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How To Set Your YouTube Advertising Budget

Posted by Amy Baker on Mar 28, 2015 3:00:00 AM

Establishing a YouTube advertising budget can be overwhelming but it does not have to be. Here are few budget-setting basics you need to know.

If you are new to Google AdWords for video and YouTube advertising the budgeting and bidding process can seem a little overwhelming. However, it does not need to be.

Here are few budget-setting basics you need to know in order to get the best return on investment (ROI) for your YouTube video ads.

youtube advertising costs

You Have Control

One of the reasons the Google AdWords system and YouTube advertising continues to grow at such an exponential rate is because businesses with AdWords businesses remain in control of their budgets and marketing campaigns.

With Google AdWords for video you will have total control of your budget. You are responsible for allocating the funds you will use to run your video ads on YouTube so it is important that you set your budget to an amount that you are comfortable spending.

Google AdWords for video operates on a pay-per-view (PPV) system. With Google AdWords you will only pay for views when a YouTube user watches your video ad through to finish or watches the first 30 seconds, whichever comes first. When you first use AdWords to set up your video campaign you will be asked to set a maximum cost-per-view (CPV), the maximum amount you are willing to pay for each view your video ad receives.

Calculating Max CPV

To calculate the max amount you are willing to PPV you need to decide on an ideal monthly budget. If your ideal monthly budget is $300, then you would divide $300 by 30.4 (the average number of days in a month). Thus, your budget would equate to about $9.87 a day.

At this point you can do one of two things – you could either set your max CPV using an amount between the average spend of $.01 and $0.23 or you could divide the daily budget by the number of views you would like to receive each day. 

Option 1

Divide your daily budget by your max CPV to estimate the number of views you could hope to receive each day. If you decide that one view is worth $0.15 then you would set your max CPV to that amount. With a daily budget of $9.87 you could hope for about 65 views a day.

Option 2

Divide your daily budget by the number of views you are hoping for to calculate your max CPV. If you decide you want 100 views a day, using your daily budget of $9.87 you would set your max CPV to $0.099.


Optimising Your YouTube Advertising Budget

It is okay to start small when setting your YouTube advertising budget. It is not uncommon for businesses to set a daily budget of three to five dollars. As with any other advertising strategy, YouTube video ads are an investment and you want to make sure that you are getting the best ROI available. Your monthly budget can be adjusted at any time. If you are happy with the returns you are seeing increase your budget. If things do not seem to be adding up then optimise your budget.

Budget optimisation is about spending strategically rather than simply spending more. To gain a thorough understanding of the relationship between CPV and the quality of views your video receives you need to experiment with your budget and use performance data to find out what is working. AdWords tools such as conversion tracking and Google analytics can help you do that. These tools may show you that your intended audience only engages with your ad during certain days of the week or at certain times or only using certain devices. As a result you could go in and adjust your campaign so that your video ad does not run at times when your audience is not engaged and only runs on the devices your intended audience is using. Making these minor adjustments can make all the difference in your ROI and reassure you of YouTube’s marketing ability.

Discover the benefits of YouTube advertising for yourself and create your first campaign with the help of our digital team. To request more information and recieve 50% off of your first campaign's management fee, simply click the link below:

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Topics: YouTube marketing tips, cost of advertising on youtube, YouTube advertising, cost of youtube ads, youtube ad cost