watching youtube on a computer

How Much Do YouTube Ads Cost?

watching youtube on a computer

Utilizing video in your marketing efforts is by no means a new concept. Advertisers have been able to take advantage of it for years. It is, however, becoming more and more important, by the day, to engage with this ever-expanding marketplace that is available through video content. The main player in this space is YouTube, of course, the 3rd most visited site on the web behind only Google and Facebook!

If you’re onboard for using video in your ads, but not quite sure where to start, that’s okay! Whether you’re a large eCommerce platform, small business, or growth marketing agency, you can capitalize on the unique audience (two billion monthly users by the way), YouTube has to offer. This really only involves two things. A strong Youtube strategy (we have you covered), and a budget. This begs the question though; how much do YouTube Ads Cost?

The cost of your Youtube Ads depends on a couple of main factors. Bidding, targeting, ad placement, and ad formats. With these factors in mind, there are countless different ways to structure campaigns. This makes it difficult to pin down an exact cost. You may read online that an average CPV can be between $0.02 and $0.20. CPM might be between $2 and $10. These can add up over time and it’s hard to know what sources to believe. To get the full picture of what the cost of YouTube Ads may look like for you, we have to dive a little deeper. 

Bidding

Deciding on your bidding strategy is the first step in creating a successful YouTube campaign and determining cost. Unlike Google Ads, where you use a more traditional Cost per Click model, the three types of bidding on YouTube are Cost per Thousand Impressions (CPM), Cost per View (CPV), and Maximize Conversions. Cost will vary between these three options.

CPV

Cost per View bidding allows you to optimize for how much you want to pay for each singular view. A view counts when a user watches 30 seconds of your video, the full video if it’s less than 30 seconds, or interacts with the ad itself. Set a daily budget or campaign budget, then a maximum amount you’re willing to pay per view. You want to make sure this amount is competitive in your industry so your ads will serve successfully. 

CPM

In contrast to CPV, CPM bidding allows you to bid based on the cost per thousand impressions. Google will optimize bids to maximize your unique reach. This strategy makes more sense when you want brand awareness and visibility. For this bidding strategy you will still set a daily or campaign budget as well as a target CPM.

Maximize Conversions

This bidding strategy requires setting up conversion tracking first and making sure it is firing successfully. You will set a daily budget to allow Google to spend in order to maximize the number of conversions you will receive. CPA can vary with this bidding strategy but you have the option to set a Target CPA if you have a specific number you’d like to achieve. 

Targeting

Audience targeting can be the biggest indicator of how much your YouTube ads will cost. Without exposure to the right people, your advertising efforts might go to waste. Youtube allows you to choose a target audience in 3 main ways; affinity, in-market or life events, and retargeting. The cost will vary depending on which route you choose, but it’s beneficial to test multiple audiences at the same time to see what works for you!

Affinity

Affinity audiences are a popular audience segment devoted to users’ interests and habits. You can define exactly who you want to reach. By including relevant customer interests, you can feel certain that your message will reach the right people. 

youtube audiences

In Market & Life Events

Another effective way to find the perfect audience for you is by targeting in-market and life event segments. With this kind of targeting, you can not only find the right people, but you can make sure to find them at the right time. It’s a powerful tool to be able to target customers while they are actively searching for products or actively experiencing life events that may coincide with your business. 

Retargeting

Our final, but incredibly effective targeting method, is retargeting. Whether you’re a startup looking to advertise on YouTube for the first time, or a company that has been in business for 15 years, you can utilize the full potential of retargeting. This method relies on reaching users you have data on already. You can target customers who have been to your site but exclude anybody who has converted. Retargeting tends to bring in lower CPC’s and higher conversion rates since your user base is more familiar with your brand. No successful PPC strategy is complete without retargeting efforts! 

youtube retargeting

Ad Placement

This aspect of your YouTube Ads strategy acts as an extension of your targeting. You can layer on multiple dimensions to your audiences to specify where your ad is going to show up. This can be done using relevant keywords to your business, topics that your product may be a part of or even placements on specific videos or channels within YouTube. This will help hone in your audience to efficiently spend your budget and keep your goals top of mind. 

Keywords

If you are running Google Search ads, this is a perfect time to incorporate some of your most successful keywords into your campaign. 

Topics

Utilizing topics as a placement is similar to Affinity audiences. Allow your YouTube ads to serve the right people with these interest based topics. 

Placements

The last form of targeting for a YouTube Campaign is Placements. If you want your ads to show up on specific channels or videos, you can add those dimensions here. Be careful to keep the volume in mind so your campaign has enough users to attract. 

Ad Formats

Last but certainly not least is your ad formats. Different ad formats will require different creatives along with different budgets. The more engaging your creative is, the more of a positive effect it will have on your overall cost. 

The most popular ad formats offered by YouTube:

Skippable In-Stream Ads

Skippable in-stream ads are a popular Ad Format on YouTube. These ads can be shown at the beginning, middle, or end of a video. A viewer can skip these after 5 seconds, so be sure to incorporate an engaging intro to tap into your ad’s full potential. 

Non-Skippable In-Stream Ads

Similar to skippable in-stream ads, this ad format can show up in the beginning, middle, or end of a video, but cannot be skipped. These can be cost-effective since you will only be charged if a user watches for at least 30 seconds. 

Bumper Ads

One of the most efficient ways to advertise on YouTube is by using Bumper Ads. These are 6 seconds or shorter and will be placed before, in the middle, or after a video. You can keep your creative costs low by utilizing this short format. 

Discovery Ads

With Discovery Ads, your video will show up next to related videos, as a result from a YouTube search, or on YouTube’s mobile homepage. Your cost will look different with this format since you will be charged when a user clicks on your thumbnail. 

It’s important to remember that there is no magic number for how much YouTube Ads cost. It’s an ongoing process that benefits from constantly testing to find what works best for your business. There is no one size fits all approach, but if you utilize all of the optimizations at your disposal, you can find sustainable long-term success.