An auction determines which ads are shown, the order they will appear, and
how much they will cost. Like the Google Ads auction, YouTube ads are ranked based on Ad Rank, which is based on
the maximum CPC bid and the ad’s quality score.
$$Ad \;Rank = CPC \;bid × \;Ad \;Quality$$
The quality score of an ad is determined by three main components, with the
click-through-rate (CTR) being the most significant. CTR is a way to incorporate user feedback into
the Ad Rank and measure how relevant the ad is to what the viewer is seeking. The second largest
component is ad relevancy, which ensures that users are presented with relevant and useful ads. The
third component is landing page quality, which evaluates the quality and relevance of the landing
page that the ad leads to. (See section
Google’s Ad Auction —
How it Works in Chapter Search Advertising for more details on YouTube ad auctions).
Google Ads provides advertisers considerable information on the performance of their ads for optimization
and testing purposes. Key metrics include views (completed views as well as quartiles), reach and frequency, engagement
metrics such as CTR and clicks on other interactive elements, and average cost-per-view.
These metrics are covered in more detail in
sections YouTube Analytics and
YouTube Ad Testing Framework (Copy Testing)
They help advertisers evaluate their video ad spend and optimize
their spend on YouTube advertisements.
