There is no fixed cost for YouTube Ads since their costs vary due to various factors. However, in this blog, we will break down all YouTube ads costs: from costs of YouTube ads in terms of bidding strategy to costs of each ad type. We believe you will leave this page knowing all the necessary YouTube ads cost that is helpful for your marketing campaign.
Table of Contents
YouTube Ads cost in Terms of Bidding Strategy
Before breaking down the cost of each bidding strategy, let’s have a look at some statistics about YouTube Advertising Cost.
- 48% of businesses allocate 6%-30% of the overall advertising budget to YouTube ads
- The average business spends a $10 to $50 daily budget on its YouTube advertising campaign.
- It costs on average $400-$1000 to reach 100,000 impressions of your YouTube ad.
- 75% of businesses are happy with the ROI (return on investment) from YouTube ads.
With Target CPM (cost-per-thousand impressions), advertisers pay for every 1,000 times their ad is shown to viewers, regardless of whether the viewers take any action on the ad.
On average, the YouTube Ads’ CPM is between $4 and $10. So businesses may expect to spend around $400 – $1000 dollars if wishing to get 100,000 impressions.
This is a YouTube Ad campaign that ran from September 11th to September 18th, 2022. You could see that the average YouTube CPM over a week is $4.97.
Cost Per View (CPV)
YouTube CPV pricing method represents the cost an advertiser pays each time a viewer engages with their video ad. A view, in the context of YouTube Ads, is typically counted when a viewer watches at least 30 seconds of the video (or the full video if it’s shorter than 30 seconds), or interacts with the video in some way, such as clicking on a call-to-action overlay or a companion banner.
For YouTube Ads Cost Per View, you can expect to spend somewhere between $0.03 and $0.3 for one view (3 cents to 30 cents). To gain 100,000 views, you may be charged between $3,000-$30,000.
This is the chart comparing the CPV across various industries. Home & garden industry costs advertisers most, approximately $0.088 USD.
Cost Per Click (CPC)
The Cost Per Click (also known as Pay Per Click) is the pricing method that charges advertisers every time a user clicks on their advertisement. In other words, it’s the price for a single click on an ad.
This pricing method is applied for Google Ads; however, it is not used for YouTube Ads. Many people mistakenly believe that YouTube operates on this bidding strategy; yet in reality, YouTube Ads don’t run on a CPC basis.
If a viewer clicks on or interacts with the thumbnail video (for example In-feed video ads) or any attached links, they will be charged for the cost per view (CPV) or cost per action (CPA), not cost per click (CPC).
Mega Digital helps you run YouTube Ads campaigns with the most optimal costs. We’ll also provide advice and guidance that assists clients in independently managing and optimizing their campaigns.
Costs of different YouTube Ads types
Bumper ads are unskippable 6-second long ad videos. They are typically sold on a cost-per-1000-impressions (CPM) basis. Because Bumper Ads are an expensive type of YouTube ad, it can cost you on average $10 for every 1000 impressions. On some occasions, this figure could rise as high as $20.
Non-skippable ads are in-stream YouTube ads that appear before, during and after a video. They are 6 to 15 seconds long and cannot be skipped, to ensure the advertiser’s entire message reaches the audience.
YouTube Non-skippable Ads run on a CPM basis, costing advertisers somewhere between $6 and $10 for every 1000 impressions. These YouTube ads are basically the same with Bumper Ads, yet they are longer so they cost a little less than Bumper Ads.
In-feed Video Ads
In-feed video ads are the YouTube Ad type that appear alongside YouTube content. They can appear on YouTube What’s next, Homepage and Search Result.
In-feed video ads run on the Cost-per-view (CPV) basis, you pay for video views whenever someone watches your video ad or interacts with the video thumbnail. The average cost for an in-feed video ad is $0.10 (10 cents) per view. These ads are more budget-friendly and suitable for small and medium-sized businesses.
YouTube Masthead Ads
YouTube Masthead Ads are the most prominent video ad that appears at the top of YouTube platform. Because of its exclusivity, YouTube Masthead Ads are considered the most expensive YouTube video ad type.
Each YouTube Masthead Ad can cost brands between $300,000 and $400,000. It was even recorded that a YouTube Masthead costs $1 millions on Super Bowl Sunday.
This is all the costs of YouTube ads in terms of bidding strategy and ad types that Mega Digital summarized for you:
What determines YouTube Ads cost?
Seasonality affects YouTube ad costs a lot. Advertisers often witness variations in ad pricing throughout the year due to specific seasonal trends and consumer behaviors. During holiday seasons, such as Christmas, Black Friday, or Valentine’s Day, advertisers typically experience a surge in ad costs. As more businesses vie for limited advertising space to promote their seasonal deals and offers, the cost per click or impression can rise significantly.
Just like Google Ads, YouTube ads’ pricing functions on a bidding system, in which there can be many bidders bidding for the same ad placement as you. The more bidders joining the game, the higher the price point is.
However, because you have full control over your budget and spending, you decide the campaign duration, the total and the daily budget you will spend on this specific advert. This bidding strategy is what will affect your YouTube ads cost.
For example, you and your competitor spend $10 on a YouTube Ad campaign. You think it’s worth 2 dollars to have someone watch your video, so you set $2 as your max CPV bid. Your competitor sets $1 only.
Because you bid for the ad placement with a higher price, YouTube will prioritize your YouTube Ad over your competitor, making sure that it appears first or at prominent placements. However, with the same budget, your ad campaign will end sooner than your competitor’s. Although your advertisement gets the first impressions, your competitor’s ad will gain twice as many views as yours because you have left the game.
Certain types of targeting may cost more than others. We could see that remarketing is cheaper than targeting the new audience. It makes sense that you end up paying more if you are targeting an audience segment based on customer intent or by using some specific keywords.
The audience size also affects your YouTube ads cost: the smaller and more specific your audience size is, the more YouTube ads will charge you. Because if you are targeting a very large and general audience group, YouTube may show your ads to the people who nobody else is advertising on.
YouTube has various ad types: YouTube Non-skippable ads, Masthead ads, In-feed Video ads, Skippable ads,… Each of the ad types has a different duration, placements and serves different purposes. Some YouTube ad types appear on prominent locations while others just blend in on the Homepage. This also affects the cost of YouTube ads, making some more costly than others.
Best tips to optimize YouTube Ads’s budget
#1. Don’t set your bid too high or too low
From the example mentioned above, it is recommended that you set your bid somewhere in the middle. You shouldn’t either set your bid high so that you’ll waste more money on an ad than your competitor, or set your bid so low that YouTube doesn’t really show it to your target audience.
Also, when it comes to setting the budget, consider the duration and the daily cost of your campaign. Check carefully if there are any other lower-cost yet still effective YouTube ad campaigns that you can employ in order to maximize your spending budget.
If you want to spend less on your YouTube ads, think about teaming up with a YouTube agency partner who can handle the whole YouTube ad running process.
#2. Focus on the right key metrics
Tracking and measuring your YouTube Ads is very important. Measures like click-through rate (CTR), view-through rate (VTR), conversion rate,… help you see how your ads are doing in order to make smart decisions with data.
For different objectives, advertisers should focus on different key metrics:
These numbers will show you if people find your campaign interesting and if spending money on it makes sense. Therefore, when you track, you can know which ads are making more money and where your budget should go. This is like having a map to find the best way to go and not get lost.
If you want to save money, sell more, and beat your competition, keep an eye on the right key metrics for your YouTube Ads and make timely adjustments to make them better.
#3. A/B Testing
A/B testing is a valuable practice to refine your ad campaign. By running 2 YouTube ads and comparing their performance, you can identify what resonates most with your audience and refine your strategy accordingly.
For example, if you have two ad videos but don’t know which one your target audience prefers, use the A/B test. Show the first ad for the first 10 days and show the other ad for the next 10 days. You can choose to run the test longer if you want it to be more accurate.
Once done, all you need to do is compare the results of two sets of data and see which one is getting you more money, visitors, sales, or views, depending on the campaign objectives. Then, go with the one that’s performing better. The A/B Test is what most businesses out there are employing since they don’t want to take such a risk.
To sum up, YouTube Ads cost can vary greatly depending on different bidding strategies or YouTube Ad types. We hope that this blog will shed light on the YouTube ads cost so that advertisers won’t feel confused when choosing the right YouTube ad type for their campaigns.
If you may have any inquiries or problems relating to running ads on any digital platform, Mega Digital is always here to support. So, as they say, “Farewell and safe travels on your YouTube Ad adventure!”