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.

 

    • Related Articles

    • What is YouTube's Self-rate feature and how does it work?

      YouTube has been rolling out an experiment with a number of channels that allow the creators to rate their own videos, as to how they meet their Advertiser-friendly content guidelines. As this becomes available to a greater number of creators, we ...
    • YouTube updates Community Guidelines Strike System

      In a blog post on February 19, 2019, YouTube announced changes to their Community Guidelines strike system, effective from February 25, 2019. With the goal of educating creators, channels that violate YouTube's Community Guidelines for the first ...
    • Upcoming changes for content targeting kids on YouTube

      After concerns raised by the U.S. Federal Trade Commission (FTC) regarding YouTube's compliance under the Children’s Online Privacy Protection Act (COPPA), YouTube announced changes that will be made in about in the next four months. When ...
    • YouTube is updating the Terms of Service on December 10, 2019

      On December 10, 2019 YouTube will be updating the wording of their terms of service for greater clarity - they are not materially changing how things work, and are not introducing any changes regarding channel terminations. Here are the key items to ...
    • YouTube demonetizing videos due to inappropriate comments

      According to a publication on February 22, 2019, YouTube is demonetizing videos that have inappropriate comments. This was YouTube's response to a situation that seems to have been shared by YouTuber Matt Watson in his video, where he mentions that ...