Video ads make up 35% of all ad spending online as of February 2017. This number is expected to grow at a fast pace in the coming years as 80% of all web traffic is projected to be generated by video by 2019.
Knowing that, it only makes sense to be producing high-quality videos for advertising. Another obvious choice is to place them on YouTube. But how much does YouTube advertising cost if so many people are doing it?
We’ve rounded up the answer for you, along with a guide on how to plan your budget.
How much does YouTube advertising cost?
The cost of YouTube ads runs relatively low, at 10 to 30 cents per view. The cost of your ad depends on the quality of the video, targeting and the overall goal you’re trying to accomplish.
Whether you’re using TrueView in-stream, video discovery or bumper ads will also affect the cost of your ad.
How is the cost of YouTube ads calculated?
YouTube will charge you according to the ad unit you choose.
- TrueView in-stream video ads only charge you when a viewer watches at least 30 seconds of your video, watches your video in its entirety (if shorter than 30 seconds) or interacts with it. Whichever event occurs first is when you pay.
- TrueView discovery ads charge you when a viewer chooses to watch your video by clicking the thumbnail preview found next to related YouTube videos, as part of a YouTube search result or on the YouTube mobile homepage.
The next variable that influences the cost of YouTube ads is your bidding option. The amount you set as cost-per-view (CPV) bid lets Google know the most you are willing to pay for a view or interaction. You will only be charged the minimum amount it takes to have your ad placed over a competitor’s.
For example, say you want your maximum CPV bid to be 35 cents, and a competitor’s bid is only 25 cents. To have your ad placed over theirs, your actual CPV will be 26 cents. So for every view, your ad gets charged 26 cents.
In order to have your ad placed, Google also takes into account your Quality Score. It checks how relevant your ad is to the customers you’re targeting along with some other performance factors, such as view rate. Google then multiplies this score with your maximum CPV to determine your ad rank.
The major difference lies with bumper ads, which are charged on impressions. Bumper ads use cost-per-thousand impressions (CPM), so you pay when your video has been viewed 1,000 times.
Related: The guide to YouTube ad specs
Setting a budget
Your advertising costs are set at a daily budget with the ability to change them at any time.
Set your budget based on your goals and the amount you’re comfortable spending every day. To find out how much you should set it for, consider your average cost-per-click (CPC) and how many clicks you’d like to receive per day. Multiplying the two together will determine what your budget should be set at.
If you typically have a monthly budget, divide that cost by 30.4 to find the amount your daily budget should be. You can also allocate your budget so that it is shared across multiple campaigns.
Striking gold with YouTube advertising
Now that you see how inexpensive it is to run YouTube ads, it’s time to start filming! Be sure your content is of high quality to ensure your ads attract many viewers — which ultimately lowers your cost.