I believe that YouTube ads could be your secret weapon to grow your brand this year and beyond. It’s an extremely powerful platform. It has unparalleled reach combined with scary-good targeting. It’s the 2nd most visited site on the web behind google.com. Google’s ability to put your ads in front of likely buyers rivals or exceeds that of Facebook.
The best news? Your top competitors are almost certainly NOT using YouTube ads. I’ve had the privilege of speaking at a lot of in-person and virtual marketing conferences over the last several years. Whenever I poll the crowd about who is running YouTube ads and who isn’t, usually just 10% or so of the crowd is running YouTube ads.
I even spoke at the YouTube LA offices in early 2020 to a group of growing eComm brands who wanted to grow on YouTube and only about 20% of that crowd was advertising on YouTube in any significant way. You have an open window of opportunity right now, but it’s hard to say how long that window will stay wide open.
The biggest hurdle for new advertisers trying to break onto the YouTube platform is that they don’t understand how to use it or how to measure it.
All of the campaigns we run for clients are aimed at driving sales at an acceptable cost per acquisition (CPA). We’re running direct response ads, not branding ads.
In this article, I want to break down a series of questions that every YouTube advertiser should be asking themselves as they try to grow on the platform while hitting a CPA target. With each question, I’ll share a related key performance indicator (KPI). Constantly measuring these KPIs will help you know how you’re doing and how you need to improve.
Are my videos engaging?
Before you have any hope to sell someone your products, you have to first make them want to stop what they’re doing and watch your ad. The types of ads we run for our clients are YouTube TrueView ads. TrueView ads are the skippable pre-roll ads that force users to watch the first 5 seconds before the magical “skip ad” button appears. Those first 5 seconds are a real moment of truth. Can you properly hook and engage the right audience? If you can’t, the rest doesn’t really matter.
Looking for some powerful ways to engage your audience? Check out our Top YouTube Ad Examples and Templates Guide (It’s free).
What KPIs show me if my video is engaging or not?
The KPI that best measures engagement is view rate. View rate is the percentage of users that are served an ad impression who actually watch your video. If your ad is longer than :30 then a user has to watch at least :30 before it’s considered a view. If your video is under :30, then a user has to watch all of the video before it’s considered a view.
View rate is NOT a stand alone metric, nor is it your most important metric, but it is something to pay attention to. If your view rates dip much below 20%, you can safely say you have some work to do. You either need to do a better job with the opening of your video, OR you might just be showing your ads to the wrong audience.
Why is 20% important? If your view rate dips below 20%, you’ll likely start paying higher CPVs or cost per view than you want to pay. When your cost per view goes up, the rest of your metrics usually follow suit resulting in increased CPCs (costs per click) and increased CPAs (cost per acquisition). Campaigns that hit a CPA target begin with at least acceptable view rates.
Are my videos compelling?
A compelling video makes people what? Want to buy, right? Well, yes, ultimately that’s true. But initially a good video should compel shoppers to click. Compelling videos cause viewers to take action. If your video strikes the proper chord, then viewers will click through to your site to learn more and get the full scoop on your products. The KPI to show if your video is making viewers want to click is click-through rate or CTR.
How is CTR calculated?
CTR shows us what percentage of users who see your ad, click your ad. So this is an impression-based metric, rather than a view-based metric. So if 1,000 people see your ad (whether they skip it or not) and 10 click on your ad, then your CTR is 1%.
So what’s a good CTR or Click-Through rate for YouTube ads aimed at cold traffic?
We recently pulled data from our top spending YouTube advertisers. We found that click through rates were almost always higher than .5% and occasionally over 1% for an average of just under .7%.
Does my landing page “seal the deal?”
Remember the old Alec Baldwin line “coffee is for closers” from the movie Glengarry Glen Ross? Alec’s character also confirmed the ABC’s of selling - Always Be Closing. Well, a good landing page would make Baldwin’s character proud…earning unlimited amounts of coffee. When you’re running YouTube ads with a target CPA goal in mind, then a high-converting landing page is a must.
How is Conversion rate calculated?
There are a few ways to calculate conversion rate. If you look inside Google Analytics or other on-page analytics tools, conversion rate is usually calculated by looking at what percentage of total session (or visits) ended in a purchase or conversion. When you see conversion rate inside a YouTube ad campaign, it’s showing you what percentage of impressions end in a conversion.
What’s a good Conv. Rate?
A good conversion rate for an eCommerce page when looking at Google Analytics is often 1–3%. For a YouTube ad campaign, a good conversion rate is usually over .12%. When looking at our top spending YouTube advertisers we saw an average conversion rate of .16%.
If your view rate is solid and your CTR is strong, but your conversion rate is weak, then you likely have a few things to experiment with including:
- Audience targeting. Maybe you're targeting shoppers who want your products, but are unable to buy them.
- Landing page. Maybe the landing page doesn’t do enough to fully convince someone that your product will really meet their needs or solve their problems. Or maybe you don’t fully justify the price. Or maybe the landing page doesn’t fully confirm the promises made in the video.
- Offers. Maybe you need a more compelling offer to get someone to take action now instead of waiting.
- Cart optimization. Maybe the checkout process is slow or confusing. A smooth, mobile-optimized checkout experience is a must for keeping your conversion rates high enough.
Are my campaigns optimized for scale?
In order to truly scale with YouTube, you need to find audiences and campaigns that are hitting your CPA targets. This does take some time and experimentation. Finding winning campaigns on YouTube is more analogous to baseball than other sports. A great batting average in baseball is 300 or 30%. For YouTube you may find that your win percentage is similar. If you test 10 campaigns, maybe only 3–5 of them really work well at scale. The rest don’t work at all or only work at small spend levels.
Hitting your CPA goal takes time
It’s very rare to turn on a campaign in YouTube ads and immediately start hitting your CPA targets. You can pretty well count on the fact that for the first few weeks, and even the first few months, of advertising on YouTube results will be spotty. This happens because Google’s smart bid algorithm needs time to learn who is likely to buy your products and who isn’t. Also, you’ll need time to adjust bids and optimize on your end.
Are campaigns running out of budget?
One of the best signs of potential scale is having a campaign that is limited by budget, but is hitting or approaching your CPA targets. This indicates that you have more you could be spending. Google will identify this for you by showing that a campaign is limited by budget. Google will then give you recommendations for what you should increase your budget to. Here’s a screenshot from a campaign that is doing quite well for a client and currently spending $300 per day. Google is recommending a bump to $900 per day.
What’s the total impact am I seeing?
Most advertisers look at conversions in their YouTube ad campaigns and look no further. However, this doesn’t tell the full story. Since YouTube is reaching shoppers early in the buying journey, it’s very likely for a shopper to see an ad, engage with that ad, even click on that ad….but not buy right away. For some of our bigger advertisers, it often takes 7–28 days after a shopper views an ad before they actually purchase. It’s also very typical for someone to click on a YouTube ad and not buy, but then a week or two later search on Google for the product and then purchase after clicking on a search or shopping ad. In addition to watching conversions directly in your YouTube campaigns, you should also consider the following:
- Growth in lower funnel campaigns - A few weeks after you start running YouTube ads, you should see an uptick in volume in your branded search campaign and even your Google Shopping campaigns. We often see a 25% + increase in volume in branded search campaigns after the first 4–6 weeks of running new YouTube ad campaigns.
- Growth in Google trends - One interesting free tool to use to measure the lift created from YouTube ads is to watch Google trends data for your brand. So visit trends.google.com and type in your brand name and Google will show you how search volume for your brand has increased recently. This will give you an idea of the impact YouTube ads is having on the number of people searching for you. Here’s a screenshot of the growth we saw for a pretty large advertiser recently. The advertiser was already spending 6 figures per month on Facebook when we started, so the lift we see here in branded search volume can mostly be attributed to YouTube ads.
- Growth from other channels - We have one client who reports to us that for every 2 sales they make on their website from YouTube ads, they are also making a sale on Amazon. YouTube will certainly cause customers to buy from your site, but if you also sell on Amazon, you should watch how baseline sales increase after YouTube ads gain some momentum.
Are you interested in learning more about YouTube? Check out this case study I just completed for Ezra Firestone and Boom by Cindy Joseph. You can also learn more about the new YouTube Kickstart Blueprint I created in partnership with Ezra.