So a question I get quite often when someone finds out I have a youtube channel or they see one of my ads on youtube
Is how much do youtube ads actually cost?
So today I want to break down everything step by step so you can get a feel of how much the youtube
Advertiser pays how much youtube makes and then also how much the youtuber someone like me that has a youtube channel?
That shows ads on their videos can make from those ads now the most important thing to understand with this whole process
Is that youtube just like facebook and since google owns youtube same concept there as well
It is basically a bidding system. It's an auction
So if you think about a traditional auction you're gonna have the auctioneer
And then you're gonna have all the bidders and they're gonna be saying hey there's this item
Um, how much are you willing to bid for this specific item?
So the more bidders there are and the higher value the item
The more each bidder is going to be willing to pay and it's the same exact concept with youtube ads
There's gonna be certain videos where advertisers or business owners are gonna be a lot more willing to pay
Money to show their ads on those specific videos or if someone's typing in a specific keyword as opposed to other videos
that might be geared more towards younger kids or
Teenagers someone that's not really gonna have a credit card to pull out and buy something from them
So going back to the auction example of having the bidders that are bidding on the different items
Those bidders are the advertisers the people that are actually running ads on youtube
So with youtube's advertising platform
They make it really easy to be able to go through and choose where you want your ads to actually be shown
so you can pick specific videos you can say you only want your ads to show up on certain channels or
Something that I really like is you can say hey anyone that types in this specific keyword or a variation of that keyword
I want to show my video to those specific people because for example i'm in the real estate space
So if someone types in how to generate leads in real estate, I know that person is actively searching for a solution
so if I show an ad to that specific person
I know that whatever I have to offer they're actively
Looking for it and then on top of that in addition to showing your ads on specific videos channels keywords
You can also upload custom data into the google ads platform
And say these are the people that have already visited my website
These are the people that are already leads in my database or potentially customers
So you can retarget these people no matter what video they're watching
So if it's a video on how to generate real estate leads or a business video or a taylor swift video or cat video
the ad will show up to that specific person now after I explain all this to whoever
Asked me about how much youtube ads actually cost
The next kind of logical question is well
How does youtube know which ads to show and who's at the show before the next person's ad?
And that is basically how much they're willing to bid on that particular placement
However, if you are an advertiser
There's something you actually have to be cautious with or else you could end up spending a lot of money without
Having any real benefit to you. So just to make this example easy
Let's say there's a specific video that one advertiser
They're willing to pay two dollars for every single person that sees that video now, obviously
These numbers are astronomical but i'm just using these numbers to make it simple for this example
So, um advertiser a they're willing to spend two dollars
Advertiser b they're only willing to spend one dollar
so obviously youtube is going to show advertiser a's video before they show advertiser b
However, what advertiser a has is what's called a daily budget
so let's say both advertisers advertiser a as well as advertiser b they're willing to spend a hundred dollars every single day on their
Advertising so what happens is youtube is gonna show advertiser
A's ad at the higher price point but then once that whole budget is spent that whole hundred dollars
They're gonna start showing advertiser b's ad for a much cheaper cost
So if advertiser a has a 100 budget and they're willing to pay two dollars every time their video is shown
Then 100 divided by two it's only shown to 50 people
Whereas advertiser b they also have a 100 daily budget
But they're only willing to spend one dollar and although they're not getting those first impressions
They're able to get two times as many views on that video because they're not bidding as high now
What can we learn by this? You might be thinking?
well
That means i'm just not going to bid anything and i'm going to get all these cheap clicks and views and leads and everything
Well, unfortunately that also doesn't work that great either
So what you want to do is you kind of want to find a middle ground
You never want to be the advertiser that's bidding so high that you go and spend your budget super quick
And then all the other advertisers are getting all these leads and clicks for a lot cheaper
But you also don't want to have your bid so low that youtube actually never ends up showing your ads to anybody now
Obviously this really depends on your market and the videos or the keywords that you're going after and the competition
And obviously the more bidders the more advertisers
the higher the price points gonna be
because it's just simple supply and demand the way I like to think about it is think about
A freeway think about billboards on that freeway. You're going to get traffic
You're going to get cars going down that freeway
But there's only so many billboard spaces to fill
And so once those billboard spaces are filled then obviously if you want to go through and show
Your ad on that billboard instead of the next guy you have to be willing to pay more
Than the other business owners now if you are an advertiser
You've got a business and you're looking to run ads on youtube
One of the great things about the youtube advertising platform is you can get a lot of impressions basically
Someone has seen your ad without actually having to pay for those impressions
If somebody clicks on the skip ad button now you guys have seen this before pretty much any youtube video out there
All of my videos where an ad runs and then you can hit skip ad after five seconds
And if you click that skip ad button because maybe it's not pertinent to you or you just don't care. You're not interested
Then that advertiser actually does not pay for that
Click that advertiser or business owner only ends up paying youtube
if you the viewer watches for at least 10 seconds of that ad and then let's say for this example that
Advertiser that business owner pays one dollar to youtube now
What youtube does which is very generous of them is they take that revenue?
So they take that one dollar that the advertiser or the business owner paid to them
And they will actually split that money split that revenue
With whoever owns the youtube channel now to be honest
I don't know the exact split between youtube and the youtube channel owner
But basically youtube does this to incentivize creators people who have youtube channels?
To create more content because the more content that's created
Then the more people will be flocking to their platform the more people that flock to their platform the more they can have
Advertisers show their ads to people and so it just works out better overall
That they're able to share some of those revenues with the youtube channel creators
Now as far as that goes you guys have probably seen some of my videos on my channel
where I talk about how much I make for my youtube channel different videos and you might think oh
Well, i've watched another youtube channel and they don't make nearly as much or this person makes way more and the truth
Is it really depends on your market? Your audience is actually watching your videos
So a lot of my videos are related to business growing your business generating leads making money
so because of the topics of my videos
There's gonna be a lot of business owners watching my videos
and so
business other business owners are going to want to advertise to those business owners because they know they have money and they're willing to
Spend money to go through and grow their business and invest into their business. And so
I'm able to make a lot more than a lot of other channels because let's say you've got a channel
with cat videos or kids doing stupid pranks or anything like that then business owners or
Advertisers they can show ads on those videos
But they don't really know who their demographic is because someone doing some stupid prank videos
That could be for young kids could be for teenagers. It could be for adults. It could be for everyone
So there's not a lot of direction on who those advertisers are actually showing their ads to anyway
I hope this video helped with breaking down how much youtube ads actually cost how the
Advertisers work how the youtube channel makes money how youtube makes money and this whole bidding auction system
If you have any questions on how this whole thing works drop a comment down below because I myself I have my youtube channel
Which I make money from i've also an advertiser. So i've spent money on the ads platform. So I understand how that works
So I kind of have two of the ends
I'm, obviously, I don't own youtube which that would be the third pillar of this whole concept
So anyway, if you guys do have any questions drop them down below also if you found this video helpful, go ahead
Give it a thumbs up. I would greatly appreciate it. And with that said I will see you in the next video