Are YouTube Ads Really Worth It? We Break It Down

YouTube is one of the most talked-about platforms in the video marketing world.

On the organic side of things, it's not hard to see why. Most businesses are aware that starting a YouTube channel can be beneficial.

But what about paying for ads on YouTube? Is that a good idea?

So, are YouTube ads really worth it? Yes, YouTube ads are really worth it ‒ if you do things the right way. There are several components that go into a successful YouTube ad campaign. If you can get these components right, the sky's the limit as far as revenue generation is concerned.

To learn the benefits of running YouTube ads, and how to make generating a positive ROI from your ads as likely as possible, read on.

The benefits of running YouTube ads

YouTube ads benefits

Enormous reach

YouTube is the second-most popular website on the planet. Only Google gets more overall traffic.

This popularity brings in over 2 billion active users every single month. By running ads on YouTube, you gain access to this entire population of heavily engaged users.

While you won't be targeting anywhere near 2 billion people, the vast potential audience of your ad means that there are plenty of people in your target market using YouTube regularly ‒ no matter what industry you're in.

Microtargeting capabilities

Though this feature is common among digital advertising platforms, it's worth mentioning that YouTube allows you to narrow down who sees your ad with a variety of microtargeting options.

  • You can choose which locations your ad should be shown in.
  • Demographic targeting. Choose your target's age, gender, parental status, household income, and more.
  • Interest targeting. YouTube knows what hobbies and topics its viewers are interested in. Use this to your advantage by choosing the interests that best fit your target market.
  • Life event targeting. If your product or service is more likely to be used by people in the middle of a significant life event (moving, graduating college, getting married, etc.), you can choose to target people actively going through that life event.
  • Tell YouTube to show your ad to consumers who have already viewed another one of your videos.

It's also worth noting that YouTube is owned by Google, so they have access to all of the personal information Google has been collecting on virtually everyone on the planet over the past couple of decades.

And when I say virtually everyone, I mean it ‒ Google has over 90% of global search engine market share. Nearly everyone in the world uses Google, and the quality and breadth of their user information are reflective of that.

Cost-effective advertising

According to Big Commerce, the average cost per view (CPV) of a YouTube ad is $0.026. While this number will vary depending on your industry and the topics you're targeting, this CPV is quite affordable compared to some of the other video advertising options out there.

YouTube also lets you test ads by setting a small budget before investing a sizable chunk of your marketing budget. This option is a refreshing change of pace from older video advertising options like TV commercials, where you had to pay upfront to show your ad to; however, many viewers would likely watch your ad given the show and time slot in question.

Fewer ad blockers

One of the main issues with display advertising is that many consumers have ad blockers. The percentage of your target market using ad blockers will vary depending on their age and level of technological sophistication, but ad blockers are becoming ever more prevalent, nevertheless.

Advertising on YouTube allows you to target many consumers who would otherwise block your ads on their desktops or laptops. This is because many people view YouTube on phones or smart TVs that don't have ad-blocking capabilities.

So, if you're concerned about ad blockers preventing your target market from seeing your ads, YouTube is an excellent way to get around this.

What makes running a YouTube ad worth it?

A YouTube ad is worth running if the cost to create and show the ad is less than the revenue the ad brings in.

So, to figure out if a YouTube ad is worth it for your business, you'll need to know a few things.

  • The total cost of producing the video.
  • The total cost of running the ad on YouTube
  • How to measure the revenue brought in by the video

YouTube ad production cost

YouTube ad production cost

The first thing you need to consider when determining whether a YouTube ad is worth it is the cost and time involved in producing the ad.

To figure out how much time or money you'll need to invest in your ad, you'll need to ask yourself a series of questions.

What kind of ad will you be making?

Before you spend a dime of your video marketing budget, you need to figure out which type of ad you'll be creating

Explainer ad

An explainer ad is exactly what it sounds like: an ad that explains your product or service.

While there are a variety of ways to create an explainer ad, the most common format involves the owner of a business providing some insight into who they are and what their business does.

This is arguably the most budget-friendly way to create a YouTube ad, as it can be done with minimal equipment, doesn't involve hiring actors, and can be shot entirely at your place of business. And although you'll have to come up with a script, doing so should be relatively easy for a business owner who has a deep understanding of what their business stands for and what their strongest selling points are.

Explainer ads can also come in an animated format, although this can be trickier to pull off if you're working with a tight budget. Unless you've got a talented animator sitting around your office, you'll have to outsource the entire video creation process to a third-party studio.

Here are a few examples of successful explainer ads:

video marketing need a boost

Story ad

A story ad is also self-explanatory: it's an ad that tells a story. The story told will typically show how a product or service can be helpful to a consumer, though some story ads are created solely to attract viewer attention and boost brand awareness.

Story ads can be a bit harder to create when compared to explainer ads. For starters, they require competent actors, so you'll probably have to hire some to make the ad bearable. You've also got to come up with an original script, flesh out a storyboard, and locate (and possible rent out) the proper settings to shoot your scenes in.

Despite these additional difficulties, you can create a story ad on the cheap with a touch of ingenuity. Take Majestic Heli Ski, for example. This Alaskan heli-ski company used GoPro footage shot throughout one of their tours to provide viewers with the start-to-finish story of their heli-skiing tour experience looks like.

The result? Majestic Heli Ski now gets 50% of its customers from YouTube and grew sales by over 400% in five years.

If done right, story ads can knock your revenue out of the park. For a bit of inspiration, here are a few more examples of successful story ads:

As you'll notice from these examples, you don't need words to create a successful story ad. Often, music and imagery alone are more than enough to tell a captivating story.

Note: When marketers use the phrase "story ad," they could be talking about ads that run when social media users watch "stories" on platforms like Facebook, Instagram, and Snapchat. Be aware that the term "story ad" has multiple meanings in the marketing world.

explainer ad

Will you be hiring a professional video creation service?

It's entirely possible to create a professional video by yourself. If you're willing to put in the time and energy to learn the basics of shooting video, you can create a high-quality piece of content for a fraction of the cost of a professional service.

However, if you don't have the time or patience to buy the necessary gear and teach yourself, hiring a professional videographer is a great alternative.

Aside from shooting the video, the best part about hiring someone to help you shoot your video ad is that they will have done this before and can walk you through the process. They can offer advice on what ad format would work best for your business, as well as provide tips on how to complete some aspects of the video creation process (scriptwriting, storyboarding, etc.).

A competent videographer will also be able to edit your video ‒ a vitally important step that many beginners often overlook or assume will be easy.

While the video editing skills required to make a professional video are pretty easy to grasp with a bit of practice, learning a new piece of software can be pretty overwhelming. Most professional video editing software options have interfaces filled with buttons and knobs for every possible editing task you can think of. Even though your editing will mainly consist of slicing clips and placing them in the correct order, navigating through this jungle of options can make your head spin.

The cost of a videographer can range from $25 an hour for a film student to $250 an hour for a world-class veteran. Most videographers charge between $75 and $150 an hour for their services, though.

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What equipment do you own?

If you're going it on your own, you'll need a few essential pieces of video shooting gear to produce a high-quality video.

HD video camera

The most essential piece of equipment is the video camera. Almost everyone exclusively views videos in at least 1080p HD quality. If your camera can't provide this level of quality, no one is going to take your ad seriously ‒ even if the script and acting are A-list material.

Fortunately, HD video cameras have become extremely affordable. Most later generation smartphones have at least 1080p capability. And if your phone isn't up to snuff, standalone HD cameras go for as low as $65.

Microphone

Although the average phone or standalone camera is more than capable of capturing high-quality video, they kind of suck when it comes to capturing clear audio.

To supplement this lack of audio, you'll need to procure a decent microphone. You don't need anything particularly expensive; a lavalier microphone taped to the inside of your shirt is both virtually invisible and will pick up vocal audio without unwanted background noise.

Lighting

Getting the proper lighting is one of the trickiest parts of the DIY video creation process. It's tough because every lighting situation is unique; while advice from the internet can provide some general advice, no YouTube video can explain how to illuminate whichever room or environment you're shooting in perfectly.

Fortunately, most lighting issues can be solved relatively inexpensively with a decent pair of soft lights. You can get these on Amazon for as little as $70 and positioning them at the right angles can improve the quality of your video immensely.

Do you need a script written?

Every video ad needs a script. No matter how relaxed and off the cuff you want the tone of the ad to be, you still need to plan out what you or the actors you hire are going to say. Even a story ad without any words needs to plan out the sequence of events that will be shown.

The script is arguably the hardest part of the process to outsource. No one knows a business like the person who runs it. While videographers and editors can make you look sharp and professional while you're speaking, they can't affect the quality of the words that are coming out of your mouth. And those words are an essential part of the process, as they are what will be convincing prospects to take action.

Nevertheless, it is possible to outsource a video script. Many professional copywriters will be happy to write your script for you. You'll just need to be heavily involved in the process to ensure they truly capture what your business has to offer.

Do you need to hire actors?

If you're running a story ad, or if you aren't comfortable representing your business on camera, you'll need to hire actors to be in your video.

While it can be tempting to go with friends, family members, or employees, their lack of professionalism and acting ability may end up making the ad significantly worse. There's an unquantifiable air of quality that a good actor brings to a table that can't be replicated by untrained amateurs. To imbue your video with that level of sophistication, you'll need to hire professionals.

Most professional actors charge between $50 and $500 for their services, depending on their level of expertise and the preparation required for the role.

representing your business on camera

Running the ad

Now that we've covered the costs of production, we can move on to the factors that impact the cost of running the ad.

What industry are you in?

The industry your business operates in will have an impactful role in determining how much your video ad costs. It costs a lot of money to run ads in the finance or business sector, as there is a ton of competition to reach consumers viewing that kind of content.

The purchasing power of your target market also plays a role. It will cost more to run an ad targeting C-level executives than it will to run an ad targeting dog-owning grandmothers. Because the average executive has more money than the ordinary grandma, the businesses targeting them have the luxury of charging more for the product or service they're offering.

How many consumers are you trying to reach?

The more people you want to see your ad, the more you'll have to pay to show it to them.

I don't recommend targeting a large number of consumers until you're sure your ad will generate a positive ROI. To be sure of this, you'll need all of the things that support your ad in place: a landing page, a lead generation offer, a sales funnel that nurtures leads, and a strategy to turn converts into brand advocates are all part of the process.

Will your campaign be local or global?

Targeting different locations can result in different ad costs. Consumers in Malaysia have less purchasing power than consumers in San Francisco. As such, it will cost more to run ads targeting people in San Francisco than it will to target people in less affluent areas.

Final thoughts

YouTube ads are worth it ‒ if you do things the right way.

If you create a high-quality video ad, target the right people with that ad, and have the supporting structures in place to capture and nurture leads, your ad will have a great shot at generating a positive ROI.

But if you're missing any of those components, the ad might fall short of its goal and end up being a waste of time.

However, with how cheap it is to produce and run a YouTube ad, there's no reason not to try it out. Videos are the preferred form of information consumption for many internet users, and advertising on the most popular video site in the world is an excellent way to capitalize on this preference.

Additional Resources

Shawn Manaher - Owner of Ignite Marketing
Shawn Manaher
Shawn Manaher is the founder and CEO of Ignite Marketing. He's one part local business growth specialist, one part campaign strategizing ninja, and two parts leader of an awesome nerd pack. He won't eat pancakes unless you call them flat waffles.

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