One of the biggest misconceptions about digital media is that it’s a low cost alternative to more traditional advertising options. While years of cheap CPMs on Google and Facebook have conditioned marketers to believe they can run effective campaigns on shoestring budgets, the reality is you get what you pay for. Sometimes that means junky banner ads on Plenty of Fish and Candy Crush that do little but devalue your brand and obfuscate your media effectiveness. 

The strengths of digital include targeting and measurement but too often that translates into inefficient investments or budgets spread too thin across too many tactics. For example, if you’re aiming to build awareness of a new product or service, and have the budget to create video content, YouTube might be a great option. It reaches a huge audience, is highly targetable, and if you choose skippable ads, there’s a great KPI built in around completion rates that will let you know how well your ads are working.

But what does an effective YouTube campaign cost?

Choosing the Right Budget

Let’s say you’re launching a new product in BC that’s broadly appealing and you know your target audience is adults 25-54. There’s probably a lot of great targeting options that align with your product, from in-market audience segments to relevant content, but for this campaign, you want to make a big splash and introduce your brand to everyone in that age range. As media practitioners, we know you’re going to want to reach a high percentage of that audience and also serve them ads frequently enough to get noticed.

Google has a pretty handy YouTube estimator but it can quickly send you looking in the couch cushions. Over an 8 week campaign, to reach 50% of that audience (about a million people) an average of 6 times, the recommended budget is around $80K. That means you’re only putting ads in front of half of your audience and on average less than once per week. Some will be familiar with the messaging, but a big chunk of your audience may never see an ad.  

What if you want to reach 100% of the potential YouTube audience? Is that double the cost? Well, no, it’s actually significantly more, and you’ll hit a point of diminishing returns fast as the platform will start to build frequency against regular visitors and struggle (and make you pay more) to find those that are more sporadic. Frequency capping can help thin out to a larger audience but even if you could hit a theoretical 100% of 2 million people an average of once per week, you’d be looking at a budget in the $200-300K range. 

Suddenly those targeting segments aren’t looking too bad, right? Reaching a smaller, more niche audience will concentrate your media spend on the people you’re most likely to see results from, but there’s a good chance the optimum budget will still surprise. 

And while TV – long considered the most effective mass reach medium – has seen a slow decline in viewership, and against many audiences now has less reach than digital video, the gap between the appropriate investment for a TV campaign and a digital video campaign with similar objectives is a lot smaller than most people realize.