Advertising on YouTube 101: A Beginners Guide to YouTube Ads

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.

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