Why Are YouTube Ads So Affordable?

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As business owners and marketing professionals, you constantly look for cost-effective ways to promote your products or services. The most sought-after platform for video marketing is YouTube, which is known for its relatively low ad costs compared to other channels. With over 2 billion logged-in users per month, YouTube has a massive user base that provides a vast pool of potential customers for advertisers to reach at a relatively low price.

But why are YouTube ads so cheap, and is it worth considering as a part of your advertising strategy? In this article, we’ll delve into the factors contributing to the low cost of YouTube ads and how they compare to other advertising options. We’ll also provide some insight into how you can use this platform for remarketing.

Cost per view is often under a nickel

In general, the cost-per-view (CPV) of a YouTube ad is very low compared to other forms of advertising. A recent study shows that the average cost-per-click (CPC) for YouTube ads is $0.97, significantly lower than the average cost-per-thousand-impressions (CPM) of other ad platforms. The average CPC for Google Ads (which includes search and display advertising) is $2.69. Search tends to be much higher than display.

In a pay-per-click (PPC) advertising model, advertisers pay a fee each time one of their ads is clicked. On YouTube, PPC ads are typically charged on a cost-per-view (CPV) basis (you select this in the settings), meaning that the advertiser is charged only when their ad is viewed. Another factor contributing to the lower CPV on YouTube is the fact that the platform has a large and diverse audience, allowing advertisers to reach a wide range of people at a lower cost, making it an inexpensive yet efficient touchpoint.

A view means watching 30 seconds of an ad or clicking on a landing page

A YouTube view is counted when a user watches an ad for at least 30 seconds or clicks on the ad and is directed to the advertiser’s landing page. This is different from an impression, which is counted every time an ad is displayed on a user’s screen, regardless of how long it is viewed. The 30-second view threshold ensures that advertisers only pay for engaged views of their ad rather than for brief glimpses or accidental views.

The distinction between views and impressions is important because it affects how advertisers are charged for their ads. Since YouTube uses a pay-per-click model, advertisers are only charged when users click on their ad and are directed to the advertiser’s landing page. This means that advertisers are not charged for impressions that do not result in a click, ensuring that they get value for their money and that their ads are seen by users interested in their products or services.

~90% of Google Advertisers are B2C

Creating and running a successful video ad campaign can be a complex and time-consuming process, particularly for businesses that are new to video advertising or do not have the necessary resources or expertise. For businesses in the B2C sector, which tend to focus on selling products or services directly to consumers, the cost and complexity of video advertising may be a deterrent. These businesses may have limited budgets and may be unable to justify the investment in video ads, especially if they are not familiar with the process or do not have the in-house expertise to handle it. As a result, they may opt for other types of advertising, such as search or display ads, which can be more cost-effective and easier to set up.

The economic barrier to YouTube is the process of making the video

Creating a video is expensive, which can be a significant barrier for businesses with limited budgets or who lack the in-house expertise to handle video production.

To create a successful video ad, businesses must first conceptualize and script their ad, which can be time-consuming. They must then secure the necessary equipment and crew to film the ad, which can involve renting gear and hiring professionals. Once the ad is filmed, it must be edited and polished to ensure that it is high-quality and tells the desired story effectively. This process can be complex and may require specialized software and expertise.

YouTube has a wealth of videos

There are over 500 hours of new content uploaded to YouTube every minute. The sheer volume of content on the platform means a constant supply of ad inventory for advertisers to choose from. This abundance of ad space can help to keep prices low because there is less competition for ad placements.

Moreover, advertisers on YouTube can choose from a range of ad formats, including in-stream ads (ads that play before, during, or after a video), display ads (ads that appear on the YouTube website or app), and sponsored cards (ads that appear on the screen during a video).

Video is a powerful tool

Video ads on YouTube can be a game-changer for businesses. They’re highly immersive and attention-grabbing, which helps brands tell their story and showcase their products or services in a more engaging and interactive way than other types of ads. Plus, amateur video can be especially effective for remarketing on YouTube because it lets businesses connect with their audience on a more personal level without educating them. When someone visits a business’s website and sees an ad featuring its products or services on YouTube, it creates a more personal and relevant connection. This can be a great way for businesses to build customer relationships.

It is worth considering YouTube as a part of your advertising strategy if you are looking for a cost-effective way to promote your products or services. As video content continues to be a bulletproof marketing tool, YouTube is consistently every advertiser’s go-to platform for efficient ROI, finding the right audience, and successfully converting leads.

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