Critical Analysis: The #1 Reason Why Video Advertising on YouTube is The Best Thing Ever


Why To Use YouTube Video Advertising

This is an intermediate article intended for marketing professionals who have some familiarity with advertising costs.

Primetime TV is currently sitting at around $25 to reach 1000 homes (CPM). Your $25 gets you 1 thousand forced 30 second commercial views, that people may or may not pay attention to (generally the latter). Commercials are bunched into blocks where people might visit the bathroom or browse their phone…or they might have the TV on for background noise…or they might have a PVR that cuts commercials out. Nonetheless, it’s about $25 CPM.

Now here’s the main reason why you should use video advertising on Youtube:

YouTube pricing greatly depends on the channel and content. Their default pricing structure also only charges a “True View”, which is when someone doesn’t hit the skip button and watches 30 seconds or more of your ad. Isn’t that incredible? This is a much stronger metric than a view or impression but because it’s measuring something else: people who actually care about your message. That being said, you can calculate how many skips you’re getting per $ in, and how many real views you’re getting per dollar.

My most recent campaign results were:

  • Cost to show to people who ended up skipping the ad entirely: $2.70 per 1000
  • Cost per thousand TrueViews: $60 per 1000
  • Ratio of ad watchers to ad skippers: 4.5%

More YouTube Video Advertising Advantages

At first, it looks like we’re paying just over double the CPM rate if we’re only counting how many people saw at least 30 seconds of the ad, but it’s so much better than that. Why? YouTube’s far superior audience targeting options. Similar to Adwords, I have the ability to really hone in on my audience. I’ve targeted specific demographics, theme of video that they’re watching, and could even do a video remarketing campaign to improve brand recall and pull people back in to close the sale. That level of specificity isn’t possible with TV, so I’m already ahead on that front. That targeting also ensures that I target people who will be more likely to watch my ad, and more likely to watch longer!

I find it difficult to quantify the value of the sub-30 second views where people skipped or left the page, but again, the price is incredibly low. $2.70 CPM for 5-30 seconds of ad time is CHEAP. If I were really concerned with longer ad impressions, I could run a pure CPM campaign and force the view of a 15 second spot. People generally find those more annoying though, so I prefer not to do them.


So what does this all mean? To me, it means YouTube is still under valued as an ad platform. Incredible growth in time spent online in the last 4 years has completely changed the landscape, but marketing professionals are still “testing the waters” and putting small buys into online. I’d argue that now is the time to strike: prices are stupidly low because YouTube has a glut of content and views, yet relatively fewer advertisers vying for those ad spots. This is a sunshiney time of rainbows and low low prices because the majority of advertisers haven’t caught on yet. Want to be one of the early adopters and strike while the iron is hot? Contact Top Draw to plan your online media buy.