How does YouTube ad system work?

How does YouTube ad system work?

The YouTube ad system is managed by a complex algorithm that is updated and improved periodically to provide the best possible service both to the creators and the advertisers. Essentially, what it does is display the right ad, to the right viewer at the right time.

With the information provided by YouTube, advertisers bid at auctions to buy ad placements and reach their target audience. The information the algorithm takes into consideration to display an ad in a video is taken from the creator side (content) as well as from the viewer side, such as:

  • The keywords used in the title, description and tags
  • Community engagement (comments, likes, shares…)
  • Viewers watch history, activity, device, age, location, gender, interests…

When it comes to earnings, the results can vary wildly. Ad revenue is based on a wide range of variables. Below are some examples:

  • Viewer
  • Ad type
  • Video category
  • Time of year (advertisers tend to spend more at the end of each quarter)
  • Amount of ads and placements available

Once the ad placement is sold and served, the revenue generated will be split between YouTube (45%) and the creator (55%).

With more control on how their ads budget can be spent, advertisers are more selective and spend money on more targeted audiences. This means that it becomes increasingly important for creators to focus on creating great original content, interact with the community, use all the tools that YouTube and Freedom! have available, and also make sure to follow YouTube’s Community Guidelines and Policies.

Many advertisers don’t mind to pay more to reach the right audience because in the end they get the results they are looking for. Following YouTube’s best practices described in the links above will ensure that your content is accurate and attract the right kind of viewer (the one that becomes a fan), which in turn will also keep your channel relevant for advertisers.

For a more detailed and entertaining overview on how YouTube ad system works we selected a video from a content creator that should worth 4:30 minutes of your time. Check below.


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