YouTube accounted for 11% of Google’s total ad revenue in 2021. These numbers are growing steadily each year. During Q1 of 2022, the streaming platform dragged in almost $7 billion in revenues — a 14% year-over-year increase.
YouTube experienced enormous growth during the pandemic, as stay-at-home orders forced more people indoors, in need of diversion. While these numbers have slowed down slightly from their peak, the growth pattern is hugely impressive.
On top of that, YouTube’s audience numbers are massive. 2.6 million monthly users alongside 1.22 million daily active users. In the US alone, over 240 million people use the streaming platform.
I guess that’s a long way of saying that YouTube is on the rise. But considering these massive audience figures, is the service an underrated marketing channel?
Why is YouTube underutilized for marketing?
It’s hard to say for sure. But most likely, it comes down to two reasons.
1) Video ads are more complicated to produce than search or display ads
2) There is a perception that the YouTube audience skews very young
However, if either of these reasons is holding you back from using YouTube, you need to review the situation.
For starters, you can do slick, professional video ads on a budget. And even if you don’t, YouTube offers text ad formats too.
Secondly, everyone uses YouTube. It has a 95% marketing penetration in some countries. Also, 36-60 years olds are the fastest-growing demographic on the platform. It’s actually a great way to reach a diverse audience.
How video advertising helps during the sales funnel
Video ads can be effective at every stage of the funnel. However, what type of messaging and content you craft should be carefully considered for each step.
Let’s look at the early, mid, and late-stage funnel and see what types of YouTube ads will perform best.
Early-stage: Early-stage funnel ads should be short and to the point. These ads are about raising awareness and getting your brand in front of potential customers.
Speak to your prospect’s pain points, highlight your solution, but don’t go for the hard sell. Seek to build trust with short educational or explainer videos.
Middle-stage: By this stage, your prospects know who you are. So it’s about explaining why your product is the best choice. Explain all the features and functions and leave them clear that you’re the brand that can help solve their issues.
Product videos and tutorial videos are most effective here.
Late-stage: Late-stage funnels are usually stuff like customer testimonials or detailed webinars. These are long-form, deep dives into a topic or solution.
The average length of a YouTube video ad is 38.1 seconds. YouTube video ads are probably most effective for early-stage trust and awareness building because of their limited length. However, there is a case for using middle-stage content, like product videos.
There is a place for late-stage funnel ads too, which you can promote via Discovery ads, which we’ll get into below.
What kind of ads can you buy on Youtube?
There are five different kinds of YouTube ads. Each offers something a little bit different for advertisers.
#1. Skippable in-stream video ads
Skippable in-stream video ads are the YouTube ad format you are most likely to be familiar with. These ads play for 5 seconds before or during a video. However, the user is offered the opportunity to skip them.
These ads need to be at least 12 seconds long. One of the best things about this format is that you only get charged if the user:
- watches 30 seconds of the ad
- watches the entire ad (for ads <30 seconds)
- clicks on the ad
You can still build awareness and brand recognition without being charged.
#2. Non-skippable in-stream video ads
Non-skippable in-stream video ads play before or during a YouTube video. However, users can’t skip these ads. This feature adds a price premium and YouTube charges per 1000 impressions.
These ads are a great option when you need to boost awareness and raise visibility.
#3. Non-video ads
YouTube offers non-video ads for brands that are on a budget. These can take the form of display ads that appear on the right-hand side of the interface when a video is playing. Another form of non-video ads is banner ads that pop up during a video. Banner ads provide more visibility and therefore cost more to use.
#4. Discovery ads
Discovery ads are similar to native advertising. They appear on the SERP (search engine results page) of YouTube when the user inputs a search term. These ads are pretty visible and can be a great way to target users by intent. For example, if a user searches “how to do tax returns,” you could promote your SaaS accounting software.
#5. Bumper ads
Bumper ads appear right before a video and are a short-and-sweet six seconds long. They’re an excellent choice for brands with a punchy message they want to communicate. As such, they’re perfect for driving awareness.
Tips for making effective YouTube ads
A great YouTube ad understands the format. Remember, you will be inserting yourself into the user experience, often before a video they want to watch — or during the video.
Getting over this hump is hard. The user is being taken out of their zone. Research suggests that up to 90% of YouTube ads are skipped.
So the best thing you can do is get to the point and try to hook your audience quickly. Establishing branding within the first few seconds is essential.
How YouTube Ads offer excellent audience targeting opportunities
YouTube Ads use audience targeting to help reach specific users. Google has a lot of first-party data via Gmail and search. Additionally, YouTube watch history can reveal a lot about a person’s interests and intent.
You can reach users with your YouTube ads via broad demographics, more detailed demographics, a wide range of interests, etc.
How do YouTube’s users compare with other screening services?
While YouTube has some original content, the majority of videos on the site are user-generated. Their most comparable services are sites like:
- DailyMotion (300m monthly active users (MAU))
- Vimeo (1.24m subscribers)
- Twitch (140m monthly active users)
- TikTok (1 billion monthly)
You could throw in other streaming sites or music services, too, like Amazon Prime, Spotify, Hulu, SoundCloud, and even Netflix.
YouTube has a much bigger user base than all these platforms, with TikTok the only app that comes close. However, YouTube Premium — the paid and ad-free subscription version of the service — only has about 20 million users.
In terms of reach, YouTube is the best option for marketing teams.
Conclusion
YouTube is a monster in the streaming space. Their ad revenues and user base are huge and growing all the time.
Despite public perception that suggests otherwise, the streaming platform has a diverse audience demographic. Also, thanks to the vast amount of data they have on their users, YouTube ads can target very defined audiences.
If you’re not already using YouTube ads as part of your Google Ads strategy, it could be time to consider unlocking the benefits of using video to reach the platform’s 2 billion+ users.
