YouTube Ads – The Definitive Guide to Advertising on YouTube

Advertising on YouTube

Last updated on January 13, 2021

Video ads on platforms like Facebook, Instagram, and Twitter have been getting a lot of attention lately because of how effective they are for marketers and businesses.

But, with all the excitement over new video ad platforms, many people overlook the pioneer of online videos—YouTube.

YouTube ads are still one of the best marketing investments out there. In fact, they are getting even more popular.

More people are watching YouTube than are watching traditional TV.

Each day people watch more than one billion hours of YouTube videos.

YouTube video ads have three key advantages over traditional TV commercials:

  1. Businesses of any size can afford YouTube video ads. TV commercials can still cost $100,000 or more.
  2. You can target a narrow niche on YouTube to increase your conversion rates. TV ads still require you to advertise to millions of people you don’t care about.
  3. You can adjust the audience and other settings on YouTube ads on the fly. TV commercials are much riskier.

Do YouTube ads work?

Consider how many people are making six and seven-figures through their YouTube channels.

Where does all their money come from?

YouTube video ads generate most of this revenue.

Businesses spend a lot of money to advertise on YouTube because it’s one of the most efficient places to spend marketing dollars.

What Kinds of Businesses Should Advertise on YouTube?

Businesses of all sizes are finding success on the platform.

Major brands like Coke and Target buy YouTube ads.

However, small and solo businesses also find a lot of success advertising on the platform.

The reason businesses of all sizes are able to get their ads to convert on YouTube is because you can micro-target. Click To Tweet

You aren’t wasting money to put your ad in front of people who aren’t interested.

You are able to focus your advertising dollars on your ideal customers.

YouTube ads work for brand awareness and for direct sales.

You can sell products or services or you can build your subscriber base.

It doesn’t matter what size your business is, you can create YouTube ads that convert if you know how.

How Does YouTube Advertising Work?

YouTube is owned by Google.

All of the “behind the scenes” settings for your YouTube ads will be handled through your Google Ads (formerly called Google AdWords) account. 

Just like any other Google Ads campaign, your dashboard for your YouTube video ads will show you detailed data such as views, clicks, and the amount of time people have spent watching your videos and much more.

You can easily see if your ads are being seen, if their being skipped, and if your ads are converting or not.

The Main Types of YouTube Ads

There are two major types of YouTube video ads: in-stream ads and discovery ads. Both of these types of ads fall under the YouTube TrueView label.

YouTube TrueView ads are popular because they are low risk.

You only end up paying for ads when people are spend at least 10 seconds to watch your ad. 

Uninterested folk will skip the ads before that and therefore you won’t pay for those.

Marketers and businesses also like TrueView ads because they are flexible and allow you to target people on many different areas of the internet.

You can make your ads any format including traditional commercials, video testimonials, product demos, or anything you can imagine.

When you run a YouTube TrueView ad, your ad will not only run on YouTube, but it may also appear on other sites as part of the Display Network if you so choose.

In-Stream Ads

In-stream ads are the kind of ads most people think of when they hear about YouTube video advertising.

These are the ads that play before other videos.

YouTube Ads

You can skip these ads after five seconds.

However, TrueView in-stream ads also play in apps, games, and as part of the Google Display Network.

In-stream ads can be as long as three minutes, but most businesses find the most success with shorter ads.

As an advertiser, you only pay for an ad if someone watches at least 30 seconds of the ad. 

You can set up a clickable call-to-action that will pop-up during the first 15 seconds of the video ad that will take the viewer to a specific URL.

You can also create unskippable in-stream ads that play during the middle of longer videos.

These ads can only be 15 seconds long and are better suited to big brands with big pockets.

Discovery Ads

TrueView discovery ads are not as well-known as in-stream ads, but they provide businesses with additional tools to reach their ideal customers.

When you search for a YouTube video on the platform, you will notice that the top one or two results the word “Ad’ in gold below the title of the video.

These are discovery ads.

They are like the sponsored search results you see on the Google search results page.

Discovery ads also can be found in the right-hand sidebar when you’re watching a video on YouTube as a related video.

Discovery ads allow you to write a headline and two lines of body copy.

Each line of copy is limited to 35 words, and your headline is limited to 25 characters.

The video you use in a discovery ad can be as long as you want.

Discovery ads are a great way to promote longer videos that provide more detailed information to your customers.

Creating a YouTube Ad That Converts

Your first task in creating an effective YouTube video ad is to choose between an in-stream ad and a discovery ad.

You need to decide what your goal for the campaign will be.

In-stream ads work for building brand awareness and for quick, direction action pitches.

Discovery ads are better if you have a detailed content strategy where you need to educate your customers before they are ready to buy.

Many businesses use both types of ads.

An overview of Discovery and In-stream ads

It will take some experimentation and testing before you hit on the right strategy and tactics for your business.

Once you have a creative direction, it’s time to create the video you will use in your campaign.

Understand Your Audience

The best reason to use YouTube video ads is that Google’s incredible data allows you to target the exact group of people you want to reach.

The most common reason for an underperforming YouTube video ad campaign is poor targeting.

You need to know who you want to reach.

The better you understand your audience from both a demographic and preferences perspective, the easier it will be for you to create ads that convert.

If you have no idea who your ideal customer is, you aren’t going to be able to target them.

Before investing in advertising of any kind, make sure you have invested in some basic market research.

Some of the best ways to target via YouTube ads are:

  • Remarketing to people who have interacted with your business
  • Keywords
  • Placements
  • Audiences
  • Custom audiences

You also have the ability to target by demographics as well.

Remember People Hate Ads

The second reason many ad campaigns fail is that the ads are boring or un-targeted.

People hate these ads.

Most people will skip an ad in the first five seconds, so they can get to the content they wanted to watch.

Some ways you can create video ads that convert are:

  • Make ads that don’t feel like ads. Be creative
  • Do something spectacular in the first five seconds so that people are hooked
  • Get your core message across in just five seconds so that your ad still has an impact even if the viewer skips the rest

Do not waste time with waffle, logo stingers. Get to the point!

Best Length for Video Ads

For In-stream ads, there is no definitive answer to this because it depends on your script.

Aim for anywhere from 30 seconds to 2 minutes as a rule but many people have success with longer video ads.

Be interesting as the vast majority of the audience will skip your ad the second their interest drops.

Discovery ads are a different beast.

These videos should be longer and can be more educational.

The most effective length will depend on your content.

People will happily watch a 15-minute how-to video that helps them solve a difficult or expensive problem.

Most will not watch a 15-minute commercial.

Two to three-minute videos tend to get the most engagement and shares on YouTube.

Unless you have a specific reason for creating a longer video, you should keep your discovery ad video in this range.

YouTube ads

Creating a YouTube Ad Campaign

Once you have the video for your ad, it’s time to create your ad campaign.

Before you can set up your campaign, you will need to have a Google Ads account and a YouTube channel.

There are seven basic steps to creating your ad campaign:

  1. Create a YouTube channel
  2. Open Creator Studio
  3. Upload video
  4. Log into Google Ads Account (after setting it up in the first place)
  5. Select Campaign Settings
  6. Select Ad Group Settings
  7. Select Destination URL (the URL where people will go to after clicking)

First Steps

If you don’t already have a YouTube channel for your business, you will need to create one.

You will need a Google account of some kind to create the channel.

It takes less than five minutes to create a channel.

You can worry about optimizing your channel with cover art and a profile picture after you have launched your ad campaign.

Once you have a channel, you will need to navigate to “Creator Studio”.

You will need to click on your profile icon in the upper-right-hand part of the screen.

You will find a menu with several different options. “Creator Studio” will be listed near the top.

Once you are in the Creator Studio, you will be taken to a screen where you can upload your video.

It may take a few minutes for YouTube to process your video.

Once it generates a URL for your video ad, you can continue to the next step.

The actual video campaign creation doesn’t happen on YouTube. Instead, you will need to log in to your Google Ads account.

You will need to click on “Campaigns” on the main toolbar.

Next, you will click on the +Campaigns tab. You will see a list of different options.

Your options include driving brand awareness or driving conversions.

For many, you’ll have more flexibility by choosing to create a campaign without guidance if you are a beginner.

Next, you want to select “Video” which is often towards the bottom of the campaign options.

YouTube Ads

Campaign Settings

From here, you will be taken to the campaign settings page.

Here you will need to complete the basic information about your ad including:

  • Campaign name
  • Budget (budget what you can afford)
  • Start and end date for video ad campaign
  • Where you want the ad to run
  • What languages you want
  • What locations you want to include
  • Your bidding strategy (bid high as Youtube works like an auction)

* Budget low and bid high as a general rule of thumb.

For the best results, you want to narrow your audience.

You probably don’t really want to target the entire world.

It’s higher to earn a significant return on your investment with a highly targeted ad than an ad that is aimed at everyone.

Ad Group Settings

The next step is to set up your ad group settings.

This is where most of the targeting for your ad will take place.

This is the most important part of setting up your campaign.

You will need to create a name for the ad group and set your maximum bid.

Finally, you will need to set the demographics, audiences, keywords, topics, and placements for your ad.

You do not want everyone to see your ad.

You only want the people most likely to click on your ad to see it.

Google has a lot of data about all of us.

If you spend the time to get your targeting right, you can have a lot of success even with a mediocre ad.

But, if your targeting is off, even a killer ad will underperform. 

Once you complete the ad group settings, you will be taken to the last section before launch.

You will need to post the URL to your ad (your YouTube video URL that is) and select between an in-stream ad or a video discovery ad.

You can also set a companion banner for the ad.

Use the same best practices for this image that use to create YouTube video thumbnails.

Very last, you will paste the copy for your ad into the boxes for the headline and body copy (if you’re running a discovery ad).

No copy is needed for an in-stream ad.

Once you’ve completed all of these steps, you’re ready to launch your campaign.

A Tutorial – Taking Out a YouTube Ad


We teach YouTube Ads among many other things inside our top secret program.

Points to be aware of:

  • When linking out to a website, it must be Google Ads compliant
  • Do not make claims or guarantees in your copy
  • Do not use affiliate links as a rule. Link to a page you own that acts as a presell page or bridge to the offer.
  • Make sure you have your conversion tracking set up. Google provides you with a global site tag and snippet. 

Monitor Your YouTube Ad Campaign

As satisfying as it is to launch your first YouTube video ad campaign, your work isn’t done. You want to monitor your ad.

The more money you’re spending, the faster data will be available for you to review.

You want to make sure your ad is being seen and that it is converting.

If you aren’t getting views or your conversion rate is far below your expectations you will want to tweak your settings.

Even seasoned YouTube video ad pros take the time to monitor ads and make adjustments as needed.

YouTube video ads can be powerful and effective, but they are not set it and forget it.

Every time you run a YouTube video ad, the process will get easier, and you will get better at generating the results your business needs.


PS…Like our YouTube Ads Guide? Please share this post on Social Media. Protection Status 

Comments on YouTube Ads – The Definitive Guide to Advertising on YouTube

  1. Chris says:

    Love this Yt ads guide!!

    Very thorough and the videos are definitely nice.

    Looking forward to testing this out, seems super powerful if done correctly

    1. Adam Payne says:

      Thanks Chris. Glad you liked it. Like all things, you may not hit a home run right away but things get easier and better as time moves on.

  2. Matthew Foran says:

    Excellent! Will bookmark and use as reference for future project. Thanks, Adam.

    1. Adam Payne says:

      Thanks Matthew. Glad you liked it.

  3. Garry B says:

    “but they are not set it and forget it.”

    I think this is the key to doing any type of paid ad on social media…

    Getting the targeting “right” and then monitoring great advice as well, on top of the rest of the vast amount of info in this post…


    1. Adam Payne says:

      Agreed Garry. It can seem overwhelming at first but once you dive in and get going it’s not too bad.

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