Cost and Effectiveness of Youtube Ads

We’ve said it before, and we’ll say it again—YouTube is a gold mine for advertisers.

With over 1.5 million monthly users and over 3 billion monthly searches, it’s clear that there’s plenty of potential for marketers to use YouTube to reach their customers, boost their brand awareness, and drive profitable customer action.

The only problem is the cost.

From a budgeting standpoint, YouTube ads can be a little intimidating. With no set costs for ads and ROIs that are hard to measure, it can be tough to know how much you need to budget and whether you’re going to see a positive return on your investment ahead of time.

To help you to figure all that out, we’ve put together this guide to the cost and effectiveness of YouTube ads. We’ll be covering the different types of YouTube ads, how much each of them costs, and when you can use them.

We’ll also be looking at some benchmark figures to help you get an idea of the average costs you should expect, and talking about the costs of video production.

Ready? Let’s get started!

How do YouTube Ads work?

YouTube Ad campaigns use a bidding system to determine costs, similar to the Google AdWords network. 

It works like this:

  • You set a budget of what your willing to pay per day (e.g. $10)
  • Next, you set up your targeting options (who you want to show your ads to) and determine the type of ads you want to show (we’ll cover your different options in a moment)
  • Finally, you set your bidding selection. In most cases, you’ll bid a ‘Max Cost Per View’ or ‘Per Click’. This is how much you’re willing to pay up to every time someone views or clicks your ad. You can also set different bids for different ad types. 

You can only bid within a range that YouTube will show you. This might be, for example, between $0.10 – $0.30. Your bid range will depend on a number of factors including your targeting options and advertising competition.

YouTube will show you an estimation of how many views/clicks you’ll get each day and a predicted CPC (cost-per-click) or CPV (cost-per-view). If you’re happy with it, you can go ahead and launch your campaign.

Once your campaign is up and running, you’ll only pay when somebody engages in your ad (depending on what ad type you’ve chosen, this will usually mean watching your ad for 30 seconds or clicking the CTA). 

You’ll also only be charged up until your maximum daily budget, at which point YouTube will stop showing your ads to ensure you don’t spend more than you anticipated.

How much do YouTube ads cost?

There are many different factors that will influence how much your YouTube ads will cost, but the average cost of YouTube ads (CPV) is around $0.10 – $0.30 

That means that to reach 10,000 viewers, you should expect to pay anywhere between $1000 and $3000.

We’d recommend starting with a low maximum daily budget of around $10 or less and monitor your campaign performance to see how well those views/clicks convert before you invest more.

Different types of YouTube ads

Alright, now let’s look at the different types of YouTube ads and when you might want to use them.

Display ads

Display ads are ads that appear on the right-hand side of the video above the suggestions list to desktop viewers. They’re typically much cheaper than in-video ads as they’re less popular with advertisers and can cost as little as $0.03 per view. 

If you don’t have a big budget to work with, you don’t want to use a video ad, or you’re hoping to drive traffic for a specific search term, display ads can be a good choice.

Overlay ads

Overlay ads are translucent text or image ads that appear on top of the video being viewed. They’re a little intrusive but only take up around 20% of the video screen space. Again, they’re not as popular as video ads but can work well for certain campaigns, such as if you’re trying to drive traffic to your brand’s YouTube channel.

Skippable video ads

Skippable video ads are what most people think of when they hear YouTube ads. They appear either at the start, in the middle, or at the end of a YouTube video and give the viewer the option to skip after 5 seconds. 

The great thing about skippable video ads is you only pay when viewers watch 30 seconds or more. This helps you to weed out the viewers that aren’t interested in your content and ensures you only pay for engaged viewers. 

Non-skippable video ads

If you don’t want to give your viewers the option of skipping your ad completely, you can opt for non-skippable video ads instead. This is another type of in-feed ad that viewers have no choice but to watch. They’re usually around 15-20 seconds long and are less popular amongst both viewers and advertisers than non-skippable ads, but they help you to ensure greater ad reach. 

Bumper ads

Bumper ads are very short, non-skippable ads that appear before the video. They can only be a maximum of 6 seconds long so they’re most useful if you have a very concise, memorable message you want to get across.

Bumper ads are charged per impression (CPM), so you’ll pay a set price every time 1,000 people view your bumper ad.

Sponsored Cards

Sponsored cards are informational cards that display information relevant to the main video. This might include information and links to products featured in the video, for example. The viewer is presented with an icon in the top right corner which they can click to browse the sponsored card.

Video production costs

Before we wrap up, let’s briefly talk about another important cost – video production. 

If you’re opting for in-feed video ads, this may be the biggest cost of your entire campaign. Depending on how long your ad is and the production quality, it can cost as little as $1,000 right the way up to $100,000 or more. For enterprise-level brands with huge reputations, costs could even run into the millions, especially if they employ A-list actors.

When you’re setting your video production budget, remember that the quality of the video you produce directly impacts how well your campaign performs, so spending more here might be a worthwhile investment and lead to greater ROIs further down the line.

Outsource your YouTube advertising

As you can see, setting up a YouTube ads campaign is a mammoth task. It requires a lot of planning and preparation if you want to get it right. 

If you don’t have the time or resources to manage it all in-house, you can always let us take care of it for you instead. The team at Hyper Frame Digital are experts in YouTube advertising and generate an average 300% ROI for our clients. 

We can manage and oversee the whole campaign for you, from offer creation right the way through to video production. To find out more, click here or get in touch.

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