Youtube Business Model Explained | Explore How Youtube Make Money Through Advertising

Youtube is the second-largest search engine of the world, which is owned by Google, so the advertising that is done on youtube is done through the Google AdWords network. The average cost of the youtube ads per view is  $0.10 to $0.30, and the average cost to reach more than 100,000 viewers on youtube is around $20.000. The views are counted on the basis of the overall youtube business model view generated by viewers after viewing the advertisement. Youtube advertisers mostly pay per views of the advertisement. 

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The cost really of an advertisement depends on many factors such as on the region, on the quality of the video, targeting, overall goal you’re trying to accomplish, and also on the type of video you want to post. The cost of youtube advertisement decreases relatively as per the views of 10 to 30 cents. When the user selects Trueview in-stream, bumper, or video discovery for the advertisement it also affects the cost of the advertisement that you want to post on youtube.


Why Advertising on Youtube?

A marketing campaign is one of the important steps to get the success that helps you to combine your efforts across multiple channels for one cohesive campaign. Nowadays, all sizes of businesses such as small, big, and medium-sized businesses are advertising on youtube to get the attraction of the people, which can be proved as beneficial for the business, and the number is going on increasing day by day.

Roundabout billion users log in to youtube every month, and each person spends a minimum of 1 hour on youtube watching a different video as per their choice and convenience. Google’s AdWords for video system makes it so simple for all sizes of businesses to develop video campaigns for youtube. There are several benefits of advertising on youtube, from which some are discussed below.

1- Reach the Targeted Audience

Youtube is the best marketing channel from all the available marketing channels, and it has the best potential to reach the largest percentage of the population. Youtube has over 1 billion unique visits each month, and over six billion hours of video are watched by visitors every month. The overall reach of Youtube is certainly incredible, Youtube also looks after whether you are “reaching” the people in your target audience or not.

The advertisement on youtube can be done on precision targeting based on interests, demographics, location, viewing devices like tablets, laptops, cell phones, etc, and even time of day to ensure that the message is delivered and pop up in front of the right people that are targeted for the advertisement.

2- Utilization of Time

When compared to other social media channels, youtube provides the best platform for their users, youtube users tend to spend their huge amount of time on this platform in watching the video, ads, and much more. Youtube provides the best opportunity for the small business who are looking towards to grasp more attention of the people to their ads. Specifically, on mobile, the average session time of youtube reports is more than 40 minutes.

3- Effective Measures

Youtube advertising is more measurable in comparison to that of television advertising, it has a significant impact on customer purchases. The business entrepreneur can easily track the success of the videos digitally using clicks. The business owner can often use youtube’s analytics to measure when people often watched the video as well as when the viewer has dropped the video.

4- Helps to Grow the Network

Youtube Video advertisement helps to interact with the potential user in an authentic and meaningful way. You can grow a huge amount of network by creative video advertisements that will connect you with different people. By doing so, you can motivate them to choose the product of your company as well as you can also motivate them to be one of the important parts of your company.

5- Creates Effective Interaction with the Viewers

Many consumers respond to youtube advertisements by directly using youtube’s comments section. For growing the business on a large scale the business entrepreneur must always welcome these comments, which can gain more insight directly from the consumer, and to develop further interactions with the customer, you can give a response to their comments.


State Why? Users Demographics and Country Wise Data

The B2B video marketing benchmark report states that 71% of video marketing respondents agreed that video converts are better than any other content. Youtube has become famous for video watching in the same way as Google became popular for search years ago. For the last 13 years since youtube was launched in 2005 almost 1.8 billion users have registered on the youtube sites and approximately 5 billion videos are viewed every day by different viewers, youtube has achieved a really long way. Per every 1 minute, more than 300 hours of HD quality videos are being uploaded to youtube to contribute to the massive collection of 1,300,000,000 videos. (Source)

Users Demographics and Country Wise Data


The first-quarter report represents the ranking of countries with the largest youtube audiences worldwide. The measurement was carried out on the number of monthly active youtube users. According to the report, the United States was first with over 167 million monthly active youtube users. Brazil was at second rank with close to 70 million youtube. Russia has 47.4 million monthly active users. Youtube is divided into different categories based on gender, age, and much more.


Youtube Business Model


Youtube was ranked first as in February 2019, it was the most popular mobile music, and video application in the united states, and the mobile audience reached 62 percent. A total of 68 percent of the U.S. population is using youtube to watch music videos or listen to music. The share increases to 91 percent among 12 to 24-year-olds. 

Youtube has something for everyone and for every age of the users with over 300 hours of HD quality videos uploaded a minute. Youtube provides 51 different categories from which men spend almost 44 percent more time on the youtube site per every month.

YouTube has a very vast audience base.

Youtube Watching Stat

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According to ComScore data, youtube has reached almost 81.2 percent of Internet users in the U.S., and the number is going on increasing day by day. Unsurprisingly, youngsters spend more time on the Youtube site. Do you want to create a Youtube like Video Streaming Platform? Reach out to us for more information.  As per one of the reports of December 2018, YouTube has 11% of users aged between 18 to 24, and almost 98.3 percent of U.S. Internet users are reported in this age bracket. The youngsters aged 18 to 24 spent an average of 10 hours on the youtube site. Meanwhile, the youtube platform attracted 19.4 million visitors who were in the range of 65 and older, this group spent an average of 3 to 4 hours on the site using the video-streaming service.


Top Online Video Ad Networks

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How Youtube Makes Money: Explore Business Model of Youtube

Youtube has a 1.5 billion user base, and it is going on increasing every second. Can you guess how many videos are watched on Youtube every day? Almost 5 billion videos are watched every day by different people of different age groups, gender, personalities, and much more. The cost of the youtube ads depends upon the type of advertisement. Mainly there are six formats of advertising on youtube let’s discuss them. (Source)

How youtube Makes Money?

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1- Display Ads

Display ads appear right to the featuring video, above the video suggestions list. These ads are less popular compared to other ads because they do not infringe on the videos that people watch. Apart from this, display ads can still generate positive results for your advertising campaign. These types of ads can act as an alternative to advertising on Google. Display ad formats cost less than 3 cents per view. For promoting the videos with the display ads, you have to determine the phrases in your niche that people regularly search for. By doing so, your ads will appear as relevant to the searchers as other feature videos on YouTube.


2- Overlay Ads

Overlay ads are semi-transparent ads that appear on the lower 20% of your video; they can be either image or text ads. These ads provide a great way to drive traffic to your own YouTube channel or website. For having the work done with these advertisements you need to create your YouTube channel, you must also get the popular engagement with entertaining videos. You can also create a compelling welcome video to encourage people to stay on your channel. Naturally, by using overlay ads, you can create overlay image ads that appear on anybody’s videos. You can gain the added value if anyone clicks and visits your channel.


3- Skippable Video Ads

Skippable video ads are the most common type of YouTube ads. These are the ads that are displayed before, which a viewer can skip after 5 seconds. You only have to pay for those skippable videos if the viewers watch it for 30 seconds or more. So, you did not have any worries related to paying for all skippable ads, as people like to skip such kind of video as soon as they can. Due to which the cost of skippable videos is always down. But of course, you cannot gain any benefit unless some people watch your ad, and then buy your product.


4- Non-Skippable Video Ads

Non-skippable video ads are those video ads that the viewers must compulsorily watch before they can view the main video. These ads continue for 15-20 seconds, and the viewers cannot skip these ads. YouTube is now thinking of removing this type of ad format due to its unpopularity. The length of non-skippable ads is 15-20 seconds.


5- Bumper Ads

These types of ads are non-skippable videos of the length of up to 6 seconds, which the viewer has to compulsory watch before visiting the main video. Bumper advertising is used by many businesses, mostly when they want to deliver a short, memorable message to potential customers. These videos must be to the point as they are only 6 seconds or shorter. Bumper ads are charged by CPM(cost per thousand impressions). So you have to pay for bumper ads each time when your ad receives 1,000 impressions. Checkout our Youtube clone script to get started with Video Streaming Script. 


6- Sponsored Cards

Sponsored Cards provide content relevant to the video. For illustration, products featured in the main video. The viewers can get all the basic information related to the products with the help of sponsored cards.

Campaign Types of Youtube?

How to Setup a Youtube Ads Campaign

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Before launching a youtube marketing campaign, all the companies should first establish their target market, drive the most consumer action, they must determine what type of youtube marketing campaign will generate the highest level of audience engagement and must accomplish the campaign goals. For your first influencer marketing campaign, let’s discuss some of the getting tips on optimizing, measuring, developing, and implementing.


Different Types of Marketing Campaign on Youtube

Marketing Product Placements

YouTube video marketing campaigns are one of the most common and effective types for marketing any of the brand’s products, logo service, into a YouTuber’s video. By coordinating with a YouTube star and recommending their service or showcase a company’s product in a favorable light, brands can gain the attention of a YouTuber on a large scale, and also can get the highly-engaged audience for their products.

Unboxing Videos

Unboxing videos are one type for YouTube marketing. The YouTuber can literally unpack a new product on youtube using the unboxing videos, in most cases, it explores the product’s features and a short description of how to use this new item, which is launched on youtube. Due to the popularity of technology brands like Samsung, unboxing-style videos have also become popular among the people for YouTube marketing campaigns for most of the services and the products.


How Does Youtube Tutorials Demonstrate and Guides the User

Youtube provides the best ways for many companies to reach millions of consumers. All the companies who want to reach their targeted audience can develop a helpful tutorial through which the demonstration process can be carried out easily, and that will provide the user value to a YouTuber’s subscribers and also to the global audiences. This type of YouTube marketing mostly serves to educate audiences and also helps in providing the solution to all the problems of the customers by guiding them in the right direction.


Vlog Style Marketing Campaigns

Vlog Style Marketing Campaigns is one of the most shareable, engaging, and relatable types of YouTube videos. This marketing campaign is for those top YouTubers who have the best documenting experience of creating an authentic dialogue with subscribers through vlogging. Vlog style marketing campaigns are one of the best ways to gain exposure to millions of followers.


Creative Marketing Campaigns

These marketing campaigns typically involve the integration of the company’s product or service with a creative video concept. Creative marketing campaigns often feature unique types of other YouTube marketing campaigns such as product placements, unboxing videos, tutorials, etc. This type of marketing campaign is likely to generate high levels of engagement in the form of comments, and social shares among YouTuber’s subscribers and have a great chance of going viral by the sharing of the users.


Know Which Calculation Method is Followed by Youtube to Make Money

All the companies spend a lot of sums on internet advertising, particularly on platforms like Google Adsense. According to Alexa, the largest website of all is Google itself, and the second-largest site is YouTube since April 2016. Google owns YouTube, which doubles the importance of youtube advertising platforms.

Many tools are developed which allow you to calculate the estimated earnings from a Youtube Video or Youtube channels, and the calculation is mostly based on the video view count, engagement, and many other factors.

For the calculation of YouTube ads, the user must connect to Google AdSense by signing up for Google AdSense. Once the user signs up, they start their earning by video, and payment is processed every month. Once the user has an active account, they can link it to their YouTube channel by pressing the “Monetization” link in their Channel area, then clicking the “AdSense Association.” Once the user confirms the AdSense login details, the setup gets complete. The Social Blade LLC formula to calculate the CPM range is $0.25 USD – $4.00 USD. Many factors come into consideration when calculating a CPM like a niche type of video, the price of specific ads, Adblock, the actual click rate, Quality of traffic, source country, and much more.

The Adsense revenue differs based on the CPM. It depends on how much an advertiser is paid for 1000 views of the ad. This number can be started from $0.10 to $10, and in some cases, it can cost even more, but the most common ranges for the cost are from $0.25 to $4, and that is a default range for YouTube AdSense revenue calculations. If you have a brief knowledge about the exact CPM on your videos, you can toggle CPM slider and can get more accurate data of the cost to be calculated.


How to Set Up the Budget on Youtube Marketing?

Developing the YouTube advertising budget can be mind-blowing. Let’s know some budget-setting basics, which are very important for you to get the best return on investment (ROI) for the YouTube video ads. One of the most crucial and vital reasons for the continuous growth of the YouTube advertising and Google AdWords system is the businesses with AdWords businesses, which remained in control of their budgets and also marketing campaigns.

With the help of Google AdWords for the video, you can have the total control of your budget. When you have just started with youtube advertising, then you can start with the small YouTube advertising budget. You can set your business with a daily budget of three to five dollars. YouTube video ads are the best advertising strategy among another advertising strategy, which will gain the best ROI available. You can set your monthly budget at any time you want after you get the satisfactory returns.

Budget optimization is about using the best strategies for the business rather than simply spending more. Thus grasp a complete understanding of the relationship between CPV and the quality of the views your video receives. After understanding all the strategies of the budget, you need to experiment with your budget, and you must use performance data to find out what is working. AdWords tools like Google Analytics and conversion tracking can help you do that.


Select the Best Youtube Advertising Makers for Lower Cost Ads

Online advertising video has a huge base, so 100 hours of video are uploaded to YouTube every 60 seconds, and the viewers are always very crazy to view all these videos, so the video viewing doesn’t seem to be slowing down any time. If you are thinking of advertising on youtube, then the user can select the best youtube advertising makers who cost very low for making the ads. Although there is a lot more information available for getting the best ROI from YouTube ads, let’s discuss some of the steps which simply guide you about how to start building your YouTube presence. (Source)


Must Create a Google AdWords Account

The user must have a Google AdWords. If the user does not have the Google AdWords account, then they must create the account, and if they have the Google AdWords account, then they must go to to create a new video ads campaign.

Link Google AdWords and YouTube

The user must make sure that YouTube and Google AdWords are linked together. The user can complete this step using the navigation menu by clicking on “Linked YouTube accounts”.


After linking YouTube and Google AdWords accounts together, the user must move to the next step of setting. The user must complete the general setting by selecting the desired budget per day. It’s better for the user to start with a small budget at the start, and later the user can scale up when they get more familiar with the account and what good objectives are.

Set the Locations

The user can choose different countries, ZIP codes, IP addresses, regions, cities, and much more. It’s more specific for the user to choose the location for getting the better result.

Upload Video

The user can select the video that they upload to their account from YouTube. After completing the upload of the video, the user has to wait for the viewers to view it.

Call to Action

YouTube Ads are a great advertising option for the business as all the people get a clear idea about the brands, services, products, and much more by watching the video ads. Visual things have a significant effect on human minds, so advertising through youtube advertising is the best opportunity for the business to gain customers. In our company, we do the advertisement for you using various media or advertising, which will definitely benefit your business on a large scale.

We would love to hear your feedback on our Youtube business model canvas blog. If you have any questions you can reach to us on


Post by Gaurav Kanabar

Gaurav Kanabar is the Director of Alphanso Tech, a globally acknowledged IT consulting company providing the services in the arena of the WordPress Development Services & iPhone App Development Services. With the immense support from the adroit team, Alphanso Tech has been serving a huge client base worldwide.

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