The Anatomy of an Effective YouTube Ad – A Must-Read Guide

YouTube is currently the second biggest search engine after Google and with 2 billion logged-in monthly users, it’s a great opportunity for companies to advertise their products and reaches the audiences they want to convert into customers.

Video content is also becoming the most favorable type of content that people prefer to consume and therefore advertising your company and its products or services on YouTube with a video ad makes a whole lot of sense these days.

But before you can get cracking on your amazing new video ad or YouTube, there are a lot of things you need to know in order to make sure you get the most value out of advertising dollars spent on YouTube and that you are connecting with the right audience in the right way.

A YouTube ad is made up of a variety of elements that all work together to produce the kind of return on investment that makes this advertising space so popular. But more than just the video ad itself, you also have to consider the placement on YouTube, the targeting, the keyword phrases, how to interpret the data from your ad’s performance, and much more.

Let’s take a look at the complete anatomy of a YouTube ad and how you can set one up for yourself and start reaching new customers on YouTube.

PART 1: The Setup

Before you create a video for your Youtube ad you should first be aware of the options that Youtube gives you to work with. This is important because a good understanding of how the system works and how you can work within the system allows you to create a video ad that will maximize your efforts and budget most effectively.

In this article, I will be listing the important features that you need to master for your advertisements to perform well on Youtube. There is no set recipe but instead, I’ll be showing how to utilize the system and optimize these features. I will also be going into how you can modify your videos to work well.


Youtube allows you to have four types of campaigns with their advertising campaigns, each with their own purpose. In this article, we’ll be focusing on two types of campaigns that will help your business succeed on the platform.


Lead campaigns are designed for conversion, meaning it comes with features that promote turning viewers into customers. A prime feature would be the ability for customers to interact with your business without having to leave the Youtube application.

Products and brand considerations

Products and brand considerations are designed to reach a wider audience. The features in this type of campaign are more for brand awareness and reaching people.

Create an audience

Youtube allows you to give parameters for who to show your advertisements to. This includes parameters such as gender, age, nationality, etc. Some users have found greater results with playing with these parameters than others.

You should adjust accordingly depending on what type of product or business you are advertising and who exactly you are targeting with your advertising.

Conversion and tracking conversion

Conversion in the simplest terms is when an advertisement you’ve posted on Youtube ends up as a sale on your website. How Youtube tracks conversion is by giving you a code that you add to your sales page on your website, meaning the part of your website that a person sees after they’ve bought a product. Youtube tracks down users that clicked on your ad and when they end up buying something from your website.

Keywords and Topics

Aside from the actual advertisement, this is an extremely important factor in determining how well your ad will do on youtube. The more optimized you set up your keywords and topics, the better chances that your ads will be played to viewers and in turn increase your conversion rates.

The best way to set up keywords and topics is to find a combination that reaches an audience that is untapped by your competitors or would most likely lead to conversions. There is no set recipe on how to do this and it goes down to having to run multiple small scale campaigns to get a good idea on what works for your product and what doesn’t.

A good system to set in place is to run small scale campaigns for a week or two at a time and look at what results they produce. Some might lead to higher views while others might lead to higher conversion.


There are 3 different ways that Youtube can display your advertisements to your audiences. They each have their own advantages and disadvantages, so let’s see how they work.

In-Stream and Pre-Roll

In-Stream advertisements are ads that are played within a video.

The pro of this type of advertisement is that you can play longer advertisements including a call to action, which is a banner that they can click that will lead them directly to your website.

The con of this type of advertisement is that it is skippable.

The purpose of this advertisement is for introducing your brand and products or services to both new and older audiences. 


Bumper advertisements are ads that are played at the end of a video. These advertisements are short 6 second clips that cannot be skipped by viewers.

The pro of this type of advertisement is that it is not skippable by viewers.

The con of this type of advertisement is that because it’s so short you really won’t be able to say anything of substance about your product or business.

The reason why you would get this type of advertisement is for exposure and to get more people to be aware that your brand exists.


In-display videos are ads that are shown on the side. Your audience can only view this advertisement if they click on the link displayed.

The pro of this type of advertisement is that it leads to higher conversion rates, this is because your audience chooses to watch your advertisement and learn more about your products or services.

The con of this type of advertisement is that it doesn’t do very well for promotional and brand awareness purposes.

The reason why you would get this advertisement is for retargeting campaigns and to appeal to already interested buyers.

Tip: If they don’t watch then you don’t pay

I’ve mentioned earlier how Youtube charges you. Every time an advertisement is viewed you a certain price will be deducted from the budget you give to Youtube. For advertisements like In-Stream and Pre-Roll if a user watches less than 20 seconds of your advertisement then you won’t be charged for that view.

There are some pros and cons to this depending on what you’re campaign’s objective is. If it’s for brand exposure then it may be of some use, however, it comes at a cost of a lower conversion rate as this is an indicator that viewers are not interested in your product/business.

Frequency Cap

A frequency cap is used to determine how many times a person can see your ad before it stops playing for them. This may sound counter-intuitive at first but this is actually a good thing. It’s good because it doesn’t make your ad spam your audience’s Youtube viewing.

Part 2: The Ad

Working with the Placements

The type of video you’ll be making will depend on what kind of placement you are going for. If your budget is limited you can always opt to use one video and have it show on multiple placements. On the other hand, if you’re willing to invest more you can make video ads that have different goals.

5-second rule

If you have ever seen a Youtube ad you would know that you can skip an advertisement after it has played for 5 seconds. With this, it’s only logical that you do your best to capture your audience’s interests within those 5 seconds.

How will your ad be appealing?

This is the part where you decide whether you want your advertisement to speak about the value of your product or to give your product a story or background that people can relate to. This part might not seem very important, but it helps to bring clarity and perspective on what kind of ad you can focus on creating.

A “value” type of advertisement would be an ad that speaks all of the benefits of having your product. You would say “This wallet has 100% European Alligator leather” or something along those lines. This would be more appealing to people who are looking for a wallet and just need to choose.

A “feeling” type advertisement would be an ad that tells a story revolving around your product with the objective of making your customers “feel” something. You would show a Father giving a wallet to his son. This would be more appealing to people simply going about their day and it makes your advertisement more memorable.

You do not have to exclusively be a value type or a feeling type of advertiser. There are plenty of companies that do both and do them well. An example of this would be Colgate’s Advertisements. Colgate’s adverts always show someone with bad breath and that feeling of embarrassment when people can smell it. Colgate also shows the solution their product offers to that problem. 

The video

Video ads offer the opportunity for your ads to say something. This might sound corny or vague but the majority of iconic advertisements are video advertisements. A clear example of this would be the Coca Cola 1971 ‘Hilltop’ advertisement or the advertisements from Nike’s Just Do It campaign.

The reason why I’m emphasizing the creative side of your video is that you’ll be investing loads of money to get people to watch the videos you put out.

It’s important for your video ad to be relevant to the current culture of the Internet in today’s world. This includes references to styles of aesthetics, movements, etc. that are popular now.

These topics that people are accustomed to are generally good because it is familiar and at the same time you can put your own twist on it that can generate interest, which you could then use to sell your products or services through the platform.

Non-video ads on Youtube

Non-video ads on Youtube will also work, considering that Youtube is one of the most used websites in the world. The problem with non-video ads is that it doesn’t take advantage of Youtube as a platform. Youtube gives a different opportunity to present your products or services to audiences compared to other websites.

You have to remember the reason why people are on Youtube is to watch videos, so rather than being in the background, it would be better to go along and be a part of the user’s engagement with Youtube.


TIP #1

Identify the type of advertisements you need. The type of advertisement should be suited to the product that you are advertising with your YouTube campaign. Types of advertisements include product reviews, testimonials from customers, demonstrations, descriptions of your product, or a story featuring your product.

TIP #2

Ther are two key elements to a great video, a hook, and an action. The hook is what generates interest from your audience, catching their attention by giving them a new idea or perspective.

From this, you can direct the attention towards motivation and your advertisement can be used to direct this motivation into action, which is either going to your website, purchasing your product, doing more research on your company, or just a niche impression that would lead to your audience being more active within your market.

The reason why this works well is that you are constantly changing up the content of your video advertisement, based on different interactions you want to achieve with your audience. By being dynamic you are able to build interest and from there you can convert that interest into a perceived need. Through marketing your product well, your customers would then find the motivation to take action which would lead to conversion or sales.

The general psychological aspect that this method of video advertising is based upon, is the fact that people will always try to find a way to improve the quality of their life. Using these objectives in your video advertisement and executing them well will allow you to take advantage of this.

Tip #3

To make a video you should consider how much resources, the logistics, and work that is required to make your video advertisement.

Tip 3.1

The first thing you should consider is the creative work that is put into a video. When creating a video, a director would create a storyboard or a description of how the video would look and would pitch it to their clients, which would be you in this case.

The key here is to communicate with your director well and to also try to put your vision into the planning of the video. Use their expertise to your advantage as much as possible in order to create your ad. The ad that is pitched to you should be something you would personally like and pay for rather than something that they tell you will sell. A good ad is something that resonates with you as a business and at the same time be visually appealing and interesting.

Tip 3.2

The next thing you should consider is the production work that it takes to create a video advertisement. This can range from animation to filming locations depending on the available resources you have and what you decide is best for your product. The latter requires a film crew with camera work, lighting, props, and many more logistical requirements.

Tip 3.3

The cheapest way when starting out is to go with an animated advertisement that can range from advertisements that resemble PowerPoint slides or even simple graphics like a hand drawing on a whiteboard. 

The more high-end type of video advertisement are usually the ones that involve people so you have to take into account the actors, film crews, equipment rentals, director, working with agencies, setting a schedule, finding a good location, writing a good script, props for the ad, and managing all of these to make sure that your money isn’t wasted by delays. The reward is a more professional looking advertisement that separates you from a regular online business.

Tip #4

Another way to advertise your business on YouTube as a platform is by working with content creators. This is a good way to achieve organic growth because having a content creator advertise your product is practically them vouching for your business and services to their audience.

The trick here is looking for content creators that you can work with and that have a potentially good audience that will help your business grow. The audience can either be big and have low conversion rates because your business is just included in a shout out and doesn’t resonate with their audience, or it could be a smaller audience that has a high conversion rate because your business is featured in the content creator’s videos and resonates more with their audience.

If you plan on doing this you would need to sponsor the channel. You can either do this by paying the content creator or by creating X-deals.

You should do research on the usual rate that content creators are paid, based on the subscribers and viewers and from there negotiate a deal with the content creator.

It’s important to communicate with the content creator on how you want them to advertise and present your product. This includes how often and when to advertise your product in their videos.

Note: It is up to you on whether you wish to give the content creator creative freedom when advertising your product. This depends on how important it is to maintain a brand image for your product to their audience.

There are pros and cons. The pro is maintaining your brand image and professionalism but at the same time it may look generic and the audience might not be interested especially if the content creator does not mix your advertisement well with their video.

Allowing the content creator to have creative freedom with how they advertise your product will make it seem organic and at the same time interesting and engaging to their audience. This option is really dependent on how the channel is and how it relates to your product and how related it is to your business or service for this to work.

Tip #5

Diversify your advertisement by using different kinds of placements. As mentioned earlier in this article, in order to maximize the video advertisement you paid for you could use the same video for multiple placements. This could work better for a variety of reasons, such as being a cheaper means of advertising and reaching different audiences in different ways,

Tip #6

Run multiple campaigns on the same advertisement. Youtube allows you to run multiple campaigns and set a budget for each and every campaign. Use this try and reach different audiences with different keywords, topics, search parameters, filters, and placements to get different results.

There is no set recipe when optimizing your campaigns, so it’s best to gather data and see what works with your advertisement and what does not. Some campaigns will bring profit while other campaigns will be at a loss. See what works and what doesn’t and continually try to improve your numbers within the platform.


Remember that the market is always changing and that Youtube is constantly improving and changing as an advertising platform. The best way to adapt and constantly come out on top is to create a system on how you operate. This includes creating advertisements and posting your advertisements on Youtube. The information in this article should be used as an introduction to operating and creating successful advertisements for Youtube.


Retargeting campaigns have been shown as one of the best ways in gaining conversions. This is because members of this audience have already shown an interest in your niche. Take advantage of this by setting up your keywords, topics, and parameters to match this audience and create your video ad in such a way that would convince them to buy your product rather than introducing it.


Play with keywords. Advertisements compete in Youtube through a bidding system. You set a bid for each time an advertisement will get played. The ideal balance is finding an audience that allows you to get the cheapest bid while at the same time get a good number of views. This works especially well with retargeting campaigns because your goal is already to target a certain market.


Now that we’ve covered the complete anatomy of a YouTube ad, I hope that you are already in the planning phase of your next YouTube ad to help take your company and products or services to the next level.

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