360 Degree Media Group Blog

Factors that Affect the Cost of Advertising on YouTube

Posted by Amy Baker on Mar 7, 2015 4:00:00 AM

The actual cost of advertising on YouTube varies greatly. Here are a few factors to consider when calculating the total cost of YouTube advertising.

Google’s AdWords for video system allows businesses of all sizes to advertise and showcase video content on YouTube. Using YouTube to run ads continues to grow in popularity because these funded advertising opportunities are low in cost and highly targeted.

With YouTube advertising you can ensure that your ad will be seen at the exact moment someone searches for content that is relevant to keywords linked with your video content. Google AdWords for video works on a pay-per-view (PPV) basis, which means you only pay for an ad when someone fully engages with it. 

how much does youtube advertising cost

What Determines the Cost of Advertising on YouTube?

The actual amount you will end up paying per view will vary greatly based on a number of different factors. However, one of the benefits of Google AdWords and YouTube advertising is that you can set your budget in advance.

Video Formats

With Adwords for video you can choose between two TrueView formats for YouTube advertising: in-stream ads, which are ads that precede YouTube video content; and in-display ads, which are ads that appear beside video content (this also includes in-search and in-slate video options). You can choose to mix and match these different formats when you create your video campaign. You will only pay for an ad when a viewer engages with it.

With in-stream ads, viewer engagement is defined as a person watching 30 seconds of your video (or seeing your video to the end, whichever comes first). For in-display ads, engagement means a viewer choosing to watch your ad by clicking on the thumbnail.  While your ad can potentially be put in front of hundreds, and even thousands, of people, if only 117 of those people watch your video, you will only pay for those 117 views.  You pay nothing for those who do not actively select your video or for those who drop off before the minimum amount of time passes. 

YouTube advertising cost

Bidding and Your Budget

While video formats can affect the cost of advertising on YouTube, the two greatest factors that contribute to your total cost will be your budget and bidding.

Bidding for cost-per-view (CPV) is the default way to set the price you will pay for your YouTube AdWords video content.  The average spend is between $.01 and $0.23 per view. Simply enter the highest price you are willing to pay for a view when setting up your video campaign on AdWords.

Example: If you think it is worth 21 cents to have someone watch your video, set $0.21 as your max CPV. You can also adjust your max CPV depending on the video format (in-stream or in-display) you choose.

You may be wondering, “how is bidding different from setting a budget?” Your max CPV will determine your ad’s position among other ads related to the keywords you have linked to your video content. These other ads may also be attempting to reach your target audience at the same time you are. When this happens, the video with the higher max CPV will typically win the higher ad placement.

Example: If your max CPV is $1.00 and another advertiser’s max CPV bid $0.75, and you two are the only ones vying for the same position, Google will only charge you one cent more than your closest competition while remaining within your max CPV. So even though your max is $1.00 your actual CPV may only be $0.76.

In addition to setting your max CPV you can also set a weekly budget. If your budget is  $100 per week and your set max CPV is 50 cents then your ad can generate 200 new views at the max CPV rate. If your actual CPV is significantly lower than your max CPV you could potentially generate more than 200 new views. 

YouTube Ad Costs

Conclusion

The good news is by advertising on YouTube you will only pay for what you get and you will know what to expect. Your target audience will have a chance to engage with your video content within a timeframe you determine.

The key to success is trial and error. Find out which video format works best for you. Start small with your budget and your bidding. As you see results and grow more familiar with Google Adwords you can adjust your budget and bidding accordingly.

For more information about how you can start advertising on business, contact us today. Alternatively to enquire further: simply click the link below and receive 50% off of your first YouTube campaign management fee.

YouTube Campaign 50% Off

Topics: how to advertise on youtube, cost of advertising on youtube, YouTube advertising, cost of youtube ads, Google Adwords, youtube ad cost