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The no-frills guide to YouTube ads

If you’re a small business owner looking for growth, YouTube ads are the way to go. Get this guide for all the basics on how and why to use YouTube ads.

Starting YouTube ad campaigns can make your profits, brand awareness, and everything else soar.

It can also tank your budget and time.

If you’re hesitant to invest too much into YouTube ads before feeling it out more, we’ve got you covered today.

In this guide, we’ll dive into the basics of YouTube ads, including why you should use YouTube advertising, the different types of YouTube ads, plus some best practices for creating your YouTube ads.

To help you navigate some of the confusing aspects of YouTube advertising, let’s start clearing the way to your fresh video ads and new campaign.

Why should you use YouTube advertising?

The most obvious reason to use YouTube advertising is YouTube’s gargantuan user base.

How gargantuan are we talking?

With over 2 billion users that watch 250 million hours on their TV screens daily, a majority of people from each major age group use YouTube.

And when you purchase YouTube ads, you can target viewers based on their demographic information and previous searches. This gives you a healthy range of advanced targeting and audience targeting options.

Plus, if you dig a little deeper, you’ll find the reasons why people watch so much YouTube video content to be convincing enough to advertise on the platform.

People use YouTube for everything from education to shopping.

A whopping 80% of shoppers who watched a YouTube video related to a purchase they planned on making said they watched a video at the beginning of their buying process.

Over 50,000 years of product review videos were watched between July 2015 and June 2017. What’s more, an overwhelming 90% of consumers discover new brands and products on YouTube. 

And if you’re wondering if the product research leads to conversions, the answer is an excited yes. After all, YouTube is the second largest search engine on the internet, making it secondary only to a Google search.

Nord VPN, for instance, used YouTube performance ads and saw an impressive 13,000 conversions from an ad campaign. On top of that, their conversions cost five to seven times less than their target cost per acquisition (CPA) for the YouTube search and display ads.

What’s not to love about lower-cost conversions, especially at a major discount like that? 

Likewise, Fashion Days used TrueView for Shopping video ads and enjoyed a 72% YouTube ad conversion rate increase, decreased bounce rate, and increased engagement, among a slew of other benefits. 

You get the gist. 

Basically, from an enormous user base to highly targeted video ads, YouTube advertising is worth working into your marketing strategy. 

If you’re looking for wide-reaching and sophisticated marketing campaigns, that won’t break the bank, a video campaign on YouTube may be just the ticket.

Now that you’re (hopefully) convinced you should partake in YouTube ads, let’s hop into the different YouTube ad formats. 

What types of YouTube ads are there?

There are six types of YouTube ads: display ads, overlay ads, skippable and non-skippable ads, bumper ads, and sponsored cards. 

Let’s briefly dive into each to give you a better idea of the six types of YouTube ads.

#.1 Display ads

Display ads appear to the right-hand side of the main video above the suggested videos list. They only show up when viewers are watching a video on a desktop. 

This display ad for Curology, as an example, appeared after I clicked on a video about pore strips

#2. Overlay ads

The second type of ad -- -overlay ads -- shows up in the bottom 20% of your video. Check out this overlay ad from Honey that was shown at the bottom of an Epicurious cooking video

Just like display ads, overlay ads only appear when a video is played on a desktop. 

#3. Skippable ads

The third type of YouTube ad is arguably the most common on YouTube, and I’m sure you’ve seen your share of them: skippable ads. 

As the name suggests, skippable YouTube ads are ads that you can (naturally) skip, after watching them for at least five seconds. They’re placed at the beginning, end, or middle of a video.

For instance, this ad for Peloton appears at the beginning of a video. After five seconds, you get the option to skip the video ad, an option shown in the bottom corner of the right-hand side of your video content window. 

Skippable YouTube ads are more versatile than other ad formats because they can show up in videos that are played on desktop, mobile, TVs, or gaming consoles. 

#4. Non-skippable ads

The opposite of skippable ads, non-skippable ads play only on desktop and mobile devices and, of course, can’t be skipped. 

Even with those differences, non-skippable ads are just like skippable ones as far as your placement options. This type of YouTube ad can also be placed either in the beginning, end, or middle of a video.

#5. Bumper ads

Bumper ads are a type of non-skippable ad, where up to six seconds play immediately before a viewer’s main video plays, like this six-second ad from Swarovski

Although you probably won’t see as many bumper ads as other types of YouTube ads, they’re still pretty effective. 

So much so that a study of 122 bumper ad campaigns from 2016 found that 70% of brands saw a significant increase in their brand awareness. The companies saw an average increase of 9% in brand awareness. 

Pretty impressive, right? 

Now for our final YouTube ad type.

#6. Sponsored cards

The sixth YouTube ad type falls under sponsored cards, which show up as either a small “i” icon in the upper right-hand side of your video or as content blocks on the video. 

Check out how Apple features a card in their video ad that promotes an upcoming Apple event after clicking on the “i” icon of their Youtube card. 

While there are only six types of YouTube ads, there are several ways you can tailor them to fit your marketing needs -- and that includes your budget.

Let me explain.

What are TrueView ads?

TrueView ads let you set up your YouTube ad campaigns so you only pay for ads that viewers opt to watch. 

There are two types of TrueView ads: in-stream ads and discovery ads. 

Viewers have to watch TrueView in-stream ads for five seconds. After five seconds, they have the option of continuing to watch or skip your ad. 

If your viewers engage with your YouTube ad or watch 30 seconds of it (or the duration of the ad if it’s under 30 seconds), then you pay for that view. 

If your viewers skip your video ad after that five-second period, then you don’t need to pay.

Pretty sweet, no? 

Just like this ad by Oui by Yoplait, which is likely a TrueView in-stream ad since it lets you skip it after five seconds. 

The second type of TrueView ad is a video discovery ad, which is similar to Google’s display network, and doesn’t show up in videos. 

Instead, it appears on YouTube search results pages and YouTube watch pages as a related video, which is based on your search history and video content previously watched. 

Take, for instance, this Shiseido ad that displayed at the top of the YouTube search results page when querying “vegan skincare”.

When a viewer clicks on a video discovery ad, the YouTube video ad won’t actually play, but instead, it takes them to the full video ad page. 

To sum up the ad formats for your YouTube advertising campaign:

There are six main types of YouTube ads that marketers can choose from. On top of that, you can also use TrueView video ads in your ad campaign, which let you only pay for the video ads people watch for 30 seconds or engage with.

(By the way, if you’re brand new to YouTube ads, this super comprehensive guide on how to set up a YouTube ads campaign from Social Media Examiner should help you get started with your first ad campaign.) 

But OK. With all these video ad formats to choose from for your YouTube advertising, you’re probably wondering how much you’ll need to budget for your ad spend on your new campaign. 

The answer is a little knotty, so let’s dive into the nitty-gritty. 

How much do YouTube ads cost?

YouTube advertising costs run the gamut since they’re based on your niche, budget, and how many people you’re aiming to target in your new campaign. 

Google recommends starting with at least $10 a day for local YouTube ad campaigns. 

But, because YouTube ad campaigns vary so much in price, and what really matters is your ad campaign goal, let’s take a look at some ad campaign examples, starting with a video ad campaign with ad spend that’s even below Google’s recommendation. 

Creator David Warfel spent $7.01 on his first YouTube ad campaign, which lasted for two days, and earned back only $2 of his original investment. 

There’s more to it than what he earned on his ad spend, though. David noticed his YouTube ad campaign significantly increased his video content’s watch time.

This is a pretty big deal because a greater watch time encourages the platform to recommend your Youtube channel and video content to other viewers, based on their YouTube search history and watch history. 

So, if your ad campaign goal is to get more people to your channel page, running a low-budget YouTube ad campaign may be a cost-effective way to get there.

Not only that, but David’s YouTube ad campaign led to his video being embedded on other sites, too. And despite having a small following, only a few videos, and merely four weeks of regular uploading, his ad campaign also brought in 10 to 15 extra subscribers. 

Not too shabby for a small video ad campaign.

Now, let’s look at a higher ad spend to see what metrics come out of that. 

With nearly $14,000 in ad spend, Candy Japan went in a little higher in its YouTube ad campaign. 

Beyond Candy Japan’s ad campaign spend, they also paid about $3,000 for their video ad’s animation and around $100 for a voiceover artist to narrate their video content. 

And what was the result of their YouTube advertising?

Although viewers placed orders with Candy Japan, they didn’t earn back their video ad campaign investment even after accounting for customer lifetime value (CLV). For Candy Japan, it wasn’t enough earnings to justify continuing the YouTube ad campaign.

The moral here is clear: Even a high ad spend doesn’t guarantee you’ll meet your ad campaign goal. 

Like in the case with Candy Japan, $13,867 in YouTube advertising didn’t achieve their sales revenue goal. If their ad campaign goal was to boost their brand awareness, that’d be a different story.

Basically, there’s no set amount you’ll need to get started with YouTube ads. The main takeaway is to clearly define your ad campaign goal before dispersing your ad spend.

That being said, several hundred dollars is likely the minimum for a week-long ad campaign. 

Now, with YouTube ad formats and costs out of the way, let’s explore ways to make your video marketing more effective. 

3 best practices for YouTube advertising

Around 62% of YouTube mobile advertising receives viewers’ attention. 

Besides that, paid YouTube advertising is 84% more likely to capture attention compared to TV advertising.

But just because people are more likely to watch YouTube ads doesn’t mean you can cut corners. You should still aim to be compelling, succinct, and speak to your viewers’ emotions in your video content.

To the end, we have a few best practice YouTube ad pointers for you. 

#1. Open with compelling video content

One way to be compelling is to make the first few seconds of your video ad attention-grabbing. 

Straight out of the gate, this Sleep Number commercial piques viewers’ curiosity within the first few seconds. The video ad opens with an alarming stat, “two out of three couples sleep best at different temperatures,” which is complemented with matching video content footage.

This video ad from Lunya, on the other hand, opens with a bold claim in their video content: “Bedtime has a new dress code.”

Plant-based meal delivery company, Purple Carrot, follows a different path in their YouTube ad. Their video ad begins with a visually-stunning montage of foods prepared with their meal kits and recipes. 

But a great opening can only retain your video ad viewers for a few seconds. To keep them from ditching your YouTube ad, you’ll need to engage them with the rest of your video content. 

#2. Create emotionally engaging video ads

To engage your viewers, create video content that taps into their emotions. 

For TrueView ads, Google also recommends creating video content that builds a relationship with your video ad viewers. In other words, hook them with an emotionally driven story.

Let’s look at some video ad examples. 

CuriosityStream’s YouTube ad for their First Man documentary opens with an attention-getting scene of a human cracking open the “tree” separating the viewer from the man. To keep their audience’s attention, the video ad then delves into the story of human evolution. 

The rest of the short video ad focuses on telling an intriguing and suspenseful story about, naturally, the “first man”.

Even if your ad campaign goal isn’t to drive people to watch an indie flick, you can still conjure up video content that speaks to your audience’s emotions.

How? Simply solve one of your audience’s pain points.

Take, for example, this ad for Jack Black beard grooming products, which departs from their typical ad format of singing their products’ praises. Instead, this video ad teaches viewers how to groom their beards using Jack Black products.

For anyone who’s struggling with their facial grooming routine, Jack Black’s video content might conjure up a sense of relief or motivation to step up their daily beard care. 

Even if you don’t have a physical product to sell, you can use your video ad to educate your viewers and promote your profitable digital products

The Officeless Agency does a great job of teaching viewers how to create a fully remote ad agency in its video content that eventually leads to promoting its masterclass.

So, if you’re looking to sell online courses, for example, you can tailor your video content to solve your audience’s emotional struggles.

Of course, capturing your audience’s attention needs to be done with video ad content that gets people to act quickly, which brings us to our final video ad tip today.

#3. Keep your YouTube ads concise and actionable  

We recommend a third video ad best practice for your YouTube advertising -- keep your video content to the point and include a clear, actionable next step. 

If you’re not planning on using skippable video ads, and want to use bumper ads that last only six seconds, for instance, Google recommends focusing your video content on one purpose. 

Google also recommends making the most of your six seconds and creating a series of bumper ads that complement each other. 

Keeping your YouTube ad concise is especially useful if you opt for overlay ads. 

Since overlay ads aren’t actual videos, but rather ads that pop up over other YouTube video content, make sure to have a curiosity-inducing claim that nudges viewers to a powerful call-to-action (CTA) right away. 

For instance, Honey claims, “If there’s a better price, we’ll find it,” and then encourages viewers to take action with their “Unlock Coupons” CTA.

Who wouldn’t want to click to see if Honey lives up to their overlay ad claim?

LinkedIn takes a similar approach with their overlay ad. 

In their video overlay ad, LinkedIn features the benefits of using its service (reaching over 600 million members), and then plays into its audience’s sense of curiosity with their “See how” CTA.

Your overlay ads don’t always have to advertise a direct sales transaction, either. You can also use this type of YouTube ad to give away free digital downloads, promote a free trial, or offer another lead magnet

Regardless of how your CTA directs people, be sure it goes to a landing page, so you can grab an email in exchange. This is vital for building an email list, and also for keeping in touch with your potential customers to nurture a sale later on. 

Take Salsify as another example. Their overlay ad promotes their Product Content Readiness Checklist, and takes viewers to a landing page with a form to complete before receiving the download. 

Sidenote: If you’re missing tools for building a landing page, sales page, lead magnet, email list, or even digital product or homepage, take advantage of this 14-day no obligation trial on Podia.

Another solid way to make your YouTube ads actionable is to use a video card, which appears as a small “i” icon in the top right of the video content. 

Apple, as an example, uses a card on their iPhone 11 ad to take viewers to an iPhone 11 landing page. 

You can use YouTube ad cards to promote a special event, more videos on your YouTube channel, or to send people to a sales page that converts. Where you direct people with your YouTube ad CTA is limitless.

The gist of it is:

Open your video ads with a hook that grabs your audience’s attention. Keep their attention with emotionally engaging video content, concise video ads, and a clear and enticing CTA that goes to a landing page instead of your homepage, so you can capture emails.

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Get started with YouTube ads today

With over two billion users -- that mostly use YouTube as an educational or product research tool -- incorporating YouTube ads into your marketing strategy may be one of the best things you do.

Let’s recap the six types of YouTube ads:

  • #1. Display ads appear to the right of the main video and above the suggested video content list.

  • #2. Overlay ads appear in the bottom fifth of a relevant YouTube video.

  • #3. Skippable ads let viewers skip after watching five seconds of your video ad.

  • #4. Non-skippable ads are video ads that people have to watch before the main video content.

  • #5. Six-second bumper ads show up at the beginning of a YouTube video.

  • #6. Sponsored cards allow viewers to click and visit landing pages and other video content from your brand. 

  • TrueView ads, whether in-stream ads or discovery ads, let you pay only for the video ads that people watch or engage with.

To create effective YouTube video ads, follow these three best practices:

  • #1. Open your YouTube video ads with a compelling first few seconds that captures their attention.

  • #2. Use emotionally engaging video content in your YouTube ads to keep your audience’s attention.

  • #3. Create concise and actionable YouTube ads with a clear CTA that leads your audience to an opt-in landing page.

Once you get past the YouTube advertising learning curve, all you have to do is let your excellent brand and video content do most of the work. Here’s to ramping up your YouTube marketing, starting with a new campaign and YouTube ads.

About the author

Cyn Meyer is a content marketer for Podia, an all-in-one platform where online courses, digital downloads, and membership websites – alongside their creators – thrive. Cyn also enjoys playing music, helping retirees live active, healthy, engaged lifestyles, and hopping into the ocean.