As a marketer, it’s important to be mindful of advertising costs and understand how to make the most of your advertising budget. This is especially true when it comes to YouTube ads. Knowing what you’re doing can make you a lot of money, but if you don’t, you can end up losing a lot. In this blog post, I’m going to dive into how much it costs to advertise on YouTube, how the Google Ads auction works, and three different levers you can pull to lower your advertising costs and increase your ad performance.
Costs of Advertising on YouTube
We’ve been running YouTube ads since they first came out in 2012. I was curious about how advertising costs have changed on YouTube over the last decade, so I went into our MCC account and pulled data from 2014 to 2022 from all of our managed accounts. In 2014, the average CPM (cost per thousand impressions) was $12.52, while the average cost per view was 11 cents. Flash-forward to 2022, and the CPM has increased nearly three times to $32.71. However, the cost per view has remained at 10 cents on average.
The costs of any advertising platform will rarely stay the same, and almost never go down. Instead, they tend to go up over time. However, the cost per view on YouTube has remained the same, meaning that you can still get a high-quality view for a relatively low cost.
Understanding the Google Ads Auction System
The Google Ads auction system is designed to determine who can advertise and whose ads will be shown. While it may seem like whoever pays the most will win, that’s not always the case. Instead, the system takes into account a number of factors, including how much you’re willing to pay for a specific action.
Three Levers You Can Pull
To make the most of your advertising budget on YouTube, there are three levers you can pull. The first is to optimize your ad targeting by ensuring that your ads are shown to the right people at the right time. The second is to optimize your ad format by choosing the right ad format for your campaign objectives. Finally, you can optimize your bidding strategy by adjusting your bids based on your campaign goals.
As a marketer, it’s important to understand how to make the most of your advertising budget, especially when it comes to YouTube ads. By understanding the Google Ads auction system and the levers you can pull to optimize your ad performance, you can ensure that your ads are making you money, and not the other way around.
If you want to make money on YouTube, keep creating quality content that resonates with your viewers, and eventually, you’ll be able to turn your passion into a thriving business.
If YouTube ads is something you or your business are interested in but not sure where to take that initial first steps then you will want to check out our 2023 YouTube Incubator program.
We spend 3 days taking you from writing your video ad script, shooting your video ad, researching your perfect audience to launching your YouTube campaign.