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Ads vs. Useful Content: How to Best Manage Your YouTube Spendings

With inflation at historic levels and war raging in Europe, the economic climate has changed dramatically in recent months. Budgets are getting tighter, also in marketing departments. But where to cut costs or double down on effort? Are YouTube ads worth the investment or are more in-depth videos the way to go? We broke down some research and shared recommendations based on our experience.

What channel type dominates on YouTube?

Our team analyzed data of 11.863 enterprise YouTube channels and identified two major types of channels that dominate on YouTube: Some companies mainly publish ads, others focus on educational and/or useful content. Both approaches are independent from company size or industry.

Ad-driven channels

ads-driven youtube channels

Examples: Persil, Volkswagen, and Coca-Cola

Content-driven channels

content-driven channels

Examples: Lewitt, OBI Baumarkt, Thermomix, Leroy Merlin

Which kind of video content has the better Return on Investment?

The trend is clear: The most popular videos on YouTube tend to be longer, according to Pew Research Center around 12 minutes. However, YouTube ads are highly effective. They do outperform TV commercials 75 percent of the time, as a Nielsen study points out. In our experience companies see the best results if they use both types of videos based on their marketing goals.

Video ads can help you…

- Quickly increase brand visibility

If you want to collect relevant leads you can then further nurture with content marketing, publishing YouTube ads can be a good starting point.

- Maximize launch sales

If you launch a new product and want to maximize your sales, you want to get your product in front of as many eyeballs as possible. Nothing beats short engaging Video ads with significant Media Budget behind it.  

- Upping one time sales

If you sell necessities or want to make sales immediately, ads are a perfect fit. They trigger a need in the short term, however their effect fades away quickly. So you either have to reinvest in retargeting or add other channels.

video ads versus content videos

Content videos can help you…

- Create long lasting customer relationships

With every content video, you gain more trust with your viewer and increase the probability of recurring revenue. Maybe you don’t make a sale immediately, but once a viewer emotionally connects to your brand, you don’t need to spend any more ad money on him to make a sale.

- Reduce money spent on video marketing

Your videos don’t need to be technically perfect to convince viewers to subscribe as long as they are helpful, inspiring or entertaining. Ads are often perceived as sleazy whereas content entices a more positive reaction.

- Improving product and offers

If you take time to build a community, answer questions and get to know viewers and subscribers, you gain valuable insights on how to improve your offer. For free.

How do you find the perfect balance?

You might say, we are biased but with 5 years of gathering thousands of data on our tubics platform and talking to hundreds of companies, we see the ROI of content-driven YouTube channels – if they are set up strategically.

Don’t just publish what you expect your customers to be interested in. Do research. Look at the data. Look at your competitors for the topics you identified as relevant. And then deliver great and useful content on a regular basis.

For your specific case we developed a concise matrix to make educated choices and we show how to work with it in different scenarios prepared below:

how to work with video ads and video content

Now let’s look at how we can use the Video Marketing Matrix in different scenarios:

Scenario 1: You might have high targets for new customers in the upcoming year and you have 1 major product launch. At the same time your existing product portfolio is in a “cash cow” stage and already fading out. In this case you might dedicate 70% of your total Video Marketing budget to Ads filling the pipeline with new leads for the new product and focus the remaining 30% on engaging the existing audience for the new product and keeping them engaged with the brand in general.

Scenario 2: In this case you have launched 3 new products in the last two years and a large cohort of your existing customers is fairly new and your Customer Case department has lots of work helping new customers with questions around the product. In this case you might dedicate 50% or more of your total Video Marketing budget to Content supporting the User Manual, explaining Use Cases and providing explanatory Video Material to strengthen ties with your audience. The remaining 50% would go into Ads converting those new customers in upselling and cross selling campaigns.

Which scenario would you choose? Share your thoughts with me on LinkedIn!

The 6-Step Guide to YouTube Content Strategy

How to build relevant video content for every business
FREE Download