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244 Part IV Promotion and Monetization

Understanding YouTube Promoted Videos

What, exactly, is a YouTube Promoted Video? It’s an advertisement, pure and simple,
for a specific YouTube video. Specifically it’s a pay-per-click ad, where you’re
charged only when someone clicks the ad to view the video.

How PPC Advertising Works

Pay-per-click (PPC) advertising is the dominant form of advertising on the
Internet. Unlike traditional cost-per-thousand (CPM) advertising, where you pay
for impressions or views, PPC advertising charges advertisers only when an ad is
clicked by a consumer; the advertiser does not pay for the placement of the ad
itself.

The advantage of PPC advertising is that you’re truly paying for results; it’s defi-
nitely a performance-oriented approach. You don’t pay if no one takes action on
your ad. It’s that simple—and that powerful.

Payment for PPC advertising is calculated on a cost-per-click (CPC) basis. The
CPC is typically determined by how much the advertiser is willing to bid on a spe-
cific keyword. That is, you choose a keyword to associate with your ad; your ad is
displayed on search results pages when a user searches for that keyword.

How often your ad is displayed, or how high up on the search results page, is a fac-
tor of how high you bid for the chosen keyword, in relation to how high competing
advertisers also bid. If you bid more than your competitors, your ad will be seen
more often and be more visible. If you’re cheap about it (that is, if you get signifi-
cantly outbid), your ad will be less visible.

As to that CPC bidding, how much you actually end up paying is a factor of what
you bid versus what your competitors for that keyword bid. You don’t necessarily
pay the full bid price; if you outbid the competition, you’ll only be charged slightly
more than the next-highest bid. So if you bid $2.00 per click and the next-highest
bid is $1.00 per click, you might only be charged $1.10 per click or so. In any case,
you’ll never be charged more than your specified bid amount.

And remember, you only pay when someone clicks your ad. Even if your ad is dis-
played to 100,000 viewers, if only one of those viewers clicks your ad, you pay just
for that single click. (Of course, if you only get one click from 100,000 views, there’s
probably something wrong with your ad.)

Given that you never know in advance how many clicks an ad might receive, how
do you know how much you’ll spend for CPC advertising? That’s simple; you estab-
lish a budget up front. The ad network (in this instance, YouTube) runs your ad