactly the same as the previous item on this list. However, the big difference is that these ads are not skippable. While they can still be positioned at either the beginning, or the middle, or the end of a video, non-skippable ads cannot be longer than 15 seconds.

Since the ad cannot be skipped, every time the ad is played in front of a user, the advertiser is charged. For advertisers, this means a few things.

• From a user’s perspective, sitting through an unskippable ad can be quite a frustrating experience. If the ad shown to the user is also bland and boring, it can direct the user’s frustration towards the brand being advertised, turning them away from the brand for good.For this reason, making their ad interesting and engaging for the user should be the top priority for advertisers choosing the unskippable ad. Your objective should be to entertain the user so much that they don’t feel like 15 seconds of their life were wasted looking at an unskippable advertisement.
• This is a continuation of the previous point. In order to truly ensure that the users are engaged with the ad that they are viewing, it is extremely important for advertisers that are using unskippable in-stream ads to get their targeting right. If your targeting is off, then it really doesn’t matter how engaging or entertaining your ad is. The user will not find it relevant and it will simply end up wasting your advertising budget.Meaning, if you are just starting out on YouTube, unskippable ads may not be the best option for your advertising campaign. Once you have some data about your audience and their preferences, you can start employing these ads to drive better results than skippable ads.

Video Discovery Ads

These ads don’t appear “in stream”. Instead, they appear in the search results of the video suggestions that come under a video played by the user.

Since these ads are not played in-stream, the advertisers are charged every time someone clicks on the ad, regardless of whether or not they view the complete ad.

The main difference in the case of video discovery ads is the way the targeting works. Instead of targeting users by only their interests, behaviors, and demographics, these ads are shown to users that search YouTube for specific search terms. In other words, these are the video version of Google’s search engine ads.

Instead of appearing in the search results of Google, these ads simply appear in the search results of YouTube.

Bumper Ads

Bumper ads are the more ‘tolerable’ version of the unskippable in-stream ads (from a viewer’s perspective). Just like unskippable in-stream ads, bumper ads also appear at the beginning, or near the middle, or at the end of a video played by a user.

Unlike their in-stream cousins, however, these ads are only six seconds long. Meaning, advertisers only have six-second to make their point in an impactful manner. Since, in most cases, this time window is too small to convince users to make a purchase, these ads work great for advertisers looking to build brand awareness.

As you may have already guessed, if you opt for bumper ads, you will be charged every time these ads appear.

Outstream Ads

Outstream ads, as the name suggests, don’t appear on YouTube. They are still video ads but they appear on the ad network that is controlled by Google. In other words, outstream ads are displayed on other websites that have an advertising partnership with Google.

Unlike other Google-powered display ads, outstream ads are videos and they start playing automatically when they appear on a particular webpage. Of course, to make sure that these ads are not ruining a user’s experience, the ads run on mute.

Such ads are great for brands that want to target a mobile-using audience because they are primarily optimized for delivery on mobile devices. If you are thinking that the ‘other’ websites where these ads will appear may not be good enough, knowing that Google has advertising partnerships with well-known publications like Forbes should give you some peace of mind.

When an advertiser opts for an outstream ad, they are only charged when a viewer has watched more than 2 seconds of the ad. Meaning, you are only charged when the user has displayed at least some level of interest in your ad.

Masthead Ads

Masthead ads are like outstream ads but they appear on YouTube. These are placed at or near the top of the user’s YouTube feed, making them almost impossible to miss. Like all other ad formats on this list, masthead ads are also video ads. Just like outstream ads, masthead ads play automatically, on mute, once a user opens YouTube.

These ads can be of virtually any length but the most popular choice seems to be 30-second ads. Advertisers can also choose between a widescreen placement or a 16:9 placement with customized YouTube channel information displayed on a right-side placed panel.

Masthead ads work superbly for brand awareness advertising objectives. However, masthead ads are also one of the most expensive options on this list, and for good reason.

Advertisers that choose the masthead ads format work directly with a Google representative. That is, in fact, the only way to run a masthead ad. The Google representative will not only help you set up your ad but will also help you with setting up the targeting for your ads. These ads are charged on the basis of per thousand impressions or on the basis of clicks.

At this point, we have learned about all the factors that influence the cost of advertising on YouTube.

As you may have noticed, advertisers have a lot of control over the cost that they pay to the platform and the ROI they derive out of their investment.

Let’s look at a few ways that you can use to maximize your control and the ROI you get out of your advertising investment.

How To Make The Most Of Your YouTube Advertising Budget

Here are a few ways you can maximize the impact made by your YouTube Ads:

Invest In High-Quality Video Production

When it comes to video production, the most expensive options are not necessarily always the best. However, advertisers must understand that producing a video ad is significantly more expensive than producing a text-only or a graphic plus text ad. Don’t worry, when done right, video ads also make a significantly more evident impact on the audience that views your ad.

Depending on what you are advertising, you may be able to produce a high-quality ad using stock footage and animations only. However, if you are offering a product that cannot be advertised with the help of stock footage and animations, it is strongly recommended that you seek the help of a talented video producer, director, and editor.

Create Short Videos

Advertisers must understand that the ads on YouTube are essentially interrupting the experience that the user expects from YouTube. Meaning, most users are not open to viewing ads that are super long.

Moreover, with video, it is possible to deliver your message quickly, in a more snappy manner.

Another advantage of producing shorter videos is that it’s cheaper. With a shorter script and fewer camera angles, the cost of producing each video will come down automatically. This way, with your budget, you can create more videos and test them against each other. This brings us to our next point.

Never Stop Testing

Testing is one of the most important aspects of running an online ad campaign, regardless of the platform you are choosing. On YouTube, advertisers can experiment with a virtually endless list of permutations and combinations of audience targeting options, ad formats, and actual ad creatives.

A/B testing remains the most popular way to test which ads are performing well against another ad or ad set. Every time you A/B test two different variations and find a winner, repeat the process by testing the winner against another variation. This will allow you to continuously improve the conversions of your ads, and in turn, the ROI you get out of YouTube advertising.

Invest In High-Quality Landing Pages

If you are advertising your product or service using a high-quality video, it only makes sense to ensure that the user’s experience after watching your ad is consistently engaging. This means, coupling your awesome video advertising campaign with an equally awesome landing page.

If a user truly likes your advert and decides to click on the link, they should be welcomed with a landing page that isn’t just as high quality but also delivers consistent messaging. For this reason, it is recommended that advertisers create separate landing pages for different ad campaigns.

Pay Attention To YouTube’s Metrics

YouTube offers advertisers access to a number of metrics that provide insight into the performance of different ad campaigns. It is important that you pay attention to these metrics and continuously optimize the delivery of your campaigns based on the data made available to you.

Just by simply monitoring your YouTube Ad campaigns, you can produce relatively better results and a higher ROI from your investment.

Conclusion

There you have it, everything you need to know about the cost involved in advertising on YouTube. Reading this guide makes another thing clear, advertising on YouTube is not difficult by any measure. If you have any more questions or any tips that can help make YouTube advertising a more profitable undertaking for the readers of this article, feel free to share them in the comment section below.

However, if you don’t have an in-house video production team and an in-house marketing team, it is recommended that you seek the help of professionals to ensure you are making the most of your advertising investment on the platform.