How Do YouTube Ads Work? A Guide

youtube ads

Any marketer would love to tap into the exposure opportunity offered by YouTube and its 2.3 billion monthly users. But the daunting prospect of video and the already enormous popularity of advertising on YouTube can make pursuing that potential feel like an unfortunate waste of time.

Video is expensive, and if you have a limited budget, how do you compete with more established brands?

Well, it turns out that Google is pretty considerate of the average SMB marketer, and they do a lot to remove the barriers to entry into their platforms.

YouTube ads are meant to work with your budget. And with a straightforward setup process, it’s simple enough for marketers with limited expertise and resources. This article will discuss why YouTube advertising can be a real possibility for any business trying to improve its digital marketing strategy.

How Much Do YouTube Ads Cost?

The average cost per click or view for YouTube ads is between $0.10 and $0.30. You pay every time a user takes a particular action, such as clicking on a link or watching an ad for a certain amount of time.

The exact cost per view depends on several factors, including how much you bid on advertising space, what kind of ad you’re running, and your target audience.

YouTube helps you stay within your budget, no matter its size. You get to set a daily budget and a maximum amount you’re willing to pay so you don’t accidentally have too many views. The service will automatically cut off advertising for the campaign period to ensure you don’t overpay.

When you’re just beginning to advertise on YouTube, you may want to go small with your budget. Staying around $10 a day is a good starting point. As you start to understand what’s working and what’s not, you can build up your daily spending to get better bids and more worthwhile impressions.

The Different Kinds of YouTube Video Ads

YouTube offers a variety of ad formats to fit your goals and capabilities.

Even if you don’t have video in the budget, you can still get your brand in front of YouTube audiences. And when you do choose to use video, you get every opportunity to get the highest possible ROI.

TrueView Ads

Advertisers love TrueView Ads because they offer the best bang for your buck in most cases.

With these types of YouTube ads, the advertiser only pays if the user engages with the ad in a certain way. That model makes it more likely that every time you pay for a view, you’re doing so because the user showed some kind of interest in your message.

The essence of TrueView ads is that they give users a choice as to whether or not they engage with your brand. As a result, you get better performance insight from your Google Ads account, with metrics including clickthrough rates, completed views, and sources of views.

That wealth of information gives marketers a ton of valuable information to help them fine-tune their targeting and improve their messages.

TrueView ads are available in two forms — video discovery ads and in-stream ads.

Video Discovery Ads

Video discovery ads are advertisement videos that show up in search results and lists of related content. They’re the YouTube equivalent of PPC ads that you see at the top of search engine results pages. You only pay for your ad when the user decides to click the video.

Discovery ads are excellent methods of driving brand awareness and engaging consumers. As standalone ads that require users to click on them to start viewing, discovery content often includes long-form educational videos featuring resources like tutorials, testimonials, and industry news. These videos also give you the most space to fill out creative headlines and descriptions.

In-Stream Ads

An in-stream ad is every viewer’s favorite kind of ad, the skippable kind. These ads can run a full length of anywhere from 12 seconds to three minutes, but you get the option to skip them after five seconds.

Advertisers like this type of TrueView ad because again, the user has the choice to watch it. As a result, you get higher quality impressions for what you pay.

You pay according to cost per view or cost per mille (cost per thousand impressions). If the user watches at least 30 seconds of your video or interacts with your video at all, such as clicking the available CTA, then it counts as a view.

Non-Skippable Ads

A non-skippable ad is paid for with every use through a CPM model because the user has to watch it whether they like it or not, making them ideal for brand awareness campaigns. These ads can show up anywhere during the video, running for either 15 or 20 seconds.

These ads, like the TrueView in-stream ads, can be created directly through the Google AdWords UI. Since you pay for every view, it’s crucial to make your content as engaging as possible. Including a CTA will help get every last bit of potential out of your audience.

Bumper Ads

Bumper ads are the shortest video ads, showing up for six non-skippable seconds before the start of the video. Because they are so short, advertisers use these to run alongside longer versions of the ad in discovery or TrueView in-stream formats.

Banner and Overlay Ads

No video budget? No problem! YouTube lets you use traditional display advertising options with banner and overlay ads.

An overlay ad is a banner ad consisting of text, images, and a clickable link that sits under the video. You can also use a display ad in the sidebar, sitting alongside related videos.

How Do I Set Up a YouTube Advertising Campaign?

Google’s ownership of YouTube gives advertisers the ability to push their video creations out to numerous branches across the internet. It’s simple to link your video and banner ads originally intended for YouTube to work along with various partners in the Google Display Network.

The simplification of pushing your message across multiple channels makes it easy for any marketer to increase their ad reach and frequency of views.

On top of that, advertisers can also double down their efforts to re-engage potential prospects. User actions like views can allow you to create custom audiences, giving you a chance to retarget interested consumers with product offers.

All of this is made possible by Google Ads, the hub where you create, monitor, and tweak your YouTube ads and campaigns. Let’s explore the process for bringing your YouTube advertisement to life.

Get Started on YouTube

Before you start using Google Ads to create a campaign, you need to create a YouTube channel with the videos you want to use as advertisements. When you have a channel and videos already in place with URLs, it makes the campaign set up a little more fluid.

Create a Campaign

It’s a simple process to sign up for a Google Ads account, and once you’re in, you’re almost ready to start creating a YouTube ad campaign. Before you begin though, go to the “Tools and Settings” section and choose “Linked Accounts” to connect your YouTube channel to your Google Ads account.

When you’re ready to start your YouTube campaign, choose “New Campaign”. Then, pick the goals you wish to accomplish with your campaign, such as brand awareness and reach, sales, or website traffic. You can also create a campaign without a chosen goal at all.

Select the “Video” campaign type for video ads on YouTube. The “Display” option will still show ads on YouTube, but it refers to non-video banner ads that show up on websites within the Display Network.

You’ll then select a campaign subtype, such as “custom video campaign”, which gives you the most flexibility, or “video reach campaign”, a more budget-friendly optimized version for beginners. With a video reach campaign, you can select between skippable in-stream, bumper, or non-skippable in-stream ads, as well as a blend of formats.

Set Your Budget

Depending on the format you choose, you’ll then set a budget and bid strategy for cost per view, target CPM, or cost per user action. Your budget can be a total campaign budget or daily budget, which is helpful to make sure you don’t run out of money before the end of your campaign. You’ll establish your campaign’s start and end dates here as well.

Choose Where to Place Your Videos

YouTube gives you a ton of tools to tightly define your target audience. And the more detailed you get in refining that audience, the higher the quality of each view.

Start setting up your targeting by choosing where you want to run your ads — YouTube search results, YouTube videos, or partners on the Display Network. Search results are only available for discovery ads, while bumper and in-stream ads can go out to various videos, channels, and video partners.

You’ll then set up your basic geographic and demographic boundaries. Choose user locations, such as countries or cities where you want your ad to show up along with the user languages you’re targeting.

If you don’t want your brand associated with certain video types, this is where you can exclude content types (like mature content or videos with profanity). Advanced options further allow you to set limits on the number of times a user sees an ad and create schedules for when your ad plays across a campaign.

Define Your Target Audience

You start targeting your audience for each campaign by defining their demographics. Targeting includes user gender, age, income level, and parental status.

You can get into more detailed characteristics by adding topics and keywords that are used by your ideal customer. Google lets you choose different customer segments based on their interests and relevant searches for the types of products you sell.

Set Your Bid

Set the maximum amount you’re willing to spend for each view. The actual amount you spend may vary depending on competing bids. You can play around with the number to affect YouTube’s projected number of views for your video.

Add Your Video and Create the Campaign

Finally, input the URL for the video you want to run as an ad. You’ll select between in-stream or in-display ads, which will then give you different options for adding links, CTAs, titles, and descriptions.

Monitor Your Campaign

There are several ways to improve your YouTube ad performance, but the best advice comes straight from the numbers. Tracking your campaign’s performance is essential to find what is resonating with your audience and driving the user actions you desire.

Google Ads gives you a wealth of metrics to help you hone in on a quality advertising scheme. You can find which channels are giving you the conversion you want and which ones need to be dropped, along with the keywords, topics, and demographics that are getting you the best results.

Make Your Videos Worth Viewing

Continuously monitoring your campaigns gives you deep insight into your targeting efforts, your bidding strategy, and the quality of your content.

That last piece is the truly crucial aspect of your YouTube ads campaign. It’s easy to get lost in the metrics and try to tweak your targeting, but you’ll never get the results you need if your content isn’t engaging. Here are some tips to help you make your videos pop:

  • Hook your audience immediately
  • Keep in-stream ads to a minute or less
  • Use videos to tell a story
  • Add compelling CTAs and clear direction

And don’t forget, the more professional your video looks, the more people will be drawn to it. That means using eye-catching graphics, a well-written script, and high-quality production.

Get Started on Your Youtube Campaign

As you can see, YouTube ads are for everybody. The platform continues to rise in popularity, and with all of the branding opportunities that video provides, getting your business on YouTube can be a true game-changer.

If you’re interested in making YouTube part of your digital marketing strategy, our experts at Media Shark can help you maximize your ROI immediately. From ad creation to targeting and tracking, we apply our years of expertise to create results-driven campaigns that broaden your reach and boost conversions.

Contact us for more information on how we can help you get the most out of your digital campaigns.

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