What Do YouTube Ads Cost? Getting the Most from Your Spend
Reviewed by KUNIYUKI IMAMURA (President & CEO, NowVillage Inc.)
Contents
As the market for YouTube video grows, more advertisers are getting strong results from video advertising.
Even if search advertising and display advertising are not working for you now, YouTube video advertising may still deliver.
This article covers what YouTube video advertising costs and how to get the most out of it.
1. Three ways YouTube advertising charges you
Start with how YouTube advertising charges you.
Video and still-image ads on YouTube are managed and run through Google Ads.
Costs are set by auction bidding.
The advertiser sets the budget, so you can run ads within whatever you have.
Whether an ad runs depends on the bid together with Google’s assessment of the ad’s quality.
So budget for the media spend, but put effort into the creative as well.
There are three charging models: CPC, CPV and CPM.
・CPC（Cost Per Click）
You are charged each time someone clicks the ad link.
・CPV（Cost Per View）
You are charged when the video ad is watched.
That means the viewer watched 30 seconds, or to the end for ads shorter than 30 seconds, or interacted with the video before 30 seconds had passed.
・CPM（Cost Per Mille）
You are charged per 1,000 impressions
| Charging model | Ad format |
|---|---|
| CPC | In-feed video ads Overlay ads Display advertising |
| CPV | Skippable in-stream ads |
| CPM | Out-stream ads Bumper ads Out-stream ads Masthead ads Overlay ads Display advertising |
The article here covers the ad types in detail.
2. What to budget when you first try YouTube advertising
Because you can set the spend freely, many people are unsure how much to put behind it.
YouTube advertising can start small, depending on your goal and your budget.
To get results, spend at least 100,000 yen a month.
Below 100,000 yen you are unlikely to see results, and measurement becomes difficult too.
The figure at which results appear does vary with the product or service, and with how much competition there is.
Start by running at least 100,000 yen, then adjust from there.
3. Eight YouTube advertising formats
Ads on YouTube fall into two broad groups: video ads and still-image ads.
There are six video formats and two still-image formats, eight in all, to choose from.
| Video advertising | Still-image ads |
|---|---|
| Skippable in-stream ads Non-skippable in-stream ads In-feed video ads (formerly TrueView discovery ads) Bumper ads Out-stream ads Masthead ads |
Overlay ads Display advertising |
Alongside the CPC, CPV and CPM models above, test which format works and choose on that basis.
4. What YouTube advertising delivers
Next, how much YouTube advertising actually delivers.
The comparison is with search advertising and display advertising, both widely used online.
It assumes a spend of 300,000 yen a month.
※ The figures vary with what you are selling.
[Search advertising]
For the comparison, set an average conversion rate for search advertising.
Conversion rates vary by industry; the figures here use 1%.
Average cost per click also ranges widely, from 80 to 1,000 yen; the figures here use 200 yen.
300,000 yen ÷ CPC 200 yen ＝ 1,500 clicks
1,500 clicks × conversion rate 1％ ＝ 15 conversions
On this calculation,
a spend of 300,000 yen a month produces 15 conversions.
[Display advertising]
Take a conversion rate of 0.2％ and a CPC of 60 yen.
300,000 yen ÷ CPC 60 yen ＝ 5,000 clicks
5,000 clicks × conversion rate 0.2％ ＝ 10 conversions
On this calculation,
A spend of 300,000 yen a month produces 10 conversions.
[YouTube advertising]
The average conversion rate for YouTube advertising is said to be around 2%.
CPC is said to run from 50 to 150 yen, so the figures here use 100 yen.
300,000 yen ÷ CPC 100 yen ＝ 3,000 clicks
3,000 clicks × conversion rate 2% ＝ 60 conversions
On this calculation,
A spend of 300,000 yen a month produces 60 conversions.
YouTube advertising performs well largely because its conversion rate is higher than that of other formats.
The case you make within the video can also be aimed at awareness of the product or service, at comparison, or at driving purchase.
Keeping that in mind while you work out the video’s concept improves results.
Related article:
Five Google search advertising success stories [our own work]
5. How to make a video for YouTube advertising
Producing a YouTube ad video broadly runs as follows.
① Set the purpose and concept of the ad
② Decide the structure of the video
③ Gather the people you need
④ Prepare the filming set-up
⑤ Film
⑥ Edit the video
① Set the purpose and concept of the ad
Starting production without setting the purpose of the advertising, the KPI and the concept risks ending up without the results you expected.
Plan properly at this stage before moving on.
② Decide the structure of the video
With the purpose and concept set, decide the structure of the video.
Think about what is going through the viewer’s mind, and settle the structure around what keeps people watching and what case best conveys the appeal of the product or service.
③ Gather the people you need
If people appear in the video, you need cast.
Sometimes you can cover that in-house, sometimes outsourcing is better.
Choose according to the situation.
④ Prepare the filming set-up
What you basically need is
・a location
・filming equipment
・filming staff
and not much beyond that.
Check what you have in-house and what you do not, and outsource where needed.
⑤ Film
Once everything is in place, film.
Filming outside, note that some sites require permission.
Shooting several takes of the same scene, and generally gathering more footage than you need, raises the quality of the finished video.
⑥ Edit the video
With the footage ready, editing begins.
Simple editing is possible on a phone these days, but for an ad video it is better to have a professional do it properly.
Concept, structure, filming and editing are all separate stages, and it helps if every member of staff can take part in as much of the process as possible.
If the editor has no involvement in the other stages, for instance, you end up with footage that cannot be edited into anything, however hard they are asked to try.
Having someone who can work across everything from concept to edit keeps things moving.
6. How to improve the return on YouTube advertising
Next, how to improve the return on YouTube advertising.
- Choose the format that fits the goal
- Put your effort into the first five seconds
- Make a video the viewer can picture themselves in
- Put the right landing page in place
- Test the results and run the improvement cycle
[Choose the format that fits the goal]
Whether you want to raise awareness of the product or service, reach people who are not yet looking, or drive purchase, the format has to match the goal. You will have settled that while producing the video, so choose the delivery method that fits it.
The table below sets out YouTube video advertising goals against ad types.
| Purpose | Delivery method |
|---|---|
| Raising awareness | In-stream ads Bumper ads Out-stream ads Masthead ads |
| Reaching people not yet looking | In-stream ads Bumper ads |
| Driving purchase | In-feed video ads |
[Put your effort into the first five seconds]
With skippable in-stream ads the viewer is likely to skip once five seconds have passed, so those first five seconds matter most.
Everything rests on how well you hold the viewer and make the case for the product or service in those five seconds.
Even outside skippable in-stream ads, people decide in the first few seconds whether a video is worth watching, so it matters whichever format you use.
【Make a video that lets the viewer picture the experience】
If the video gives the people watching your ad the feeling of actually using the product or service, it will resonate with them.
Aim for a video that makes the viewer think, “this might solve my problem!”
【Set the right landing page】
It also matters whether the page people land on after clicking a video ad is set up properly.
Naturally, if people drop off on that page there is no conversion.
Check that the landing page and anything like it are properly designed.
We cover how to build an effective landing page in a separate article.
【Measure the results and keep iterating】
Measure whether the ads are performing as intended and keep iterating.
Running A/B tests with several variants is also worth doing.
7. In closing
That covers what YouTube advertising costs and how to get the most out of it.
Here is a recap.
■When YouTube ads incur a cost
・CPC
You are charged each time someone clicks the ad link.
・CPV
You are charged when the video ad is watched.
・CPM
You are charged per 1,000 impressions
■The budget to put behind YouTube ads
At least 100,000 yen a month
■How to maximise the results of YouTube ads
・Choose the format that fits the goal
・Put your effort into the first five seconds
・Put the right landing page in place
・Make a video the viewer can picture themselves in
・Test the results and run the improvement cycle
If you are considering YouTube video advertising, or search and display advertising is not delivering for you at the moment, we hope this helps.
SupervisorReviewed by
KUNIYUKI IMAMURAPresident & CEO, NowVillage Inc.
Leads B2B marketing support, covering consulting, advertising operations and web production. Builds teams that can keep delivering results after we hand the work over.
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