Why should you advertise your business on YouTube?
Well, are you ready for some mind-blowing numbers?
YouTube reports having over 2 billion monthly logged-in users across 80 languages in over 100 countries. As of January 2021, YouTube was the second most popular social media network worldwide, coming in a close second behind Facebook.
There’s a staggering amount of people across the world logging in to YouTube every single day, so it’s no wonder that a 2020 study conducted by Social Media Examiner found that almost 55% of surveyed marketers said that they prefer to use YouTube.
Advertising your brand on YouTube can help you to build brand awareness, influence buyer decisions, boost sales, and increase brand loyalty. But the one thing that may have you hesitant about YouTube advertising is the cost.
How do you pay to advertise on YouTube? What is “bidding”? How much does it cost to advertise on YouTube? It’s enough to overwhelm anyone.
As always, Foundr’s got you covered with all the essential information you need to start advertising on YouTube.
Let’s start with the basics:
How Does YouTube Advertising Work?
YouTube’s biggest advantage is this: people use YouTube to search for information and entertainment. In other words, it has intent.
When deciding on which ads to display, YouTube considers information like:
Google search history
Related videos the viewer has watched
Google Ad settings
Web history, age, location, and more, if someone is logged into their account
Using this information, YouTube pinpoints user intent and displays ads that align with the user’s interests. To advertise your brand, you pay YouTube to display your ad to the right person at the right time.
How Much Do YouTube Ads Cost?
We get this question a lot. As with all advertising, it’s very difficult to put an exact figure on how much it will cost.
Influencer Marketing Hub estimates that YouTube ads can cost anything between $0.03-$0.30 per view, with a $2000 average cost to reach 100,000 viewers. A view is counted when a viewer watches 30 seconds of your video or interacts with it by clicking on it. If your video is shorter than 30 seconds, a view is counted if a viewer watches the entire video.
The exact cost for running a YouTube ad campaign is influenced by these factors:
- Ad formats
When advertising on YouTube, your main focus should not only be on how much YouTube Ads cost but also on what you are gaining from your spending. This means that you’ll need to be constantly assessing and reassessing your campaigns to make sure that you’re hitting your goals with YouTube ads and ROAS.
What Is ROAS?
Return on ad spend (ROAS) is a metric that tells you the effectiveness and performance of your ad campaign. By calculating your ROAS, you can see which ad strategies are working well, and apply those techniques to your other campaigns.
A simple formula to calculate your ROAS is: ROAS = Revenue / Cost
For example, if you are spending $1000 a week on YouTube ads and generating $1500 a week in sales from the ads: $1500/$1000=$1.5 ROAS
A good ROAS depends on a few factors, but according to WebFX, most companies aim for a 4:1 ratio—$4 in revenue to $1 in ad costs. The average ROAS, however, is 2:1—$2 in revenue to $1 in ad costs.
The Key Factors Affecting the Cost of YouTube Ads
YouTube’s power lies in its ability to target your ideal audience at exactly the right time in the right location.
Video ads that are run on YouTube also trickle across the web through Google Ads. By setting up your ads and campaigns with the right targets, your ad is presented to someone that has been estimated as a potential lead based on their interests or activity.
You have a wide variety of targeting methods that you can use to reach specific audiences or niches based on where they are in the world, what they are interested in, and their choice in content. You can also run multiple campaigns with different target audiences to test engagement.
The cost to advertise on YouTube is heavily dependent on which audience you are targeting. Some audiences are more expensive than others to market to, so you need to choose wisely to avoid burning through your budget.