YouTube Videos are More Valuable Than They Seem

YouTube Videos are More Valuable Than They Seem
Posted on
Ari Simchi

YouTube ads are a topic known to raise a skeptical eyebrow among digital marketers. While no one doubts the impact and possible benefits of a successful video / video ad, the high-cost minimum CPM and the resources required to produce a high-quality shareable video leave most with a sense of trepidation. 

The difficulty in tracking conversions is also a hindrance to building confidence in the platform. YouTube is typically a top of the funnel marketing tool used as a means to enhance brand ambassadorship / awareness and thought leadership. As with all top of the funnel enterprises, conversions can be difficult to measure as they are often indirect. As such, it’s easy to question the ROI of video content.

As I’ll explain further on in this article, Google’s YouTube reporting also diminishes the effect of a video campaign’s true cost per conversion, failing to account for numerous indirect shares.

Born in a Vacuum 

Let’s begin with a simple thought experiment.

Imagine a business, e-commerce or otherwise, that is beginning to develop an online presence. They currently have little social media following and have never made a YouTube video.  But, in a recent marketing meeting, one of the company’s new hires, a twenty-something fresh out of graduate school, insists video marketing is the future. This employee presents his case with well-reasoned points and clarity. So the marketing department approves the creation of a video to be posted on YouTube and used as an ad on YouTube’s video pre-roll.

In this instance, the video will in essence, be born inside a vacuum. What I mean by this is any organic views the video receives; in addition to SEM views driven by ads are due in part or completely to the ad, i.e., the ad drew clicks to the video, which viewers then shared. But, those shares would not have occurred if not for the ad.

This will affect the true cost per conversion and “effective” average cost per click of your video. Google will only report your cost per click based off of the clicks the ad received, where in reality, due to the newness of the channel and lack of following, it is logical to attribute every view to ad clicks or shares derived from ad observations.

This is only true for nascent channels and brands without a major following, where we can safely assume that returning users and brand fans didn’t seek the video out directly.

To further elucidate this subtle point, let’s take a gander at the chart below.

This chart displays analytics for an imaginary video ad. Column B displays what Google provides, and column C displays the augmented numbers taking shares into account.

As you can see, when drawing a causal line between the social shares of nascent channels to the ad that led to them, the true cost per conversion meets the optimal goal of $100 or less with the share effect, whereas it does not in Google’s reporting. The impact of meeting or not meeting this goal will often impact the decision to continue scaling up with the video or cutting costs. So, a reassessment that takes you from one side of the fence to the other is definitely worth considering.

One thing to keep in mind is although Google does provide cost per conversion and earned shares metrics, simply relying on these two numbers will not suffice to provide the true cost per conversion of the video ad. Earned shares will only account for social shares performed directly through their platform, i.e., by use of their social share icons and email option. Whereas it is highly likely more shares occurred by viewers copying the URL and pasting onto another platform or in their email. Also, word of mouth shares are not reported.

So how should one calculate the true cost per conversion of a fledgling channel’s video ad? Simple. Look at the total views. The total views creates an “effective” cost per click by dividing total cost from total visitors.

Doing so will provide the sum of total inorganic and organic views, which as we’ve discussed, can all be attributed to the ad, given the account’s nascent stage of development.

Shareability is Key

What may not be clear from the above discussion is the importance of “shareability”. It is the video ad’s shareability factor that led to the video’s increased value. Once you have a shareable video, you have a potential profit model.

To be clear, by shareable, we don’t mean viral. A viral video will get shared more than once for every time it’s viewed. A viral video will continue to grow and gain traffic on it’s own without the need for input by digital marketers. Where a shareable video has qualities that lead many people to share it, but still requires some monetary assistance to get the ball rolling.

If we look at all YouTube videos as existing on a spectrum between failures no one clicks on and viral, shareable videos would fall in the middle.

Shareability is key to success. Easier said than done, right?


It’s all a matter of a/b testing.  To gauge a video’s inherent potential for shareability, it’s wise to create a few different cuts of a video (different perspectives, voicing, style, etc.) and see which one performs best, before spending a larger amount of ad dollars.

The Final Word

It is a logical assumption to attribute all video views to an ad when the video is posted to a new channel with a minimal following and low volume of direct traffic.

Given the fact that Google’s YouTube reporting only uses ad clicks to calculate revenue gleaned, the actual value of the video ad is underestimated. In reality, given the circumstances, the total views (including shares and organic views) are rooted in the ad campaign.

Thus the cost per conversion for the video is lower than shown in Google’s Youtube reporting.