A Starter Guide to Advertising on YouTube

Mock-ups of several YouTube ads hovering over a smartphone in a carousel format that give you a sense of how video marketing works. The first ad features a pair of headphones, the second ad features a video game controller, and the final ad in the series displays a blue t-shirt.
Mock-ups of several YouTube ads hovering over a smartphone in a carousel format that give you a sense of how video marketing works. The first ad features a pair of headphones, the second ad features a video game controller, and the final ad in the series displays a blue t-shirt.

Now is a great time to consider incorporating YouTube advertising into your marketing strategy. The insanely popular video platform (which is the world’s 2nd most visited site other than Google) launched ad options in 2007, and in 2020 the number of advertisers using YouTube’s TrueView for Action increased 260% (Hootsuite).

Video content is more engaging for audiences and because you need to use videos from your YouTube channel, there’s the added bonus of having some nice video content easily accessible that you can use for marketing efforts elsewhere. Visit our blog for more ideas on setting up a YouTube marketing strategy.

Table of Contents

If you're looking to add video marketing to your social content strategy, download our guide on video marketing best practices.

Is Advertising on YouTube Effective?

The short answer is yes. There are many clear benefits to running an advertising campaign through YouTube including the demographics (YouTube reaches more 18-24-year-olds than any other TV network), and the cost-effective CPV (cost per view).

As we know, video content is by and large more engaging and memorable than static content when it comes to social media, marketing, and advertising. According to Social Media Week, “Viewers claim they retain 95% of a message when obtained via video.” So, when you choose to use YouTube video ads, you’re choosing to invest in a medium that’s already more welcoming for consumers and where you have more opportunity to play creatively.

We’ll go over some best practices and our favorite examples below, to make sure you get the most out of your advertising efforts. But if these stats aren’t enough to convince you, here are a few more:

  • “YouTube is one of the best options for creating a cost-effective advertising campaign: Average CPV: $0.026. Average view rate: 31.9% Average view CTR: 0.514%” (BigCommerce, 2017
  • 70% of viewers bought from a brand after seeing it on YouTube (Google).
  • People watch over 1 billion hours of YouTube video content each day (Sprout Social)

What Kind of Ads Are on YouTube?

Glad you asked! There are five main ways you can use YouTube for advertising:

  • Skippable in-stream ads
  • Non-skippable in-stream ads (including ‘bumper’ ads)
  • Discovery ads
  • Viewable ads
  • Overlay ads

Depending on your needs and goals, all five can complement your paid social marketing

1. Skippable in-stream ads

Skippable ads meme showing cartoon character annoyed at 5 seconds for unskippable ads and excitement for a "30 second ad that can be skipped after 5 seconds""

Ahh, the skip button. We all like it and we all use it. YouTube added the skip option in 2009 after some videos saw significantly fewer views due to people closing windows and hitting back buttons out of frustration at having to watch a 30, 40, 60 second, or even 6 minute which is the max, ad before their content.

Skippable video ads on YouTube ads can be shown prior to your video beginning (known as a pre-roll ad), in the middle of a video (for videos that are over 10 minutes long), or at the end of a video. They must be at least 12 seconds in length though many are longer. 

The viewer need only sit through 5 seconds before the skip option appears. So it is a gamble for companies to consider whether or not this option makes sense financially. Though before you jump firmly into the “not for us” camp, remember that even if a user skips the ad, your brand will show up as a banner, with a prominent CTA, on the right side above suggested videos.  

In the example below, the pre-roll ad for "Possibility" has played for 5 of 16 seconds, so the Skip Button is available. After skipping, the banner ad at the top right will remain.

Example of skippable YouTube ad with banner ad displayed on the left side

Tip: Targeting by intent is good practice to prevent people from skipping your ads. According to Think With Google “People watching YouTube ads targeted by intent also skip ads less and watch ads for longer than people watching ads targeted by demographics.”

How are advertisers charged for skippable YouTube ads?

Advertisers have a few choices when setting up a skippable ad: CPV, CPM, and CPA. 

  • CPV: You can be charged either a) when the user watches up to or beyond 30 seconds of the ad (or the full ad in cases where the ad itself is 30 seconds long) or b) if the user takes an action such as clicking your CTA.
  • CPM or CPA: These are impression-based models so you will be charged base on impressions rather than clicks or view length.

2. Non-skippable in-stream ads

And now on the other side of the coin are non-skippable ads. These can show in all the same places as the skippable ads and are often shorter.

This is a popular option if your goal is brand awareness. If leads and sales are your top priority, it is probably better to go with a Discovery Ad which we’ll go over next. 

Non-skippable YouTube ads can run for a max of 15 seconds. Because of this, it’s crucial to have a deft group of writers and creatives who can create enticing ad content that gets your message across in that amount of time.

Note: You may hear the term “Bumper ad” a lot when researching YouTube ad styles. These are a popular type of non-skip ads that are served pre, mid, or post video and are a max of 6 seconds. 

Non-skip ads are usually accompanied by a small countdown or message, where the skip button is normally. Phrases include: “Your video will begin in”, “Video will play after the ad”, and “Ad will end in”.

Example of a non skippable YouTube ad

How is the advertiser charged for non-skippable YouTube ads?

These ads are CPM, meaning you will pay based on impressions.

3. Discovery ads

Also called “TrueView” discovery ads, because the user must actively select it and watch it before the advertiser is charged. These ads show up as a part of the recommended video results on the homepage, or sidebar, and link either to a YouTube channel or individual video.  

How is the advertiser charged for discovery ads?

The reason these ads are referred to as “TrueView” by YouTube is that you will only be charged if a user truly watches the ad - meaning they have to click on it to see it, it doesn’t play automatically like an in-stream ad.

5. Non-video ads

These are banner ads that show either on the YouTube homepage, above organic search results, or on the sidebar of suggested videos. 

They are not video ads, nor do they have to link to a YouTube video. Discovery ads can have a thumbnail, but it's not required, and often have multiple CTAs like in the example below.

For example, this search for “how to make a podcast” returned 3 ads before the organic results. Each ad includes many different action items, which is useful for a search like this when it’s clear the searcher is a beginner but unclear what they want to figure out first.

Example of Non video YouTube ads showing multiple ads showing before the organic video results

Purchased focused searches are usually accompanied by a row of various products, just like a Google search:

Product image ad results for a purchase focused keyword on YouTube

4. Overlay Ads

These are another type of non-video ad, also called in-display ads. Overlay ads are small and rectangular, usually with a photo and text. They get embedded into a video and show while the video is playing. Users can always close these using the “x” in the top right corner. Overlay ads are desktop-only and will not show on mobile devices. 

Photo showing example of an overlay ad on a YouTube video

Setting up a YouTube Ad Campaign

To set up a YouTube Ad campaign, you need to have a YouTube channel set up and then go through Google Ads. You'll add the URL for the YouTube video you'd like to use as your ad into Google Ads. Here’s how:

1 . Link your YouTube channel with Google Ads

2. Upload the video that will serve as your ad to your YouTube Channel. Make sure it’s listed as "Public". 

Tip: for multi-video ad campaigns, it is a good idea to make a playlist. Such as Nature Valley’s “Preserve the Parks” ad campaign:

Celebrating 10,000 miles of national park trail access restored with Daveed Diggs

3. Choose “Video” from the Google Ads new campaign window

Choose Video option within GoogleAds, starting point for creating an ad on YouTube

4. Select your campaign goals. For video ad campaigns you can choose any of the following: 

Various options for a YouTube video ad campaign within GoogleAds

5. Choose the type of ad you’d like to use. (This is where you’d select skippable in-stream, non-skippable, bumper, etc.).

6. Determine your budget and your target audience

Screen in GoogleAds for deciding the budget and audience for your YouTube ad campaign

7. Paste in the YouTube URL of the video that will serve as your ad.

That’s it! Now it’s time to watch the magic happen. Read on for tips on making magic that works.

Ready to get started using video in your marketing strategy? Download our guide on video marketing best practices.

YouTube Advertising Best Practices

Wondering how to make a good YouTube ad? These 3 tips are the golden rules to follow to ensure you make the most of this video advertising channel. 

1. Get your hook in early

YouTube ads are like a game of Russian roulette. The best practice is to get your marketing message in as early as possible to either entice viewers to continue watching without skipping or remain memorable on a non-skip ad before the video turns to the content the viewer was actually looking for. 

2. Make the benefit and CTA clear 

There’s a lot of distraction on YouTube, so while you’re making sure you get your hook in early, you also want to ensure it’s clear and easy for the viewer to take action and/or understand the benefit you’re offering.

3. Have fun!

Want to know a secret? Ads don’t actually have to inspire the visceral “skip” response. Just look at brands like Purple. Their ad content is so entertaining you actually get excited when they show up. And aside from being fun, they’re memorable. Check out some top examples below.

3 Top Examples of YouTube Bumper Ads

Remember those bumper ads we talked about? 6 seconds and no-skip button? You may have been thinking “6 seconds for brand awareness? No thanks.” Well, you might change your tune after viewing these creative ads from some of the top brands in the world: 

1. Mercedes Benz

This is a daring ad for a video platform in that there is about a millisecond of actual movement other than flashing words on a dark grey background. At only 3 seconds long, Mercedes packs an unbelievable punch, demonstrating the speed, agility, and awesome power of their vehicles.

Reminder 1 - Mercedes-Benz Singapore: The new Mercedes-AMG GT S - YouTube

2. Airbnb

Like VRBO in the following section, Airbnb has made a concerted effort to tap into the yearning for simpler times before devices and the internet. Unlike VRBO, Airbnb tries to pack all the joy and fun of family vacations into 6 seconds! And they’re pretty successful!  

Leave With A Cannonballer |  Live There With Your Family | Airbnb

3. Hefty

This office party rager inspires memories of college parties, pre-games, and first-apartment soirees (before you could afford real glassware). Through it all the trusty red cup is there, ready to unleash your inner party animal.  

If you want even more inspiration, here’s a playlist of 20 ads 6 seconds or under.

3 YouTube Ad Examples That Make You NOT Want to Skip

YouTube skip ad meme

Skippable ads pose a similar conundrum to non-skip in that the hook needs to be quick, but not too quick as these brands have figured out. 

1. Geico

Advertising superstar, Geico proved their mettle yet again with one of their funniest ad series to date. (And if you’re a Geico ad enthusiast, we know - them’s fightin’ words! But hear us out).

The “Unskippable” series is so delightfully absurd and humorous, with just a dash of uncomfortability, that you can’t help but watch to the end. The campaign won Ad Age’s campaign of the year award in 2016. 

The premise is simple: “you can’t skip this ad because it’s already over” says the voice-over as the characters of the ad freeze in place, while the rest of regular life goes on around them. Every time you think the ad might be over, it keeps going, diving deeper into the off-kilter humor Geico has become so known for. Brilliantly executed and enjoyable to watch. 

Geico - Unskippable Elevator

2. Masterclass

Masterclass has a unique advantage for captivating an audience within the first few seconds given the caliber of their teachers. Viewers see a favorite author, gymnast, actor, writer, chef, etc., show up on the screen and they appear to be talking directly to you. 

This personal feel is largely executed through the ad’s editing style - it’s like you’ve just been dropped in the middle of a conversation. 

Jodie Foster Teaches Filmmaking | Official Trailer | MasterClass

3. VRBO

Family vacations, couples getaways, campfires, and multi-generational trips are such a quintessential thing that many of us may feel like these experiences are slipping away in our tech-driven world. 

VRBO taps into this sense of nostalgia with their “Your Together Awaits” campaign. They also have a more recent pandemic-specific campaign that tugs as equally hard on our heartstrings. 

That Face Only Happens In A Vrbo

What is the YouTube Ads Leaderboard?

If you’re looking for even more inspiration take a gander at the YouTube Leaderboard which compiles the top ads people chose to watch during their YouTube sessions.

This is a great way to stay on top of trends, memes, and ad styles that people gravitate to. The leaderboard shows historical data as well, with videos listed by category, by year. Note: not all the videos are available as some brands may have pulled them or unpublished the videos after the campaign finished.

Ready to join the leaderboard yourself? Now you have all the tools you need to create and execute a YouTube ad campaign! Fill out the form below to request a demo for Meltwater social solutions.

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