Are my YouTube Ads working? If this is a question you’re asking yourself, then this blog is for you. I’m going to get into how you can figure out if your ads are working, including some things a lot of people are afraid to talk about – actual numbers.
Let’s dig into some metrics you can look at to determine whether or not your YouTube Ads are working.
Obviously, the most important thing to pay attention to is whether the ads are making money and how much money they are making. Of course, if they are losing money, they are not working. But, it doesn’t just stop there and you don’t always have this data right away. You want to be able to determine if your ads are working from day one, before you’ve had a chance to even figure out if they’ll make money.
The first thing to look at is where it all starts – the video ad itself. There are a couple of metrics I pay attention to when determining whether or not the videos are working well.
With YouTube Ads, your click-through rate is the number of clicks the ad receives divided by the number of impressions. This means even if someone skipped your ad, that will still count as an impression and count towards your click-through rate. Usually what you will find is a click-through rate of around 1-2%. If your click-through rate is above 2%, that’s great. That means your ads are probably working really well. If your click-through rate is below 1%, there might be some issues, but not necessarily. There are some other things to take into account and that’s why I actually place more importance on another metric related to the video – cost per click.
Cost Per Click
The cost per click tells you, on average, how much you’re paying every time someone clicks on your ad. This is a dollar amount so it is much more related to your bottom line. If you have a really high cost per click, it might mean it’s going to be hard to get your ads working and profitable. If you have a low cost per click, it’s obviously going to be much easier. So, what is a good cost per click? What I typically look for starting out is a cost per click between $2-3. Now, let me tell you and warn you this is just a starting point. Depending on your audience or your offer, this could vary dramatically. I have some clients paying $4/click or even more, but they’re getting great results.
The main reason they’re paying a higher than average cost per click is that they’re in super competitive markets where the traffic is that much more valuable. I have other clients paying as little as $0.25 or less per click. Not as competitive of markets or as valuable of traffic, but those campaigns can also do really well. If you’re under $3/click, you should be doing okay.
Use that $2-3 as an initial guide. If you are paying a lot more or less, you should also consider the market you’re targeting and how valuable the traffic is to you. Don’t get too wrapped up in the numbers I’m giving you today but I want to give you some numbers because I know it is nice to have something to go by.
Cost Per Opt-in
The next thing to look at to figure out if your ads are working is to look at the next step. After somebody clicks on your ad, what are they going to do? They’re going to go opt-in to your initial offer. The benchmark I look at for cost per opt-in is $10. Again, this varies greatly from one account to the next. I have clients paying less than $1/opt-in and I have other clients paying close to $20/opt-in but both of those situations can work. It just depends on what your funnel looks like, what your product looks like, and how much it costs. I say $10/opt-in is the initial guideline that I use, but depending on your funnel, it could be a lot more or less.
A typical opt-in rate for a webinar funnel is going to be between 20-30% and in some cases, as high as 40% or 50%. Other types of offers, e-books, and free downloads, you might see opt-in rates much higher than 50%. Take that with a grain of salt. Getting someone to opt-in for an e-book is a much lower-value action than getting them to opt-in for a webinar. Again, I just want to give you some numbers to go by here.
Don’t think you need to change your offer here to get a 60% opt-in rate. You can be doing just fine with a webinar at a 20% opt-in rate. But if your opt-in rate is below 20%, then your ads are not working as well as they could be. It could be the targeting, some other campaign settings that are off, or an opt-in page, but if you are below a 20% opt-in rate, you need to get that up.
Cost Per Application
You should be looking at your cost per application if you are running ads to an application or a call funnel. Here, what I’m usually going for is applications between $50 and $200. Again, this varies a lot depending on the audience and offer. Sometimes you’ll have an offer that discourages people from applying so that the people who are applying are higher quality. That, of course, is going to give you a higher cost per application than if you are encouraging everyone to apply. A lot of variables here!
Generally, you should be getting applications for less than $200 each. Maybe as low as $50 each. In some really competitive markets, you may be paying as much as $300 per application. Any more than that and it starts to get really difficult for your numbers to work out in your favor.
There are things you can and should be doing to help improve all of these metrics. If your cost per click is too high, you can test new videos. If your opt-in rate is too low, you can test new landing pages. If your cost per application is too high, you can test new webinars and new follow-up and retargeting sequences. Keep in mind that if your targeting is off, none of these numbers are going to work. So, before you go recording new videos and changing your opt-in page, and redoing your webinar, make sure your targeting looks solid.
What is the profitability? This is the #1 that matters when asking the question, “Are my YouTube Ads working?” If you’ve made it this far, your numbers look good so far, and you’re starting to get some sales, now you can start to figure out if the campaign is working based on the sales you’re getting. I hate to say it, but again, this varies greatly from one offer to the next.
Would you rather be running ads with a 2x ROI or a 10x ROI? What you should be saying is, “I need more information.” What if the 10x ROI campaign is spending $6,000/month and the 2x ROI campaign is spending $100,000/month. It’s not just about the ROI and the highest returns you can get. It’s about profitability. Now, of course, you want to be able to spend as much as possible with the highest ROI possible, but these things need to be considered together.
You also need to consider the amount of work and other expenses required at each level of scale that you reach. There is no easy answer here. So, are your YouTube Ads working?
I’m sorry I can’t give you an exact formula to follow, but there simply just isn’t a formula that exists. Hopefully, this does give you enough context to help you figure out if you are on the right path though!