With users and daily views in the billions, YouTube is a video platform to rival any streaming service. This also makes it one of Google’s most lucrative sources of ad inventory. YouTube advertising recorded $8.66 billion in revenue in just the second quarter of 2024.
Businesses look at numbers like that and see potential customers, but is the juice really worth the squeeze? Well, it depends.
If you’re considering YouTube as an advertising channel in 2024 and want to make it work, you’ll need a better strategy than “Let’s spend some more money.”
Before that, here are 5 key considerations to better understand whether your business is likely to see positive results from advertising there in the first place.
1. How is YouTube Advertising different from Google and Meta?
For years, Meta and Google were online advertising on easy mode.
All you had to do was make and show ads, collect clicks, and watch the money roll in. Targeting was specific and direct, making the sales cycle a lot shorter than if people had only discovered your brand organically.
One reason was the way people used those channels.
With Google, you were able to meet buyers the exact moment they were searching for what they needed. Facebook and Instagram were powered by infinite scroll and an “entertain me” mindset.
In either situation, an ad that stood out was highly likely to progress to a conversion immediately or within a few days.
Now think about how you use YouTube.
Whether you’re trying to find out how to fix a leaky kitchen faucet or enjoying a compilation of your favorite 90s sitcom character, you’re there for a reason that has little to do with wanting to buy something.
This natural interrupt is both an upside and a weakness of YouTube advertising. It opens up a world of targeting based on interests and creators. It also means your ad needs to be especially catchy to get people to watch, pay attention, and keep their fingers off the skip button.
2. Where does YouTube advertising fit in the paid media mix?
YouTube advertising has two significant advantages over other video platforms:
- Sheer variety and volume of content
- Ability to target viewers based on search history
This hybrid “search + social” nature means you can create custom segments around keywords, topics and even channels. Because people aren’t necessarily searching for something at that moment, your ads typically carry latent interest rather than active need.
Along with this comes the risk of intent mismatch.
First, let’s review how YouTube charges advertisers:
- Non-skippable ads are charged per 1,000 impressions
- Skippable ads are charged by click or view percentage (30 seconds, or the full ad if under 30 seconds)
Consider someone who is searching (or has searched) for “beach vacation in europe”. The query appears to indicate with fairly high probability that they’re planning a holiday. It’s safe to assume they’d want to see ads for swimsuits, luggage, leisure wear, sunscreen, and other beach vacation products.
If they are indeed planning a European beach vacation, these ads would be beneficial. But because YouTube has such a large video library, they might actually be looking for something else—video editing inspiration or a background video for their cafe.
If you run a non-skippable ad, you will have to eat the cost of impressions for these types of search intent. And for skippable ads, you need to hope they don’t accidentally click through or let the ad roll in full.
Because there’s no real way to filter out this intent, and because these can be sizable segments that add up in terms of cost, I recommend that you view YouTube advertising as a top-of-funnel awareness channel—not one where you expect immediate and direct conversions.
3. Who should advertise on YouTube and when?
As with any platform, not every business is suited to advertising on YouTube. Here are some situations where it may be advisable to invest:
Brands with an established presence
In my experience, YouTube ad campaigns rarely do well without a solid brand and marketing presence behind them. Without product-market fit and a great website, brands typically struggle to get noticed in meaningful ways.
Brands with robust YouTube channels
I would go a step further. Brands looking to advertise on YouTube should have a solid organic presence on the channel. A library of Shorts and videos means when people do click through to your channel there’s something there to capture their interest. Helpful videos, product reviews, UGC content, interviews with experts and influencers, and even promotional Shorts can compress your funnel and make acquisition less expensive.
Brands that have saturated other channels
I would rarely advise a brand to advertise on YouTube before a platform with more reliable attribution, such as Google or Meta. Once you’ve tapped out the incrementality those platforms have to offer, YouTube can be a valuable source of incremental brand awareness. Conversion tracking is rarely one-for-one with YouTube, so choosing it first may cause issues with justifying your investment.
Brands that know what already works
Having product-market fit means you already know what messaging and features your audiences respond to. For ecommerce, this could mean knowing which products and bestsellers to advertise. For lead-gen, it could be choosing an audience that is not only willing but able to hire your services. Knowing what works elsewhere leaves less room for guesswork.
4. What do I need to start advertising on YouTube?
Remember what’s going through people’s minds when they’re on YouTube. You’ve got audiences in theater mode, people looking for solution and fix-it content, and others catching up on their favorite creators.
So how do you interrupt people and still get enough of them to stay until the end? Make your content more interesting and relevant using these three parameters.
- Creative: YouTube offers a variety of ad inventory, but they largely boil down to video as a format. Banners and text ads are also possible if you opt into Search Partners or Display Partners, but these are not native YouTube ads. Those need to have strong hooks that get people to pay attention within the first three seconds, followed by rich and valuable content that justifies someone watching further or clicking through. Ecommerce is particularly good at creating thumb-stopping hooks and a strong retention graph. As long as your videos are entertaining and relevant, people will watch them.
- Targeting: YouTube offers many of the same targeting options you get from Google’s search and shopping ads—keywords, audiences, lists. The big difference is the mindset of your viewers. Whether someone is watching content for educational or entertainment purposes, ads on YouTube are interruptive. They can’t be scrolled past or ignored like Meta and Google. Whether your ads show up at the start or middle of a video, you are asking people to actively divert their attention to your brand from an immediate want or need. It had better be relevant to who they are.
- Budget: Advertising on YouTube is typically expensive due to significantly lower conversion rates than you see on more demand-oriented platforms. If you’re already limited by a modest advertising budget (say $10,000 a month), diverting a small portion to YouTube will both yield limited results as well as take away potential conversions from your primary ad platform. However, if you were able to divert $10,000 directly to YouTube, you might be in a better position to test the channel. Until then, keep your budget where it can have the strongest impact on your business.
5. What limits the effectiveness of YouTube ad campaigns?
Some scenarios and factors lend themselves to making YouTube advertising more difficult than it’s worth. Here are three examples of when it might be time to stay away or walk away.
- Too low a budget: If you don’t have enough to make a meaningful attempt at testing YouTube ads, I suggest waiting until a more significant budget is available. Not only will you come up short on YouTube, but you’ll take budget away from a more lucrative channel and harm your business in two ways.
- Too boring an ad: Your viewers are here to learn or be entertained, and ads are no exception. They need to show people something that excites or enriches them. Think of how you would create a hook for a Meta campaign, then amplify that because you only have three seconds until they can skip your ad. Being able to capture and sustain interest on YouTube is a rare skill that requires practice, effort and budget.
- Too small an audience: The surge in popularity of YouTube’s paid version has led to nearly 28 million subscribers. YouTube Premium famously features no ads, thus removing those people (and in many cases their households) from your potential audience altogether. If you’re able to invest meaningfully and have the creative quality to make it work, but you just can’t seem to get the reach or results that you should, it might be because your audience has gone ad-free.
YouTube advertising should not be the first stop in your journey
“YouTube burns cash.”
“We can’t figure out YouTube.”
“Even our best ads don’t work here.”
These complaints aren’t uncommon among media buyers and marketers, even more experienced ones. It can make YouTube feel like a regrettable splurge.
In truth, most brands simply advertise on YouTube too soon.
It’s a platform best saved for the latter stages of advertising maturity—once a business has established product-market fit, saturated Google and Meta, and created everything it needs to win customers over on their websites.
