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How To Determine YouTube Ad Prices

How to Determine YouTube Ad Prices

YouTube is arguably the most popular video streaming platform, with over 2.2 billion users in more than 100 countries. 

It’s also one of the most popular social media networks globally, second only to Facebook. It’s no wonder that companies have been racing to promote their ad campaigns on YouTube to gain the attention of a huge audience base. In fact, most marketers prefer to use YouTube for their advertising campaigns compared to other social media platforms.

If you want to build strong brand awareness and influence your customers, creating a YouTube ad campaign can be an ideal marketing strategy. But, the question is: how much do YouTube ads cost? 

You need to understand how YouTube advertising prices work to create a financially feasible ad campaign. In today’s article, we’ll talk all about YouTube ad pricing, bidding strategies, and much more.

Why Do You Need A YouTube Ad Campaign?

Before we discuss the details of YouTube ad costs, let’s address the initial question every marketer thinks: why YouTube? To answer simply, YouTube has a massive audience base that’s hard to beat and offers you a certain edge over your competitors when it comes to digital advertising. 

On top of this, almost 90% of internet users in America between the ages of 18 and 44 use YouTube, making it much easier for you to reach the target audience. Most customers watch YouTube videos, and by creating relevant ads, you can attract their attention to your brand to make a well-informed decision. 

Furthermore, ever since the digital revolution, creating YouTube ad campaigns has become much more effective than using traditional advertising platforms, like TVs, billboards, or newspapers. Posting YouTube ads can help you reach the customers at the right moment when they are searching for similar products to buy. 

Not just this, but YouTube ads are powered by Google Ads, which makes YouTube advertising campaigns almost effortless while creating a solid customer base for your brand. 

How Does YouTube’s Ad Pricing Work? 

Just like Google, YouTube uses the Cost-Per-View (CPV) and Cost-Per-Click (CPC) pricing models to determine advertising campaign costs. These models calculate your YouTube ad rates based on user actions. For instance, if someone clicks on your ad or views the entire ad, you’ll need to pay for that specific action. 

You are only charged if a user views your ad for more than 30 seconds or clicks on your ad. If the length of your ad is less than 30 seconds, the view is only counted if the user watches the whole video. So, depending on your ad format, you’ll either pay for ad clicks or ad views. 

How Much Does YouTube Advertising Cost?

There’s no designated minimum amount that you need to spend when you advertise on YouTube. Your overall campaign budget will determine the amount you spend on creating and advertising the YouTube ads. 

Businesses spend $10 or more each day to run their advertising campaigns on YouTube. However, this amount is not set in stone and can vary depending on the campaign performances of different companies. 

The cost of video ads on YouTube can range between $0.10 and $0.30 per view or click. You mostly pay for the ads based on the CPV scale, so every time a user views the ad, you have to pay the required amount. It’s always best to go by the maximum amount you want to pay per ad view to avoid exceeding the overall campaign budget. 

This is only an overview of the rates that businesses usually pay while investing in YouTube ads. But, it’s safe to say that your YouTube advertising costs will vary significantly depending on ad formats, campaign goals, target audience, and video quality. 

What Is ROAS? 

ROAS or Return On Ad Spend helps you determine the performance and effectiveness of your YouTube ad campaign in enhancing revenue collection. By calculating the ROAS value, you can monitor which advertising strategies work well in generating more revenue and apply those to your campaign. 

You can use a simple formula for this: ROAS = Revenue/Cost 

Say you’re investing $1,000 per week on YouTube ads and generating a weekly revenue of $1,500 from those ads; your estimated ROAS value will be $1.5. The ROAS value will depend on various criteria, but more on that in the following sections! 

What Factors Determine Your Ad Costs?

Several factors determine the cost of YouTube ads and influence the YouTube advertising campaigns, and we have mentioned the most important points here.

1.) Targeting

Accurate audience targeting is the most powerful aspect of YouTube advertising, and you can get the attention of your ideal audience at the right place and at the right time. Furthermore, since Google Ads powers YouTube ads, the video ads on YouTube automatically find their way to a larger audience through Google. 

Thanks to the YouTube advertising strategy, you can target different groups and niche consumers based on their location and needs. Once you set up the YouTube campaign, your ad is presented to potential customers depending on their Google search history, online activity, and interests. Lead generation for your brand can become much easier with a well-executed YouTube advertising campaign. 

Moreover, you can create separate campaigns to target different audiences based on your business requirements. But, it’s best to select the audience carefully because marketing for some audiences can be more expensive compared to others.

Set your daily budget for the campaign accordingly to avoid facing a financial crisis. 

2.) Bidding

The ad placement on YouTube works exactly like Google advertising campaigns through a bidding system. Your YouTube ads’ cost will depend on how much your competitors are willing to bid for the same ad placement. 

Additionally, the YouTube bidding costs can change based on your target audience. Before you decide on a bidding amount, make sure to target the right audience and gather adequate knowledge about the competitors. 

That said, the daily bidding limit typically depends on the Cost-Per-Million (CPM) or CPV counts. You have to pay the bidding amount when a user views your ad for more than 30 seconds or interacts with the ad. 

But, you can also follow the CPC pricing model to set the bidding amount for certain ad formats. With CPC, you only pay for users who click on the ad, so the number of ad views isn’t considered. 

Set A Budget 

Most businesses set a daily bidding limit of $10 for their YouTube campaigns and gradually increase or decrease the bidding amount once they start generating better revenue from the ads. You can set a daily bidding amount between $5 and $10 or determine the weekly budget by calculating 50 times your Average Order Value (AOV). 

The bidding system allows you to set the maximum daily amount you want to pay for the YouTube ads to avoid bankruptcy even if more people react to the ads. YouTube even offers a prediction of the daily views and ad searches so that you can stay at the top of your game without losing money. 

Set Your Bid

Once you’ve set the overall campaign budget, you need to bid the maximum CPV amount to get started. Depending on your target audience, YouTube will offer a range of bidding options. You can use the option to Customize Bids Per Format and target the right audience using one specific ad format. 

Under these circumstances, YouTube will offer an estimated prediction of the daily number of ad views based on your targeting. Consider these predictions carefully to adjust and align your campaign goals accordingly. 

3.) Ad Formats 

Depending on your YouTube ad type, the pricing will vary because different ad formats offer a different user experience and audience reach. For instance, if you want to create brand awareness, it’s better to post a short skippable video ad than forcing the audience to sit through an entire non-skippable ad. 

At the same time, masthead ads might be more budget-friendly than a YouTube video ad if you want to promote a 24-hour flash sale of your brand. It’s best to consider the ad format to create YouTube ads that’ll increase your customer base without jeopardizing the campaign budget.

How Can Different Ad Formats Influence Your YouTube Ad Costs?

As we mentioned earlier, ad formats will significantly impact your YouTube ad prices, but the question is: how do they work? Generally, you have to pay more if there’s increased ad exposure or you want a bigger ad space based on the ad format. 

So here, we’ll highlight different ad types and how they impact the campaign budget. 

1.) Display ads 

Display ads only appear if you’re accessing YouTube from your desktop, above the video suggestions list and on the right side of the feature video. As far as ad promotions go, YouTube display ads are not popular among advertisers because they don’t appear in the videos that viewers usually watch. 

But, they’re still quite effective in building robust brand awareness by helping viewers discover your brand’s products or videos because they act as video discovery ads. Through display ads, you get to target the massive YouTube audience and attract their attention to your brand. 

Moreover, promoting display ads on YouTube is quite affordable, and you can achieve it by paying a measly amount of $0.10 to $0.30 per ad view. 

If you identify the right keywords that people usually use while entering a YouTube search, you could use them in the video to promote it as a display ad. In that way, you can create relevant videos that meet the needs of your customers and use them as YouTube display ads. 

2.) Overlay ads

Overlay ads are TrueView discovery ads and can help drive online traffic organically towards your brand’s official website or YouTube channel. You need to create engaging and entertaining videos if you want the overlay ad to generate sufficient leads. 

For instance, creating interactive and welcoming YouTube videos will help to peak customers’ interests, and they might be more willing to explore your channel or website. You can even create an overlay image ad that can appear on any YouTube video and offers effective results if viewers click on it to access your channel. 

3.) Skippable video ads

YouTube video ads are also known as TrueView video ads, and skippable video ads are in-stream ads that appear as a part of any YouTube video. For these video ads, you only have to pay when a viewer watches the ad for more than 30 seconds or in its entirety if its runtime is less. 

You don’t have to pay if viewers skip promptly within 30 seconds, which can help cut down on your campaign budget. However, you won’t be able to generate any new leads or enhance your revenue if viewers don’t click on the ad to buy the product. 

Accurate user targeting is essential to make the most of skippable in-stream ads. 

4.) Non-skippable video ads

Non-skippable ads are usually around 15 to 20 seconds long, and you can place them before, after, or during any YouTube video. As the name suggests, the viewers can’t skip the ad and have to watch the entire video before the main video resumes playing. 

A non-skippable video ad guarantees that the viewers will watch the entire ad. On the downside, advertising non-skippable videos on YouTube can be expensive because you have to pay every time a viewer watches the video. You might also end up paying for people who are not even interested in your ad. 

Thus, it’s best to allow viewers to skip the ad to narrow down your potential customers without unnecessarily paying money. 

5.) Bumper ads 

To create a short and memorable message for your potential customers, bumper ads are an excellent choice because they run for 6 seconds or less. You need to incorporate brief and to-the-point catchphrases in these video ads to grab customers’ attention. 

Bumper ads are charged based on the Cost-Per-Thousand scale, so you only have to pay every time the ad reaches 1,000 impressions. 

How To Set Up Budget-Friendly YouTube Ad Campaigns? 

1.) Create in-house advertising campaigns 

The best way to reduce your YouTube ad cost is to build an in-house team who can run the entire campaign successfully. If you choose an in-house advertising team, the budget will be solely under your control. You can decide the daily bidding amount for the ads based on your business requirements. 

In contrast, hiring a video marketing company to design the campaign can cost you thousands of dollars, and the budget will depend on the rates set by the company. You should also consider several elements of video creation, such as duration, camera angles, and script, to reduce ad costs. 

2.) Select the target audience 

Targeting the right audience guarantees the success and profit of your YouTube ads, so you need to look through various niche groups to choose the ideal customers. For instance, demographics can be a determining factor in selecting the target users based on their income status, age, or gender. Similarly, the life events and interests of viewers play a major role in generating solid leads for your campaign. 

You can benefit from remarketing based on the past purchases and search history of your target customers. Using the right keywords and phrases can also make it easier for users to discover your YouTube ads while searching. 

Depending on your campaign goals, apply these strategies to choose the right audience and lower the advertising cost. 

3.) Create quality video advertisements

When it comes to creating YouTube video ads, content is everything and can hugely influence your brand’s customer engagement. It goes without saying that you need to invest your time in developing high-quality content for video ads to get the best results. 

Start with shooting a high-definition video because you don’t want viewers to skip your ad because of bad camera angles or poor resolution. Next, you need to add value to your video content to offer helpful information to customers. 

If you can’t create a video ad with valuable content, it won’t have much impact. So, plan the video content beforehand to gain traction and influence customers’ buying decisions. 

4.) Keep the ads short 

One common problem with long video ads is that customers often lose their patience and interest while watching them. It happens with non-skippable ads, so always try to keep your ads short and crisp to avoid driving away the audience. 

Creating short, high-quality videos keep the customers hooked to your brand and offer better results in terms of sales and revenue growth. Ad videos having a runtime of 45 seconds or less are ideal and have maximum impact while delivering your brand’s message. 

5.) Create relevant landing pages 

When you are posting a video ad on YouTube, you must ensure that it can lead viewers to a relevant landing page once they click on it. It’s crucial to connect the audience to a landing page that offers in-depth information regarding the content advertised in the video. 

Linking the video ad to a relevant landing page will also help you direct customers to your brand’s products or services. It is an excellent way to boost online traffic to your website and improve the sales rate. 

Final Thoughts on Estimating YouTube Ad Costs

Even though budgeting and calculating ad prices can be overwhelming, YouTube allows you to set the whole advertising budget at your convenience. Every aspect of the campaign is solely dependent on your preferences, starting from targeting to choosing the right ad format. 

Not just this, but you can also optimize the campaign and improve your return on investments, thanks to the YouTube ad bidding system. With billions of users worldwide, YouTube is the perfect digital platform to kickstart your online advertising campaign. 

But if you are still feeling reluctant about undertaking such a huge advertising project, you can always consult a professional digital advertising agency for their guidance and expertise.

Disclaimer: WebCitz, LLC does not warrant or make any representations concerning the accuracy, likely results, or reliability of the information found on this page or on any web sites linked to from this page. This blog article was written by David W in his or her personal capacity. The opinion(s) expressed in this article are the author's own and may not reflect the opinion(s) of WebCitz, LLC.