YouTube Ads

The components of a typical YouTube video ad are shown in Exhibit 13.20. They include the skip countdown/skip button, link to the advertiser’s website, share icon usually at the top right, and a channel engagement panel.

The channel engagement panel, which appears on the top left corner of the ad, displays information such as channel name, channel icon, and name of the video. This information appears only if the video creative is YouTube-hosted.

The most common type of ads on YouTube are referred to as TrueView. Advertisers pay for TrueView ads only when viewers watch at least 30 seconds of the ad or the entire ad, whichever is shorter, or when they interact by clicking on a call-to-action (e.g. the link to advertiser’s website).

Ad formats include:

• Video ads. These ads appear on YouTube videos either at the start (pre-roll), in between (mid-roll), or at the end (post-roll). The ads are offered as either skippable or non-skippable. In a skippable video ad, viewers are given the choice to skip the ad after the initial 5 seconds.
• Overlay ads are transparent overlays that appear on the lower portion of the main video.
• Video Discovery ads can run on the search results and watch pages for desktop, as well as the homepages for desktop and YouTube mobile apps. The ad consists of an image thumbnail and up to three lines of text, and when clicked it takes viewers to the YouTube watch or channel page where the ad video plays.
• Standard Display ads can appear over any of the pages of YouTube, except for the Homepage. The banner size is fixed (300×250 pixels).
• Mid-roll ads can appear on videos that are over 15 minutes long. Like TV commercials, they are spaced within the video, and usually viewers cannot skip these ads.
• Bumper ads are non-skippable video up to 6 seconds long, optimized for mobile viewing.
• Native mobile ads are available only on mobile. These display ads appear below the video’s metadata.

YouTube requires that skippable TrueView ads be 12-60 seconds in length, while non-skippable ads, depending on region, are limited to 15 or 20 seconds. (These specifications are subject to change).

Ads can be targeted on YouTube based on the type of audience the advertiser wants to reach, or based on where the advertiser wants the ads to appear.

Audience targeting methods include:

• Demographic profiling.
• Interest profiling: Target people interested in certain topics, even when they may be visiting pages about other topics. Advertisers can select from a wide range of categories, and depending on their objective, they reach out to prospects at different stages of the marketing funnel.
• Affinity audiences: Where the objective is to achieve salience and sustain interest, the ads are targeted at people who already have an interest in relevant topics. For instance, a car manufacturer may target individuals who are interested in automobiles.
• Custom affinity audiences: Here the audience is narrowed down to prospects with more finely tuned areas of interest. For instance, energy efficient cars.
• In-market audiences: targets prospects who are actively searching products and considering buying a product or service. For instance, people searching for energy efficient cars.
• Remarketing (retargeting): targets prospect based on their past interactions with the advertiser’s videos, TrueView ads or YouTube channel.

Content targeting methods let you define where you want your ads to show. These include:

• Placements: Target unique channels, videos, apps, websites, or placements within websites. Advertisers may target an entire website or just specific pages within the site. Placement options include YouTube channels, YouTube videos, and websites and apps on the Google’s Display Network.
• Topics: Target YouTube videos, channels or websites related to the topics you select. Ad shows on YouTube to people watching videos about that topic.
• Keywords: Show ads based on words or phrases that the audience is interested in

TrueView ads are configured in the Google Ads user interface.

An auction determines which ads are shown, the order they will appear, and how much they will cost. Like the Google Ads auction, YouTube ads are ranked based on Ad Rank, which is based on the maximum CPC bid and the ad’s quality score.

Ad Rank = CPC bid × Ad Quality

There are three components to the quality score, and the biggest amongst them is the click-through-rate (CTR). The CTR is the means of incorporating users’ feedback to the Ad Rank. Relevancy is the next largest component. It ensures that relevant and useful ads are displayed to users. The third component is the landing page quality. (See section Google's Ad Auction — How it Works for more details on YouTube ad auctions).

Google Ads provides advertisers considerable information on the performance of their TrueView ads for optimization and testing purposes. Key metrics include views (completed views as well as quartiles), reach and frequency, engagement metrics such as CTR and clicks on other interactive elements, and average cost-per-view.

These metrics are covered in more detail in the chapter, Advertising Analytics, under the section YouTube Analytics. They help advertisers evaluate their video ad spend, and optimize their spend on YouTube advertisements.

Beside TrueView ads, which are procured only on auction basis, YouTube also permits advertiser to buy on a reservation basis.

Advertisers pay a fixed rate based on the number of impressions (CPM) or on per day (cost-per-day) basis.

Benefits of advertising on a reservation basis include improved control on execution and spend, higher visibility of ads (these ads can also run on the YouTube homepage) and wider reach.

Reservation basis is better suited for advertising to a mass market, such as for enhancing perceptions and sustaining interest in big consumer goods brands. TrueView ads on the other hand, work better for more narrowly targeted marketing initiatives.

The mechanisms and the key themes of advertising are covered in the chapter, How Advertising Works. In the context of diverse marketing initiatives, varied target audience and best practices in advertising execution, this chapter imparts an understanding of the ingredients that make advertising effective and impactful.