YouTube is one of the biggest platforms for video sharing and viewing, and it has become a key advertising platform for businesses. However, many business owners don’t understand how YouTube advertising works, how much it costs, or how to turn advertising into an investment. In this blog post, we’ll provide an overview of YouTube advertising and explain the costs involved. We will also cover how businesses can make advertising on YouTube a successful investment by understanding their metrics and budget.
How YouTube Advertising Works
YouTube uses a TrueView advertising model, where businesses only pay for views when a viewer has watched 30 seconds of their ad or engaged with the ad, whichever comes first. This means that if a viewer skips an ad before 30 seconds or stops watching before 30 seconds, the advertiser is not charged for that view.
On other advertising platforms, like Facebook and Instagram, a view is counted after three seconds with the audio turned off. On TikTok, a view is counted after just one second, even if the viewer is scrolling past the ad. This means that YouTube’s TrueView model provides more value for businesses, as they only pay for views from engaged viewers.
Costs of Advertising on YouTube
The cost of advertising on YouTube varies depending on geographic location, targeting options, ad performance, and bid type. On average, the cost per view across hundreds of thousands of campaigns is around 10 cents. The cost can be as low as 2 cents or as high as 30 cents, depending on the factors mentioned above.
Understanding Your Metrics and Budget
To make advertising on YouTube a successful investment, businesses need to understand their metrics and budget. It is important to know how much a customer is worth to the business and how much they are willing to spend to acquire a customer. For example, if a customer is worth up to $10,000, a business may be willing to spend up to $2,000 to acquire that customer, as this would provide a five-to-one return.
Businesses also need to know how their customers become clients. For example, if a customer needs to fill out an application to become a client, businesses may be willing to spend up to $200 per application, as this would still provide a good ROI.
Advertising on YouTube can be a powerful tool for businesses, but it is important to understand how it works, how much it costs, and how to make it a successful investment. By using the TrueView model, businesses can get more value for their advertising dollars, as they only pay for views from engaged viewers. To make advertising a successful investment, businesses need to know their metrics and budget, including how much they are willing to spend to acquire a customer and what their cost per customer is. By understanding these metrics, businesses can make informed decisions about their YouTube advertising budget and ensure that their advertising efforts are paying off.
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.