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Advertising on YouTube 101: A Beginners Guide to YouTube Ads

Advertising on YouTube Main Image
YouTube Ads
Table of Contents

In this article, we will cover everything you need to know about advertising on YouTube. You will learn how YouTube Ads work, what are the YouTube ad types(and when to use each), how to create an effective YouTube Ad, and whether or not YouTube Ads are right for your business. 

Why Advertise on YouTube?

YouTube is the best place to advertise online right now for the following reasons:

  1.  Wide User Base and Inventory: YouTube is the second largest search engine (1st being Google) and has a massive amount of inventory that is growing every minute by 30,000+ hours.
  2.  High Intent Audience: Most people that are searching on YouTube have a specific reason for being there - it is an intention-based search vs. mindless scrolling on a newsfeed. People visiting YouTube are on education mode, and overall we’ve noticed that YouTube Ads produce higher quality leads compared to Facebook ads. 
  1. Targeting Options: YouTube targeting can be very powerful and precise. The fact that YouTube is owned by Google means that YouTube advertisers can target people based on their Google searches.  Advertisers on YouTube can also place their ads on select YouTube videos and channels, as well as target viewers who have visited specific websites. You also can show your ad to your website visitors, email lists, and people who have previously viewed or interacted with your ad, which makes YouTube ads a powerful remarketing strategy for advertisers. 
  2. Lower Competition: Video is a higher barrier to entry which keeps the competition in check and Cost per Purchase lower (we often see higher CPL on YouTube, but higher quality leads).
  3. More Lenient Ad Compliance Policies:  The Google Ad platform (and more specifically YouTube) is more friendly to business owners with ad approval and ad account health - unlike the "Big Blue Machine".
  4. Video Converts Better Than Images and Text: Video marketing is more powerful than image and text. Think of it like this: Can you remember the last image ad you saw? How about a video ad? YouTube is the perfect platform for you to show the benefits of your product in front of your prospective customers. According to Wyzowl, 88% of video marketers are set to incorporate YouTube into their video marketing strategy for 2022. 
  1. Scalability: YouTube ads have great scaling potential. If you have a great product or service and great video ads, you will be able to leverage the 2nd largest search engine online after Google, while still leveraging the different targeting settings that enable advertisers to test winning creative and get results across different audiences that are in the millions. So there are lots of opportunities to tap into your avatar and scale your offer, once it's dialed in. Compared to other paid ad platforms such as Facebook, YouTube has a much larger inventory, which means much more room for consistent higher spending. YouTube as a platform is very stable when it comes to scaling: we’ve managed up to $25000/day in spend on YouTube for multiple brands, without extreme volatility in CPAs.

How do YouTube Ads Work?

Because YouTube is owned by Google, there are several similarities between how Google Ads and YouTube Ads work. 

YouTube Ads work on a bidding auction basis (similar to Google Ads). Advertisers enter a bid to place their ads on YouTube. 

You determine the audiences(and placements) that your ads are shown to through your ad targeting options (discussed further below). 

Depending on the type of ad format you choose, you are charged by Google only when one of 3 things occur:

  1. Impressions (How often your ad is shown)
  2. Views (A view is counted when the viewer watches 30 seconds or until the end of the video, whichever comes first.)
  3. Click: (When a viewer clicks on elements of your video ad such as calls-to-action (CTA), cards, banners, thumbnails, or logos)

A question many people ask when considering running YouTube Ads is, “how much do YouTube Ads cost?”. Check out our YouTube Ads pricing guide where we provide a detailed breakdown of YouTube Ad costs, plus our budget tips  for YouTube ads beginners. 

YouTube Ad Types (and when to use each)

There are several types of YouTube Ads to choose from. Which YouTube ad type you should go with depends entirely on what your objectives are with YouTube ads.

Whether you want to drive conversions, build brand awareness and consideration, or retarget your existing customer base, there is a suitable ad format for you. 

Skippable in-stream ads: Skippable in-stream ads play either before, mid, or after a video on YouTube. Skippable means that you can choose to skip the ad after 5 seconds. You are only charged when 1) the viewer watches the entire duration of the ad (or at least 30 sec, whichever comes first) or 2) the viewer clicks an element of the ad (such as the CTA button). 

skippable in stream ad example on YouTube
YouTube ad example: Skippable in-stream ad from Fiverr. Skippable ads are characterized by its "skip ad" button which appears after the first 5 seconds of the ad. You can also add a companion banner to the right side of the ad (on desktop devices) as an additional call-to-action.

Linx Recommends: 

  • Skippable in-stream ad is the most popular ad type on YouTube. In fact, we use this video ad type 95% of the time for our clients because it is designed for driving conversions (get leads and sales)
  • Use skippable in-stream ads when you want to drive conversions.
  • This ad type is also an efficient way for achieving top-of the funnel (brand awareness and reach), and middle-of-the-funnel (product and brand consideration) marketing goals.
  • We also recommend using this type of video ad as a part of your ad retargeting strategy. (You have the ability to show your YouTube ad to an audience of your website visitors, email list, and people who have previously engaged with your ad or YouTube channel.)

Non-skippable in-stream ads: These are ads that play before, mid, or after a video on YouTube. These are ads that last up to 15 seconds. Unlike skippable in-stream ads, viewers do not get the option to skip the ad. 

non-skippable ad example
Example of a non-skippable in-stream ad.

Linx Recommends: 

  • Non-skippable in-stream ads are best suited for brand awareness and reach goals. 
  • Typically big companies such as Nike with a higher advertising budget will use this ad format to get in front of as many people as possible. 

Bumper ads: These ads play before a video on YouTube, and last up to 6 seconds long. Viewers do not get the option to skip the ad (similar to non-skippable in-stream ads). 

example of a bumper ad on YouTube
Example of a bumper ad on YouTube

Linx Recommends:

  • Bumper ads are great for brand awareness and reach goals
  • Due to its duration of 6 seconds, you only have a short amount of time to convey your story to the viewers.

In-Feed Video Ads (formerly known as Video Discovery Ads): In-feed ads appear in the YouTube Home feed, Watch feed, and Search feed. There are 3 components to an in-feed ad: a thumbnail, copy (headline and description), and the video ad. People have to click on thumbnail (or copy) in order to proceed through and watch your video ad. You pay only when a viewer chooses to watch your video by clicking on the thumbnail.

in feed video ad/Youtube video discovery ad example
Example of an in-feed video ad from Amazon FBA expert Tom Wang. Great copywriting and an eye-catching thumbnail is key for enticing people to clickthrough and continue to the next step of watching your video ad.

Linx Recommends:  

  • In-feed video ads (video discovery ads) are ideal if you're looking to grow subscribers for your YouTube Channel. 

Masthead: These video ads are featured on the YouTube homepage, and auto play with no sound. To get started with this ad format, you need to contact a Google sales rep.

Youtube Masthead Ad
Example of a masthead ad

Linx Recommends:

  • Big brands (Samsung for instance) use the masthead to take over YouTube homepage inventory to introduce new product lines and promotions, with the main objective of branding awareness.

Overlay ads: overlay ads are non-video ads. These ads are banner-type pop-up ads that overlay a video. They are minimally obstructive, taking up only 20% of the bottom portion of a video, and viewers can close these ads by clicking on the “X” button. 

overlay ad example on youtube
Overlay ad example from Church's Chicken

Linx Recommends: 

  • Overlay ads can be effective for brand awareness and reach, and remarketing objectives.
  • Let’s face it, banner blindness is a real thing. Overlay ads are an effective way of showing up in front of YouTube viewers without being too obstructive, and we have seen both big brands and small, local businesses use this ad type on YouTube.

YouTube Ads Targeting Options

One of the key benefits of advertising on YouTube is the wide range of targeting options to choose from, including:

  • Location
  • Age
  • Gender
  • Household Income
  • Language
  • Keywords searches on YouTube
  • Keyword searches on Google (known as custom intent targeting)
  • Affinity and In-market Audiences (based on user search history on Google)
  • Placement targeting: this is where you can place your ad in front of specific YouTube videos or channels. (pssst…this option is great for stealing your competitor’s audiences)
  • People who visited certain websites, URLs, or used certain apps (known as custom affinity targeting)
  • Retargeting audience made up of your website visitors, email lists, and people that have previously engaged with your ad or YouTube channel. 

YouTube Ads offers advanced targeting options to help you show your ads to the right audience.

Want us to do your video ads marketing? Or do you want to learn it yourself?
Let’s Talk

What Makes a Great Video Ad on YouTube?

Nailing the Creative is the #1 most important thing to making YouTube video ads work.

You see, what we have learned through years of YouTube video ads experience + millions of ad spend for our clients is that having great video ad creatives are essential to profitable scaling with YouTube advertising.

An effective video ad on YouTube makes the difference between a successful ad campaign that gets you more leads and sales at a positive return on ad spend (ROAS) and an unprofitable campaign with costly cost-per-click, low clickthrough rate, and low conversions.

So what makes a great video ad? Here are 4 best practices for YouTube Video Ads Creatives:

#1 Have A Great Script

The most important component of an effective video ad on YouTube is to have a great script. Your copywriting needs to be able to connect with your target audience, address their pain points, and demonstrate how you can solve their problems. 

Based on our experience running and scaling video ads on YouTube for 5+ years with clients across multiple niches, we have found that a high-converting ad typically has the following 4 elements in the script:

  1. Attention-grabbing hook: with YouTube video ads (specifically skippable ads, the most popular ad type on YouTube), viewers get the option to skip your ad after 5 seconds. Therefore you need to make the first 5 seconds of your ad count.
  2. Problem & Solution: This is where you emphasize your ideal customer’s pain points, demonstrate the benefits of your product or service, and show how you can bring your prospects from where they are to where they want to be. 
  3. Social proof and authority: This essential component of the ad builds credibility in your offer and answers the question of, “does this product or service really work?”
  4. Call-to-action: A call-to-action guides the viewer to the desired action that you want them to take, whether that is to purchase your product, sign up to a form, or book a call, etc. 

#2 Video Quality

It is important to shoot a high-quality, professional video. This does not mean you need fancy video equipment or gear. If you are just starting out with YouTube Ads, all you really need is an iPhone and a gimbal (to prevent shakiness while filming). 

#3 Audio Quality

Unlike other ad platforms (such as Facebook and Instagram), viewers on YouTube watch videos with the sound ON. What this means for YouTube ads, is that you need to incorporate audio to guide viewers through the video ad. 

#4 Video Editing

A highly converting and engaging video ad incorporates multiple cuts, transitions, and visual elements throughout the video (zoom in and outs, b-roll, texts, etc). 

See Also: How Long Should A YouTube Ad Be

Will YouTube Ads Work for My Business? 

One question we get asked frequently is,  “Does YouTube ads work for my niche or industry?” 

Whether or not YouTube Ads will work for your business depends on several factors. 

Having great ads is only one part of the equation that makes any ad campaign successful or not. The other component is what happens after a user clicks on your ad (this is where your marketing funnel comes in).  

Proven offer and effective funnel

Having a proven offer and an effective funnel are 2 fundamental components of making YouTube Ads (or any paid ads for that matter) work. 

Ask yourself this: “has my product or offer been proven on other platforms?” If you run ads on Facebook, and have found that 

  1. People are clicking on your ad (meaning that they are interested in your product or offer and
  2. After people have clicked on your ad, they are moving into your funnel (purchasing an item, filling out a form, booking an appointment, or whichever desired action you wanted them to take) 

These 2 indications mean that you have a proven offer and an effective funnel that converts cold audiences into customers. 

Consider what your conversion rate is on both paid and organic channels, and use this metric as a benchmark to aim for with YouTube ads. 

Time and Patience

To succeed with YouTube ads, you need to work on producing your ad, experiment and test different creatives and audiences, and allow time for Google to analyze and interpret your ad performance data, so that you can make data-driven decisions to optimize your ad campaigns. 

From our experience, it can take one or even two months to get clear profitable results with YouTube Ads, provided that you have a proven offer and funnel. This is because, unlike other paid ad platforms, it takes more time, trial and error, and ad spend to find 1) the winning ad creative and 2) target audience combination. 

The good news is that since YouTube Ads are great for scaling, this means that once you are dialed in with the winning ad combination, it is entirely possible to scale your ad campaigns profitably.

Are My Competitors Running YouTube Ads?

We also highly recommend conducting some competitor research to analyze whether your particular niche can perform well with YouTube Ads. Check out our video below where we reveal the YouTube ad spy tools to help you find the top performing ads on YouTube by industry (both free and paid options).


Should You Advertise on YouTube?

People come to YouTube with a specific intention...

Giving you, the business owner, the perfect opportunity to find and get in front of your ideal customer.

YouTube Ads are definitely worth the investment of your time and money to help you diversify your sources of traffic and scale your business.

Businesses both big (think Klaviyo, Indeed, Wix, MasterClass, and Purple Mattress) and small have successfully incorporated YouTube Ads into their marketing strategy. Take a look at our YouTube Ads case studies to see how we helped businesses scale profitably by advertising on YouTube.

Partner with Us

At Linx Digital, we set ourselves apart by delivering data-driven results through our team of experienced professionals who are knowledgeable in the latest YouTube advertising best practices. 

Our end-to-end management of YouTube campaigns, including thorough target audience research, creative ad creation, unique optimization approaches, and comprehensive reporting, sets us apart from the competition. We customise our media purchasing and advertisement creative approach to fit your objectives, guaranteeing that you receive precisely what is required to scale your brand.

Our commitment to transparency and collaboration has helped us build a strong track record of delivering exceptional results for clients across various industries. We take pride in our approach and invite you to browse our portfolio of successful campaigns.

Choose US for your YouTube advertising needs and experience the difference that data-driven strategy and expert execution can make; jump on a free strategy call with us!

Explore Our Course:

Not ready to hire an agency?

Dive into our comprehensive YouTube advertising course! Learn the ins and outs of successful YouTube campaigns, from audience research to creative ad strategies. Our course is designed by industry experts, ensuring you get the knowledge needed to elevate your brand.

Experience the power of data-driven strategies and expert insights without the commitment of partnering with an agency. Start your journey to YouTube advertising mastery; enroll in our course today!

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