Have you been on YouTube today? If you’re anything like the average American, the answer is probably yes.

By Brandon Bauer

According to YouTube’s own statistics, the video platform now has 1.9 billion monthly logged-in users worldwide, making it the second-most visited site on the internet behind Facebook. YouTube viewers tend to be younger — more than 96 percent of Americans age 18-24 use the site — and are highly engaged with the content. All this makes YouTube an attractive advertising channel for brands and digital marketers.

Traditional Search has Become Saturated

The paid search team at Logical Position is seeing continued advertising investment in YouTube over the past year and the data backs this up. A recent study found that YouTube advertising revenue grew 11 percent in 2018 with a healthy 51 percent ad renewal rate. YouTube video ads have existed since 2007, however, so what accounts for the recent surge in ad sales? We believe it comes down to a few social and technological changes:

  • Access to WiFi and high-speed mobile data has improved dramatically in recent years, making YouTube more mobile-friendly. In fact, more than 70 percent of the channel’s watch time come from mobile devices.
  • A growing number of cord-cutters are eschewing traditional media in favor of digital outlets. For example, every day YouTube viewers watch a billion hours of video and generate billions of daily views.
  • Older people are becoming more comfortable with the platform as well, bringing their coveted buying power along with them.

YouTube’s ad revenue growth is also due in part to the saturation of the search landscape. Paid search advertising has increased so dramatically over the years that it’s become harder to stand out against the competition. In addition, user behavior is just different between Google and YouTube.

Think about it. You probably spend only a small fraction of your time engaged in Google searches. By comparison, the average YouTube viewer spends hours every month engaged on the platform. Advertisers, in turn, are following the trends of where people spend their time.

Given what we know about YouTube demographic and usage trends, you might be interested in giving the platform a try. Here’s the good news: Clicks are much less expensive when compared to paid search, which is another reason why the platform’s ad revenue has increased. However, it does come with a few limitations, which may not be suitable for every brand.

What are the Advertising Options on YouTube?

YouTube currently gives advertisers four different ad format options:

  1. TrueView: These ads appear at the beginning of videos and gives viewers the option to skip through after five seconds. This ad format is the most popular choice for channel advertisers because they only pay for a view if the user watches the content for at least 30 seconds. If the ad is shorter than 30 seconds, the advertiser is only charged if the user views all the content. As a result, these ads are relatively inexpensive.
  2. TrueView for Action: This ad format includes an automated bidding system that optimizes campaigns towards conversion volume. A CTA button stays in place during the ad and during the organic video that follows.
  3. Forced 15-Second Ads: These don’t give users the option to skip and because of the poor user experience, have fallen out of favor with many marketers. They’re still popular with some legacy advertisers who want to see guaranteed impressions.
  4. Six Second Bumper Ads: These ads run between videos and operate on a CPM model. They’re often used as part of remarketing campaigns.

While the low click cost and younger, engaged demographic is very enticing, YouTube advertising is limited at this moment in time compared with the proliferation of search advertising.

Paid search advertising is attractive because it’s very click-based and trackable, making the ROI much easier to demonstrate. Due to the nature of YouTube, much of that tracking goes away. Users will watch ads, but they’re much less likely to follow a link off the platform. Knowing that, marketers should set their expectations accordingly in order to take advantage of everything the platform has to offer. Starting with this: YouTube advertising should be used as more of a brand awareness tool versus simply driving clicks to your website.

YouTube Advertising Best Practices

For brands that do want to move forward with YouTube advertising, we recommend focusing your efforts in three important places.

Create a Well-Developed Channel Page

As I mentioned earlier, YouTube users are unlikely to follow ad links off the site. However, they will search for an advertiser’s YouTube channel if they’re interested in the brand. That’s why your channel should be filled with plenty of informative videos and clear information on next steps users can take. If your channel isn’t up-to-snuff, you’ll have a difficult time maintaining that interest.

Create the Right Content and Pay Attention to Production

Many advertisers make the mistake of shoehorning existing video content into YouTube ads, but that approach won’t deliver the best results. With a TrueView ad, you’ll only have five seconds to pique the viewer’s interest, then the content needs to keep them engaged through the remainder of the ad.

Our data shows that 17 seconds is a good video length guideline for maximum engagement. That being said, your video should be as long as it takes to deliver your message — just don’t try and say too much. Keep your message focused and simple and point the viewer in a specific direction knowing they can skip after five seconds. We’ve also seen brand awareness measurements improve when advertisers include their logo and brand name within the ad’s first five seconds, as well as at the end.

It’s also important to remember the role sound plays driving scenes and transitions during a video experience, so don’t skimp on production value. While YouTube has a high percentage of viewers who watch with the sound on, we also recommend advertisers include subtitles in their videos.

Experiment with Targeting

In our experience, YouTube ad targeting based on audience specifications is more effective than relying on keyword targeting. Thanks to Google’s extensive digital reach, they have a good idea what their users want.

The platform also gives advertisers the ability to target individual channels and videos, so be on the lookout for opportunities to align your message with content. Imagine, for example, a mattress company targeting their advertising in front of mattress review videos. This approach takes more time to set up, but it can be a big win if you get it right.

There’s concern in some quarters about YouTube’s ability to protect brands from associating their advertising with potentially offensive content. While Google and YouTube are doing what they can to create better filters and monitors, advertisers can circumvent this potential problem by targeting channels and videos directly.

A Note on Measurement

Every marketer needs to understand the success of their advertising campaigns in order to best make their ad dollars work. Most YouTube campaigns run nationally, so determining brand lift — the preferred metric for these video ads — can be difficult with a limited ad budget.

Google does provide a free brand-lift study that will test your advertising methodology between two groups of people with your goals and a control group — but you’ll have to pay for the advertising dollars to make the study happen.

Short of that, we recommend looking at your results in three layers:

  • How much of your videos are viewers watching and how can you use that information to improve video performance?
  • How is your engagement? Are viewers taking additional actions, like watching more of your channel videos?
  • Finally, are you seeing a brand lift as more channel viewers see your content?

YouTube Can be a Powerful Tool for the Right Brands

I’ll always recommend that brands spend the bulk of their ad money on search, because it will have the highest, most identifiable ROI. However, it’s never a good idea to have all your advertising eggs in one basket.

For brands with large advertising budgets that can invest in quality, authentic content, YouTube offers plenty of attractive features. The audience skews younger, providing an opportunity to build long-term brand loyalty. Users are also very engaged in YouTube’s content, giving your message a better chance of landing than other forms of brand awareness advertising. Perhaps best of all, these marketing tools are remarkably affordable.

This all makes YouTube’s recent revenue growth a little less surprising and hopefully provides a glimpse into the platform’s promising advertising future.

Brandon Bauer is the manager of Enterprise Strategy at Logical Position.

YouTube stock photo by pixinoo/Shutterstock