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How Much Do YouTube Ads Cost In 2023?

How Much Do YouTube Ads Cost In 2023?

It’s no secret that digital advertising prices are rising across the board — and social media ad costs are no exception. According to Global Industry Analysts Inc. (GIA), the global digital advertising and marketing market was estimated at $350 billion in 2020 and is projected to reach $786.2 billion by 2026.

Moreover, the U.S. digital advertising and marketing market alone is currently estimated at $460 billion, as gathered by Beroe Inc.

With the increased demand on major paid media channels like Meta, TikTok, Amazon and Google, digital marketers are reshuffling their budgets to ensure they spend their marketing dollars as efficiently as possible while diversifying their paid media mix.

While the reasons for the bump in ad costs are complex, most of it boils down to an increase in the competition to win consumer attention as e-commerce continues to skyrocket following the COVID pandemic. The digital marketing platforms that help promote them follow the same trajectory.

What’s more, the privacy-first data implications of Apple’s iOS 14+ rollouts, where App Tracking Transparency (ATT) allows customers to opt out of data tracking, affected pixel-tracking once relied upon by advertisers to track consumer behavior. These rollouts caused audience pools to dwindle, limiting the real estate for which a brand’s ads can enter an auction.

This has hit Facebook perhaps the hardest, incentivizing marketers to diversify their marketing mix to allocate for more reasonably priced and increasingly popular platforms like YouTube and TikTok. 

Despite the rising costs, advertising on YouTube in 2023 is still affordable for newer and smaller brands alike. However, marketing dollars spent on YouTube ads are more efficient when implementing a media buying strategy. Working with a best-in-class YouTube advertising agency like MuteSix ensures every marketing dollar is well spent on the ever-evolving video-sharing platform.

What You Need to Know About the Cost for YouTube Ads in 2023

You don’t need a YouTube channel to reap the benefits of this ever-growing social media platform. YouTube stats to note:

  • 78.8% of marketers in 2023 believe YouTube is the most effective video marketing medium
  • $5.5 billion in ad income was how much YouTube was predicted to generate in 2020 in America alone
  • 2.53 billion was YouTube’s potential ad reach in July 2023, according to Social Media Perth

The cost of YouTube ads in 2023 depends on various factors, such as competition, ad format, watch time, targeting mechanisms and campaign objectives. That said, as of mid-2023, with a daily budget of $10, a YouTube ad’s average cost-per-click (CPC) is $0.49, while the average cost-per-view (CPV) can range from $0.010 to $0.030. Lastly, the Cost per Mille (CPM) on YouTube nets out at $11.50.

While understanding different paid YouTube ad formats is important, the cost of YouTube ads tends to vary due to the bidding options used by the platform to select and place ads. Brands bid against each other in a race to win their desired placement.

You can set your maximum bid ahead of time and let the system do all the work, ensuring that you don’t spend more than is necessary to meet campaign goals relative to your marketing budget. The good news is that YouTube won’t spend more than is necessary to win the bid.

Additionally, brands can choose from different sizes and formats of YouTube ads. Naturally, the larger the ad, the more it will cost you. There are also different watch time pricing options where you could pay more for a user watching 30 seconds of your ad versus just 15 seconds. Finally, you can expect to spend more on YouTube ads if you’re trying to target a very competitive demographic.

What Are the Benefits of Advertising on YouTube, and Is It Worth the Cost?

Although the cost of advertising on YouTube is rising, it’s worth it if you do it right. Here are some of the benefits of advertising on YouTube that make it worth the investment.

Massive Reach

YouTube, now the second-most-used social media platform behind Google, boasts more than 2.6 billion users worldwide. However, YouTube doesn’t just have a high number of users — it also has the unrivaled levels of engagement necessary to boost brand awareness, customer acquisition, retention and conversion. In fact, the platform’s two-billion-plus users watch nearly five billion videos daily, resulting in an astounding daily total of one billion hours.

Generated Revenue

As short-form video formats continue to boom in popularity in a post-TikTok era of digital advertising, the user base of views has also skyrocketed — and so has the return on investment for brands marketing to them. Another area where YouTube really delivers is generated revenue. Q2 2023 ad revenue increased by 4.4% to $7.66 billion.

More Effective Video Ads

Thanks to the unstoppable growth of video-sharing platforms like TikTok, video ads on YouTube have proven more effective and engaging than photo ads. By leveraging the latest and greatest video content creation tools and trends, more and more videos are compelling users. These users later convert to customers and consume hours of engaging video content that tells a brand’s story and promotes their products in ways static photos simply cannot.

Powerful Targeting Mechanisms

Perhaps one of YouTube’s greatest strengths comes from its targeting capabilities. Owned by Google, YouTube has a wealth of user data at its fingertips, which allows marketers to strategically target audiences. As a result, their content is viewed and consumed by the high-intent users more likely to complete a purchase. For example, brands can target prospective shoppers on YouTube through demographics, life events, affinities, keywords, topics and placement. YouTube also allows brands to retarget and remarket to individuals who have interacted with their content in the past.

Google Ads Reporting for Robust Data Insights

YouTube’s access to consumer data and insights is unprecedented. When you advertise on YouTube, you have access to a wealth of consumer shopping behavior data that can and should be leveraged to help optimize campaigns to maximize results. With Google Ads reporting, marketers can capture a real-time snapshot of campaign metrics, including but not limited to impressions, views, engagement, clicks and more.

A Powerful Algorithm to Ensure Relevant Videos Are Watched

The YouTube algorithm analyzes user behavior and recommends videos users are most likely to watch based on past viewing behavior. When a YouTube video ends, the video-sharing platform suggests similar content that’s so relevant to the viewer that over 70% of viewed content is a direct result of YouTube’s advanced algorithm.

YouTube Shorts Capitalizes on the Boom in Short-Form Video Content

Thanks to the explosion of TikTok, authentic, engaging, lo-fi (non-studio-produced videos often shot on iPhones) user-generated content is becoming the rule rather than the exception. Case in point: YouTube released YouTube Shorts globally in July 2021 and has amassed over five trillion views since its rollout, turning it into an effective outlet to market your ad!

How to Launch a YouTube Advertising Campaign That’s Successful and Cost-Effective

Launching a YouTube advertising campaign involves following a few important tips and tricks.

1. Be Realistic about Your YouTube Advertising Goals

Before you begin any form of advertising, have a purpose in mind. As with many kinds of marketing, the larger your spend, the better the outcome you can expect.

If you want to keep your YouTube advertising costs low, you must be realistic about what you expect from your ad campaigns. For example, YouTube advertising is an excellent approach to raising visibility for your company. It’s not exclusively a lead-generation marketing approach, so expecting 100 leads in a week is unrealistic.

It is important to remember that YouTube advertising significantly complements any marketing plan since it may boost brand lift and brand awareness. However, it is not a primary generator of leads or even clicks for your website.

2. Understand the Upfront Costs of YouTube Advertising

When evaluating ad costs, remember the upfront expenses of generating a video for your YouTube ad. Depending on the quality and intricacy of the movie, a video advertisement might rapidly become rather pricey.

Consider collaborating with a YouTube advertising partner to reduce your ad costs. Marketing firms may have in-house video makers or collaborate with suppliers that can generate these videos for you at a low cost, reducing the initial cost for your organization.

If you want to make the content yourself, remember that you don’t have to make an Oscar-worthy video that costs a fortune — although it should be high-quality, no matter what. Overall, though, your video just has to be attention-grabbing straight away. You only have a few seconds to deter customers from hitting the “Skip Ads” button and moving on to their video content.

3. Identify the Right YouTube Ad Type for Your Campaign Goal

The type of YouTube ad you run impacts your entire YouTube advertising cost, so it’s critical to carefully select an ad type based on your campaign goals and brand identity.

The cost of YouTube ads varies depending on the ad type you select. For example, with skippable video advertising, your company would only pay for a view if the user stayed for more than five seconds, giving you five “free” seconds of viewing. On the other hand, you pay per impression when you pick a non-skippable video ad.

4. Adjust Your Audience Targeting

Since YouTube is a subsidiary of Google, you can be sure that your YouTube ad campaign will have access to powerful targeting tools. The price of your YouTube advertising might change based on your target demographic, just like when you conduct a PPC campaign.

Although this is a given, you can choose your target audience for advertisements based on factors like age, geography and gender. Similarly, you can determine your target market based on perspectives that have interests with your brand. For instance, an outdoor activity enthusiast may be the target market for a sporting products firm.

You can also target customers who have recently researched goods related to your brand. Life events are another aspect that might help. They enable you to target consumers based on a life event that can increase their interest in your product. 

Your YouTube advertising costs may rise in direct proportion to how difficult it is to draw in your target demographic or how precisely you are targeting them.

5. Choose the Right Daily YouTube Advertising Budget

Your YouTube ad campaign will not break the bank to operate and manage. Many brands begin with a daily budget of at least $10, but you may raise it based on the objectives of your campaign.

When it comes to setting your YouTube advertising budget, you should consider factors like:

  • How long you want your campaign to run for
  • How much you need to spend daily to achieve your campaign goals
  • Any less expensive YouTube ad options, so you can optimize your ad while maintaining effectiveness

You can decide how much you’re prepared to spend and what action you want shoppers to take. Additionally, you can experiment with different ad formats, targeting choices and daily budgets to help your campaign be successful.

Once you’re done picking an ad type, you must test it before launching it into the market. You can determine your ad’s effectiveness with extensive A/B testing before putting money behind it. Then, track your campaign throughout its lifetime to ensure it effectively aligns with the customer journey, ultimately compelling viewers to click over to your site to complete a purchase.

After running your ads and tracking their efficacy, don’t be afraid to make pivots in strategy along the way should the performance not be optimal.

Why Work With a YouTube Advertising Agency?

Leaving a mark on YouTube is definitely a challenge for brands that have grown accustomed to static image ads or other marketing platforms. The competition to create video ads compelling enough to convert viewers into shoppers grows more difficult as competitors in the video-sharing space continue to increase in number and redefine users’ expectations. Work with a YouTube advertising agency like MuteSix to ensure you’re tapping into the latest trends, ideation, testing and optimizing of video content backed by data.

That being said, not all YouTube advertising agencies are created equal. If you’re enlisting media buying and creative services to help scale your advertising efforts on YouTube and exponentially grow your brand, opt for an agency with a dedicated team of Google and YouTube advertising specialists like MuteSix. As the leading performance marketing agency for DTC brands, MuteSix has been able to manage marketing budgets, allocate spend and produce the winning content necessary to attract customers through the marketing funnel. In other words, MuteSix can help you run YouTube ads optimized to reach the right users with the right content while using YouTube.

When you work with MuteSix, we take you through the entire YouTube advertising process from start to finish. We start with a thorough audit of your brand and provide feedback on any existing video content. From there, we develop a media-buying and creative strategy to align with your marketing budget and meet your goals. After that, we perform extensive research to learn more about your audience and determine the best ways to reach and convert them. Finally, we implement industry-leading ad unit and bid strategy testing before optimizing your creative and scaling your ad spend.

MuteSix’s YouTube content garnered 362 million views in 2020, translating to over one million purchases. Consider, for example, our finance app client Dave. Through our advanced Google/YouTube strategy — which consisted of a unique Universal App Campaign (UAC) segmentation, adoption of UAC video beta, creative A/B testing and optimizing for downstream events — we increased iOS install volume by a staggering 500% in just three short months, while not only maintaining but decreasing the cost per install.

Final Thoughts on YouTube Advertising in 2023

YouTube advertising in 2023, though currently rising in cost due to several factors affecting all paid media channels in a post-iOS 14+ world, remains an extremely cost-efficient solution so long as you fine-tune your media-buying and creative strategies. 

One of the best ways to get the most bang for your buck on YouTube is to work with a YouTube advertising agency like MuteSix. So, before you dismiss YouTube as a high-cost paid media channel, reach out to us for a complimentary consultation. We can show you how priceless the results can be when implementing an industry-leading marketing strategy on YouTube.


Estimated U.S. Youtube Usage Increase Due to Coronavirus Home Isolation 2020 | Statista

YouTube Statistics for 2023 | Social Media Perth

YouTube Q2 2023 Ad Revenue Tops $7.66 Billion, 4.4% Increase | Digital Music News 

Global Digital Advertising and Marketing Market to Reach $786.2 Billion by 2026 | PR Newswire 

Digital Marketing Market to be Valued at $460 Billion by 2022, Says Beroe Inc | PR Newswire

Special thanks to our friends at MuteSix for their insights on this topic.
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