When it comes to digital marketing, YouTube is a true powerhouse. With over 2.3 billion active users spending an average of one hour per day on the platform, it’s no wonder businesses are clamoring to create successful YouTube marketing campaigns. Keep reading to learn more about how to maximize your YouTube CPM within your digital campaign!
Data shows that Youtube is the second largest search engine (second only to Google), and it also has the highest engagement rate of any social media platform. Why? Because video dominates social media. And YouTube is the largest platform entirely dedicated to it, with over 1 billion hours of video content being viewed each day.
So, what does that mean for your business? It means that there is a lot of potential for reach and engagement with your target audience. Yet, studies show that only 9% of small businesses have signed up for it, which suggests there’s still plenty of space left for your business.
Not only is YouTube an excellent platform for promoting your brand, but it’s also a great way to generate leads and sales through paid video and static ads. Businesses that have not yet tapped into this market are missing out on a huge opportunity and are leaving money on the table.
So, how do you get started with paid YouTube marketing?
The first key step to success with YouTube marketing is understanding how the platform works and what you need to do to maximize your reach and engagement.
One of the most important aspects of any YouTube marketing campaign is understanding how YouTube CPM works. CPM, or cost per mille, is the amount you pay for every thousand impressions your ad receives. This metric is important because it helps you understand how much your ad is worth.
Before you can start reaping the rewards of this popular platform, you must understand YouTube CPM and how to maximize your reach through optimized youtube marketing. In this blog post, we’ll discuss what CPM is and how you can use it to your advantage to improve your youtube marketing strategy!
What is CPM?
CPM stands for cost per mille or the amount you pay for every thousand impressions your ad receives. It is the amount you pay whenever individual ads have been viewed one thousand times. This popular metric is important in your brand/business marketing and advertising because it helps you understand how much your ad is worth. It tells you how much you are paying for impressions.
You can use CPM to gauge the effectiveness of your YouTube marketing campaign and make necessary adjustments to improve your results. For example, if you notice that your CPM is high, but your click-through rate is low, that means you’re not reaching your target audience.
A good CPM should be around $2, but in the United States, CPM tends to be higher between $6-$8, especially for high value and competitive products
You can use CPM to your advantage by targeting specific demographics and interests when creating your ad. This will help you reach the right people with your message and improve your chances of conversion.
Additionally, you should keep an eye on your competition’s CPM. If their CPM is lower than yours, that means they’re doing something right that you’re not. Take a look at their ad campaigns and see what you can learn from them.
How to Calculate YouTube CPM
Now that we’ve answered the question “what is YouTube CPM?” it’s time to learn how to calculate it. CPM is calculated by taking the cost of your ad and dividing it by the number of impressions, then multiplying it by 1000.
For example, if you spend $100 on your ad and receive 100,000 views, your CPM would be ($100/100,000)*1000) = $1.
Let’s assume that your competitor is paying $20 for an ad that receives 10,000 views.
What would be their CPM?
$20/10,000 X 1,000 = $2.
This means that for every thousand views, you’re paying $1 while your competitor is paying $2. In this case, you have the advantage.
However, if their ad results in more conversions than yours, then they are getting a better return on investment (ROI), and you need to reevaluate your YouTube marketing strategy.
Does CPM Change?
CPM rates can change depending on a variety of factors. The time of year, the type of product you’re selling, your target audience, and even the day of the week can all affect your CPM.
For example, if you’re selling swimsuits, your CPM may be different in summer than in winter. That’s because people are more likely to be searching for swimsuits when the weather is warm.
To put this into perspective, let’s revisit the scenario above:
Normally, you spend $100 on your swimsuit ad, which ends up getting 100,000 views.
Your CPM is ($100/100,000)*1000) = $1.
This means that you are spending $1 for every thousand views.
Now let’s say it’s the middle of summer, and you run the same ad, maintaining the budget. However, this time your ad gets 500,000 views.
What’s your new CPM?
($100/500,000)*1000 = $0.20.
This means that you are now paying $0.20 for every thousand views. As you can see, the time of year can greatly impact your CPM.
However, this is just an ideal situation. Remember that when business is booming, there is more aggressive competition trying to get a piece of the cake. This means that you may be forced to double down on your ad investment to get reach, which ultimately alters your CPM.
Other factors that can affect your CPM include:
- The type of product you’re selling
- Your target audience
- Location of your target audience
- The day of the week e.g., Black Friday
- Shifting ad formats
To get the most out of your YouTube marketing campaign, it’s important to keep these factors in mind and adjust your budget accordingly.
You must also remember that CPM is only one metric you should be paying attention to. Cost-per-view (CPV) and cost-per-click (CPC) are also important factors to consider when evaluating the success of your ad campaign.
CPM, CPV, And CPC: How does YouTube Ad Pricing Work?
YouTube follows a cost-per-mille (CPM), cost-per-click, and cost-per-view pricing model, which means you’ll be charged based on how many people click or view your ad.
The amount you pay per click or view will depend on a few factors, including:
- The quality of your ad
- The length of your ad
- The type of ad
- The targeting options you’ve selected
- The competition for that particular keyword.
YouTube ad pricing also works by taking into account other factors, including the time of day, the type of content, and the demographics of the viewers. The cost also depends on whether you’re running a pre-roll ad (an ad that plays before the video), a mid-roll ad (an ad that plays in the middle of the video), or a post-roll ad (an ad that plays after the video).
Pre-roll ads are typically the most expensive because they have the highest chance of being seen by viewers. Mid-roll and post-roll ads are usually less expensive because there’s a lower chance that viewers will see them all the way through.
So, how much should you expect to pay for a YouTube ad?
How Much Does It Cost To Advertise On Youtube?
There is no silver bullet answer to this question.
The short answer is: it depends.
The cost of a YouTube ad will vary depending on a number of factors, including the quality of your ad, the targeting options you’ve selected, the length of your ad, the time of day, the type of content, and the demographics of the viewers.
In general, you can expect to pay anywhere from $0.01 to $0.03 per view, with the average cost-per-view (CPV) being $0.02.
In this case, if your ad receives a thousand views, you would pay $20 (i.e., 1000 X 0.01)
Of course, you’re not just paying for views. You’re also paying for clicks or actions taken by viewers, which is where cost-per-click (CPC) or cost-per-action (CPA) come into play.
CPC is the amount you pay for each click on your ad, while CPA is the amount you pay for each action taken by a viewer.
CPC on YouTube ranges from $0.10 to $0.30 per click. With the average cost-per-click (CPC) falling around $0.2. However, if you’re running a pre-roll ad, you may pay a bit more because they have a higher chance of being seen and acted upon by viewers.
But the good news is: you really don’t have to break the bank to advertise on YouTube. You can start your ad campaign with as little as $10 and increase as you see results.
If you want to run a successful YouTube ad campaign, you need to ensure your ad is high quality and targeted to the right audience. You also need to know your competition and how much they’re paying for their ads. By keeping all of these factors in mind, you can maximize your YouTube marketing budget and get the most out of your ad campaigns.
We recommend using the Google Ads tool to get a more accurate estimate of how much your YouTube ad will cost. This tool will help you calculate your ad campaign’s estimated CPC, CPM, and CTR.
What Determines My Youtube Ad Costs? Factors To Consider
Actual YouTube pricing differs from niche to niche, business to business, and campaign to campaign, depending on a number of factors we’ll touch on below. Generally, the average cost per view (CPV) for a YouTube ad falls between $0.01 and $0.03, with the average cost per click (CPC) coming in at around $0.2.
Here are some of the factors that will define your YouTube ad costs:
Your Goal: What do you want your ad to achieve?
Are you looking for brand awareness? Or are you looking for more conversions or clicks through to your website? Your answer will determine the type of ad, where it’s placed, and how long it runs.
Your Budget: How much are you willing to spend on your ad campaign?
This will obviously play a big role in how successful your campaign is, as YouTube ads are priced on a pay-per-view or pay-per-click basis. The good news is that you can start running ads on YouTube for as little as $10.
Your Target Audience: Who do you want to see your ad?
YouTube offers several audience targeting options, including location, demographics, interests, and behaviors. The more specific you can be with your target audience, the better results you’ll see from your ad campaign. Unfortunately, some of these targeting options will cost more than others.
Your Ad: What does your ad look like?
The quality of your ad will play a big role in how much it costs. A well-produced, creative ad is more likely to cost more than a simple text ad. Fortunately, a higher-quality ad is also more likely to get more views and clicks.
Your Competition: Who else is advertising on YouTube?
If you’re in a competitive market, you can expect to pay more for your ad. That’s because the cost of advertising on YouTube is determined by a bidding system, where advertisers compete against each other for ad space. The higher the demand for ad space, the higher the price.
The Type Of Bidding System: Whichever bidding system you choose will also affect your ad costs.
Youtube uses three different bidding systems, Cost-per-mille, cost-per-click (CPC), and cost-per-view (CPV). If you want to get the best value for your ad, you need to understand how each bidding system works and what the benefits are.
Choosing The Right Bidding System For Your Campaign
The three main types of YouTube ad bidding are cost-per-mille (CPM), cost-per-click (CPC), and cost-per-view (CPV).
Cost-Per-Mille (CPM)
CPM bidding is the most common form of YouTube ad bidding. CPM stands for cost-per-mille, or cost per thousand views. With CPM bidding, you pay a set price for your ad to be shown 1000 times.
For example, if you have a $100 CPM campaign and your ad is shown 1000 times, you will pay $100.
CPM bidding is a good option if you’re looking to build brand awareness or reach a large audience. However, it can be more expensive than other bidding options and may not result in as many conversions.
Cost-Per-Click (CPC)
CPC bidding is another popular form of YouTube ad bidding. CPC stands for cost-per-click or the amount you’re willing to pay for each click on your ad.
For example, if you have a CPC campaign and your ad is clicked 100 times, you will pay $100.
CPC bidding is a good option if you’re looking to generate leads or drive traffic to your website. The downside of CPC bidding is that you may end up paying for a lot of clicks that don’t result in conversions.
Cost-Per-View (CPV)
Youtube allows you to bid on a cost-per-view basis for in-stream ads, which are ads that appear before, during, or after a video. You’ll be required to pay when someone views or interacts with your ads. A view is counted if an ad is watched for at least 30 seconds or until the end of the video, whichever comes first.
CPV bidding is a good option if you’re looking to generate leads or drive traffic to your website. The downside of CPV bidding is that you may end up paying for a lot of views that don’t result in conversions.
Tip: The type of bidding system you choose will affect your ad costs. If you want to get the best value for your ad, you need to understand how each bidding system works and what the benefits are.
Five Ad Types You Should Know
Ad types are another fundamental piece to understanding your YouTube ad costs. Not all ad types are created equal, and some will cost more than others. Here are six of the most common ad types on YouTube:
1. Skippable or TrueView In-Stream Ads
TrueView in-stream ads are the most common type of ad on YouTube. They appear before, during, or after a video and can be skipped after five seconds. You’re only charged when someone watches or interacts with your ad. Some of the interactive elements include cards, companion banners, call-to-action overlays (CTAs), and links to your site or mobile app.
YouTube Ad pricing: CPV, CPM, CPA
2. TrueView Discovery Ads
TrueView discovery ads appear on the YouTube home page, as well as on related videos and search results pages. You’re only charged when someone clicks on your ad. According to Google, these ads can help you reach new customers who are actively searching for content like yours.
YouTube Ad pricing: CPC
3. Bumper Ads
Bumper ads are short, non-skippable video ads that must be watched before a video can be viewed. These ads are typically six seconds or less. You’re charged based on impressions, so you’ll pay every time your ad is shown.
YouTube Ads pricing: CPM
4. Non-Skippable In-Stream Ads
Non-skippable in-stream ads are similar to TrueView in-stream ads, but they can’t be skipped. These ads are typically 30 seconds or less. You’re charged based on impressions, so you’ll pay every time your ad is shown.
YouTube Ads pricing: CPM
5. Sponsored Cards
Sponsored cards are a type of ad that appears on the right side of the screen during a video. They can include images, titles, and calls to action. You’re only charged when someone clicks on your ad.
YouTube Ads pricing: CPC
6. Overlay Ads
Overlay ads are semi-transparent image or text ads that appear in the bottom 20% of a video. You’re only charged when someone clicks on your ad.
Ads pricing: CPC
How To Maximize Your YouTube Marketing
If you are a business owner, brand, or marketer, your concern should not so much be about how much your YouTube Ads cost but whether or not they are effective. The truth is, if you don’t get the results you were hoping for with your YouTube Ads, then you’ve wasted your money, no matter how much or little that may be.
You must therefore adapt your campaign at regular intervals to optimize its performance. Constantly measure the results of your ads to identify what is and isn’t working. Try different ad types, targeting options, placements, and call to action, and compare the results. Also, don’t forget to A/B test your ad creative.
Use the data at your disposal to make informed decisions that will help you get the most out of your YouTube marketing, and minimize your costs.
Here are key tips and strategies to help you get started:
Research your audience and create buyer personas
This will help you understand what kind of content they are looking for and how to target them effectively. Some of the things to consider include age, gender, location, interests, and needs.
Use keyword research to identify the right keywords to target in your YouTube Ads
This will help ensure that your ad is shown to people who are actually interested in what you have to offer.
Target your ads specifically to the countries or regions where your target customers are located
This will help ensure that you’re not wasting money on impressions from people who are not potential customers.
Create compelling ad copy and use persuasive call to actions
This will help encourage people to click on your ad and visit your website or landing page.
Use attractive visuals, such as images, videos, and infographics
This will help make your ad more eye-catching and engaging.
Use a strong offer that is relevant to your target audience
This will help convince people to take action and click on your ad.
Optimize your ad creative
Make sure that your ad copy is relevant, clear, and persuasive. Use eye-catching visuals and include a strong call to action.
Review your stats and understand what they’re telling you
– How many views did your ad get?
– What percentage of people who saw your ad watched it until the end?
– How many people clicked on your ad?
– What was the ad’s cost per view, cost per click, and cost per conversion?
– Which ad performed better: your control or experimental ad?
Use these insights to improve your ad campaigns and get better results.
Identify opportunities and adjust your bidding accordingly
– If you’re not getting enough views, consider increasing your bid.
– Lower your bid if you’re getting too many views but not enough clicks.
– If you’re getting a lot of clicks, but they’re not resulting in conversions, rethink your targeting or ad creative.
Wrapping It Up
Youtube marketing presents a rich and diverse opportunity for businesses of all sizes to reach out and engage with their target audiences. By understanding how YouTube Ads work and using the tips and strategies outlined above, you can maximize your YouTube marketing efforts, minimize your costs, and get better results.
If you are a small business or brand and are yet to venture into video marketing, now is the time. Youtube offers an excellent platform to grow your brand authority and promote your products or services. With over two billion monthly active users, there is a vast potential market waiting to be tapped into.
Don’t miss out on this opportunity. Go out there and start creating some great video content that will help grow your business!
