How to Run YouTube Ads: Master the Pyramid Targeting Technique
The Proven Framework For Running Low-Risk, High-Reward YouTube Ad Campaigns That Actually Convert
What You’ll Learn Here
How to implement the exact targeting strategy that transformed a failing YouTube campaign with 79 different campaigns from a dismal 1.16 ROAS into an impressive 4.78 — while simultaneously reducing the number of campaigns by over 90%
Why focusing on this popular YouTube ads metric is secretly killing your campaign performance — and the two hidden statistics that actually predict success before you’ve spent your testing budget
Why 94% of marketers completely ignore YouTube ads — and how their ignorance creates a massive opportunity for savvy advertisers (you!) who understand the platform’s true potential
What the most successful YouTube advertisers understand about campaign structure that allows them to scale campaigns profitably while others struggle to break even
Manual bidding is outdated and automated bidding always performs better, right? WRONG! For these certain specific campaign types, “manual” campaigns deliver superior control and performance
The sneaky way YouTube’s default campaign settings sabotage your targeting precision (and the three settings you must change immediately)
PLUS — How to create high-converting YouTube video ads even if you’re not a video expert and don’t have fancy equipment or Hollywood production values
Why Most YouTube Ad Campaigns Fail
You’ve probably heard the success stories: A simple YouTube ad campaign drives 300% ROI, a startup scales to seven figures with YouTube ads, or a course creator enrolls hundreds of high-ticket students through video advertising.
Yet when you tried YouTube ads yourself, the results were… disappointing.
Your campaign drained your budget with minimal returns. Or worse—it spent erratically, some days not delivering at all while others blowing through hundreds of dollars without a single conversion.
You’re not alone.
According to industry research, a staggering 94% of marketers are ignoring YouTube ads entirely. Among the 6% who do run YouTube campaigns, most struggle to generate positive ROI consistently.
Why? Because they’re using the wrong approach.
The problem isn’t YouTube itself. With over 2 billion monthly logged-in users and unparalleled intent-based targeting options, YouTube offers incredible advertising potential. The problem is the implementation.
Most advertisers make three critical mistakes:
Diving into the deep end first – Starting with broad audiences and automated bidding before proving their offer works with high-intent viewers
Creating unnecessarily complex campaigns – Setting up dozens of micro-targeted campaigns that make optimization nearly impossible
Optimizing based on the wrong metrics – Focusing on view rate or impressions rather than the metrics that actually predict conversion success
After running YouTube ad campaigns for 9 years (and Google ads for 14), managing millions in ad spend, and helping businesses from startups to international brands, I’ve developed a system that eliminates these problems.
It’s called the Pyramid Targeting Technique—and it’s about to transform how you approach YouTube advertising.
The Secret Framework Used by 6-Figure YouTube Ad Managers
Before diving into the framework, let me briefly introduce myself. I’m Alex King, founder of Adzoola and YouTube ads specialist. My background includes:
14+ years of Google Ads experience
A 4-year Marketing degree with industry placement
Managing YouTube campaigns across dozens of industries
Helping businesses achieve consistent ROAS while minimizing risk
The Pyramid Targeting Technique I’m about to share isn’t theory—it’s the actual system I use with clients who are spending anywhere from $5,000 to $50,000+ monthly on YouTube ads.
This framework emerged from necessity. Many of my clients needed fast results with minimal risk. They couldn’t afford to spend thousands testing broad audiences before finding what works. They needed a system that:
Minimizes risk while maximizing potential return
Provides clear, actionable data within days, not weeks
Creates a reliable path to scale once initial success is proven
Works consistently across different industries and offers
That’s exactly what the Pyramid Targeting Technique delivers.
Pyramid Targeting: The Complete System Explained
The Pyramid Targeting Technique is a strategic framework for implementing and scaling YouTube ad campaigns with maximum control and minimum risk.
Here’s what it looks like:
The framework is simple: start at the top of the pyramid with the most targeted, highest-intent audiences, and only move down once you’ve proven success at the current level.
Think of this as a game where you must complete each level before advancing to the next. If a level isn’t working, you either optimize it or move back up to a more controlled level.
This approach completely reverses how most advertisers tackle YouTube. Instead of starting with broad targeting and automated bidding (which requires significant data and budget to work effectively), you begin with precise targeting and manual control.
Let’s break down each level of the pyramid in detail.
Why Simplicity Trumps Complexity in YouTube Ads
Before diving into the specific levels, it’s crucial to understand a fundamental principle: simplicity beats complexity in YouTube advertising.
I once audited an account with 79 different YouTube campaigns—all created within a few weeks. These campaigns were segmented by age, gender, income, parental status, device, and even slight variations in target CPA.
The result? A dismal 1.16 ROAS, despite significant spend.
When I restructured the account with just a handful of campaigns using the Pyramid Targeting approach, ROAS jumped to 4.78.
The reason is simple:
Complex campaigns create friction – Too many variables make it impossible to identify what’s actually working
Data gets diluted – When your budget is spread across dozens of campaigns, none receive enough data to optimize effectively
Management becomes overwhelming – The more campaigns you run, the less attention each receives
The optimal campaign structure for most advertisers is:
One campaign per targeting level/audience
One ad group per campaign
Two ads per ad group (for testing)
This structure provides clean data, clear results, and manageable optimization—all of which are essential for success.
Now, let’s explore each level of the pyramid in detail.
Level 1: Placement Targeting (High Intent, Maximum Control)
At the top of the pyramid is placement targeting—the most precise method available on YouTube.
Placement targeting means showing your ads on specific videos or channels that your ideal customers are watching right now. This gives you unparalleled control over where your ads appear.
Key benefits of placement targeting:
Maximum relevance – Your ads appear alongside highly relevant content
Highest intent – You reach people actively consuming content related to your offer
Complete control – You decide exactly which videos or channels display your ads
Low budget requirement – You can test effectively with minimal spend
Fast data collection – Clear performance signals within days, not weeks
How to implement placement targeting:
Identify high-intent keywords related to your offer
Use Adzoola or YouTube search to find videos around these topics
Look for videos with commercial intent (reviews, comparisons, how-tos)
Create a list of 50-200 relevant videos depending on your budget
Set up a video campaign with maximum CPV bidding
IMPORTANT: Turn off "Video partners on the display network"
Start with a higher bid (around $1-2) to ensure impression delivery
Monitor performance and optimize based on CTR and conversion metrics
Example:
Selling premium espresso machines? Find video placement targets like:
“Best espresso machine reviews”
“Prosumer espresso machine comparison”
“How to choose an espresso machine”
Important note: With recent changes to YouTube ads, placement targeting is now only available in custom video campaigns with manual bidding, not in the drive conversion campaign type. This is actually an advantage, as manual campaigns typically perform better for this targeting level.
Level 2: Keyword Targeting (Expanded Reach, Strong Control)
The second level of the pyramid is keyword targeting. This expands your reach while maintaining strong targeting control.
With keyword targeting, YouTube shows your ads on videos related to your chosen keywords, as well as to viewers who have recently watched content around these topics.
Key benefits of keyword targeting:
Expanded reach – Significantly more impressions than placement targeting
Strong relevance – Your ads still appear in contextually relevant environments
Intent signals – You target people expressing interest in specific topics
Moderate budget requirement – Effective testing possible with modest spend
Good data collection – Clear performance signals within a week
How to implement keyword targeting:
Start with the keywords that worked best in your placement research
Add 5-15 closely themed keywords per campaign
Set up a custom video campaign with maximum CPV bidding
Turn off "Video partners on the display network"
Start with a competitive bid (similar to placement targeting but -50%)
Monitor performance, identifying which keywords drive results
Optimize based on performance data
Pro tip: Keep your keywords tightly themed in each campaign. Don’t mix keywords from different intent categories or topics. If needed, create separate campaigns for different keyword themes.
Example:
Let me share how I’d approach keyword targeting for an online fitness coach selling a 12-week transformation program:
Example YouTube Keyword Campaign Setup
After seeing success with placement targeting, I’d analyze which video placements performed best and extract the common themes, for example they might be:
- Workout efficiency (getting results with minimal time)
- Home workouts (no gym required)
- Nutrition planning alongside exercise
I’d create a tightly-themed keyword campaign focusing on home fitness with keywords like (remember this is just an example, you’ll do your own research!):
- nAd group: Home Workout
- P"home workout no equipment"
- P"efficient home workouts"
- P"15 minute home workout"
- P"bodyweight workout routine"
- P"home workout meal plan"
Keyword Bid
Note: Keyword targeting is only available in a manual campaign (more on that later).
So I’d set my Maximum CPV bid at $0.50-0.75 (typically lower than placement campaign bids), then adjust based on impression delivery and performance
Expected performance patterns for YouTube keyword targeting:
- Significantly higher impression volume than placement targeting
- Moderate view rate (15-25%) CTR around 1-2% for well-optimized ads
- Conversion rates slightly lower than placement targeting but still profitable
- Overall better scale potential while maintaining acceptable CPA
This approach to keyword targeting on YouTube typically expands reach by 300-500% compared to placements alone. The performance data then informs my custom segment strategy for Level 3, as I can use the best-performing keyword themes to build powerful custom segments.
Important note: With recent changes to YouTube ads, keyword targeting is now only available in custom video campaigns with manual bidding, not in the drive conversion campaign type. This is actually an advantage, as manual campaigns typically perform better for this targeting level.
Level 3: Custom Segments (Strategic Reach, Moderate Control)
Once you’ve proven success with placements and keywords, you can move to the next level: custom segments.
Custom segments allow you to create audiences based on search behaviour, interests, and website visitation. This targeting expands your reach significantly while still maintaining some control over audience quality.
Key benefits of custom segments:
Strategic audience expansion – Reach people beyond direct content consumption
Intent-based targeting – Still capture users with demonstrated interest
Flexible creation options – Multiple ways to build relevant audiences
Medium budget requirement – Requires more testing budget than previous levels
Moderate control – Less precise than placements/keywords but more controlled than broad targeting
How to implement custom segments:
Create custom segments based on:
- Search terms people have searched on Google (highest intent)
- Interests related to your offer
- Websites your target audience visits
Set up a Video campaign with Drive Conversions subtype (now Demand Gen)
Note: Video Action Campaigns (VACs) have been moved to Demand Gen campaigns - more on that later.
Use automated bidding (Maximize Conversions or Target CPA)
Start with 2-3 separate campaigns testing different segment types:
- Campaign 1: Search-based custom segment (most specific)
- Campaign 2: Interest-based custom segment
- Campaign 3: URL-based custom segment
Allow each campaign sufficient budget and time (at least 2 weeks)
Optimize based on conversion data
Pro tip for custom segments:
When creating search-based custom segments, use 5-10 high-volume keywords for best results. For more niche offers, you can test a combination of 5 high-volume keywords plus 10-15 more specific keywords.
Estimated weekly impressions seem to be wildly inaccurate. Sometimes it’ll show no impressions available but the campaign the audience will still work. So I wouldn’t place too much weight on this. But the Topics section where it shows ‘This segment visits websites related to these topics’ is useful to check it’s along the right lines for your target audience.
Important note: With recent changes to YouTube ads, custom targeting is now only available in Demand Gen campaigns with automated bidding, not in the drive conversion video campaign subtype (known as Video Action Campaigns or VACs). More on this later.
Level 4: Other Audiences (Scale with Less Control)
The bottom levels of the pyramid include topics and other audience types like affinity, in-market, and life events. These offer the greatest reach but require more budget and provide less control.
Only move to these levels after proving success at the higher levels of the pyramid (or if your market/audience is smaller e.g. local services).
Key characteristics of these targeting options:
Topics – Target videos about specific categories (limited options available).
Note: Topic targeting on YouTube is only available with manual bidding (not automated). So you’ll need to follow the same campaign set up as described earlier for placements or keywords – i.e. a manual campaign.
Affinity audiences – Reach people with long-term interests related to your offer
In-market audiences – Target people actively researching or planning a purchase
Life events – Reach people experiencing major life changes
When to use these targeting options:
You’ve proven your offer works with more targeted methods
You have sufficient budget for proper testing ($100+ daily per audience)
You have enough conversion data to feed automated bidding algorithms
Your campaign economics allow for potentially higher acquisition cost
How to implement:
Set up a Video campaign with Drive Conversions subtype (now Demand Gen)
Note: Video Action Campaigns (VACs) have been moved to Demand Gen campaigns - more on that later.
Use automated bidding with Target CPA or maximize conversions
Test audiences individually before combining them
Give each audience at least 2 weeks of consistent spend
Be prepared for potentially unstable performance
Especially with in-market and life events audiences
Pro tip: In-market and life event audiences can be unstable due to their temporary nature. Affinity audiences are more stable but typically have lower conversion rates. Balance your portfolio of audience types for consistent overall performance.
Important note: With recent changes to YouTube ads, these targeting options are now only available in Demand Gen campaigns with automated bidding, not in the drive conversion video campaign subtype (known as Video Action Campaigns or VACs). More on this later.
How to Structure Your YouTube Campaigns for Maximum Performance
Now that you understand the different levels of the pyramid, let’s discuss the optimal campaign structure to implement this strategy.
The simplest and most effective structure is:
One campaign per targeting level/audience
- NKeeps data clean and makes optimization straightforward
- NAllows for precise budget control per targeting method
One ad group per campaign
- NSimplifies management and analysis
- NProvides clearer performance signals
Two ads per ad group
- NEnough for effective testing without diluting impressions
- NAllows for clear winner determination
For example, if you’re selling a fitness program, your initial campaign structure might look like:
Level 1 (Placements)
Campaign: Fitness Program – Home Workout Placements
- nAd group: Home Workout Placements
- YouTube Ad 1: Problem-focused angle
- YouTube Ad 2: Solution-focused angle
Level 2 (Keywords)
Campaign: Fitness Program – Home Workout Keywords
- nAd Group: Home Workout Keywords
Same two YouTube video ads as in the placement campaign
- YouTube Ad 1: Problem-focused angle
- YouTube Ad 2: Solution-focused angle
Once these prove successful, you might add:
Level 3 (Custom Segments)
Campaign: Fitness Program – Home Workout Searches
- nAd group: Home Workout searches
Same two video ads (or new variations based on learnings)
- YouTube Ad 1: Problem-focused angle
- YouTube Ad 2: Solution-focused angle
This simple structure makes it easy to:
- NIdentify which targeting methods work best
- NAllocate budget effectively
- NMake data-driven optimization decisions
- NScale successfully to lower levels of the pyramid
Remember: only move down the pyramid when the current level is working. If you’re not seeing success at the placement level, don’t rush to custom segments or in-market audiences. Instead, refine your targeting or creative at the current level.
The YouTube Ads Evolution: From VACs to Demand Gen
If you’ve run YouTube ads before, you may be familiar with Video Action Campaigns (VACs). Here’s what you need to know: Google is retiring VACs and replacing them with Demand Gen campaigns
This transition affects how you’ll implement the lower levels of the Pyramid Targeting Technique.
What This Means for You
Manual campaigns
(Custom Video Campaigns) remain the best option for the top of the pyramid (placements and keywords), giving you maximum control and specificity.
Demand Gen campaigns
Demand Gen campaigns now replace VACs for the lower pyramid levels (custom segments, topics, and other audiences) where you want broader reach and automated optimization.
Key Benefits of Demand Gen Campaigns:
Expanded Reach - Access to multiple feeds beyond YouTube:
* Google Discover
* YouTube Home feed
* Shorts feed
* Gmail
Lookalike Audiences
Similar to Facebook’s lookalike capabilities, helping you expand reach while maintaining relevance
Improved Automated Optimization
Enhanced machine learning to find your ideal customers
When implementing the lower levels of the Pyramid Targeting Technique, you’ll now set up Demand Gen campaigns instead of VACs, selecting your conversion goals and letting Google’s algorithms optimize for your goals.
This change actually enhances the Pyramid Targeting approach by providing better scaling options once you’ve validated your targeting and creative with the more controlled methods at the top of the pyramid.
YouTube Ad Campaign Setup Essentials: Avoiding Critical Mistakes
Getting your campaign settings right is crucial for the Pyramid Targeting Technique to work effectively. Here are the essential setup elements for each level:
For YouTube Placement, Keyword & Topic Targeted Campaigns (Top of the Pyramid):
Video campaign subtype: Video views campaign (VVC)
Bidding Strategy: Maximum CPV (manual bidding)
Networks: YouTube videos only (UNCHECK “Video partners on the display network”)
Initial Bid: Set higher than you might expect ($1-2 for placements, $0.30 to $0.50 for keywords) to ensure delivery
Devices: Consider starting with desktop only for lower budgets (typically higher conversion rates, although far few impressions)
Frequency Capping: Optional, but 3-7 impressions per week is reasonable
For Custom Segments & Broader Audiences (Lower Pyramid):
Campaign Type: Drive conversions (previously Video action campaigns) Now Demand Gen
Bidding Strategy:
For initial testing: Maximize conversions
With more data: Target CPA or Target ROAS
Networks: All networks (can’t disable video partners on drive conversions campaigns)
Optimization: Initially turn OFF optimized targeting until your segment performs well
Budget: Allocate enough to run the campaign for at least 2 weeks.
Avoid These Common But Critical YouTube Ad Campaign Setup Mistakes
Mixing different targeting methods
Mixing different targeting methods in the same campaign (e.g., combining placements with topics) dilutes your data and makes it impossible to determine which targeting method is driving results.
Keep each targeting level in its own campaign for clean performance analysis.
Leaving "Video partners on the display network" enabled for placement campaigns
This completely negates your targeting control, as your ads will show on random websites instead of your chosen YouTube videos.
Low bids for the most granular targeting
Setting bids too low on manual campaigns (the top levels of the pyramid) will lead to few or no impressions.
If you’re not getting impressions, double your maximum CPV bid every 48 hours until delivery begins
YouTube Ads Performance Analysis: What Really Matters
One of the biggest mistakes YouTube advertisers make is focusing on the wrong metrics. Let’s clear up what actually matters:
YouTube campaign metrics that DON’T predict success:
View rate (someone not skipping isn’t the same as someone interested in buying)
Impressions (meaningless without conversions)
Raw view count (vanity metric)
YouTube campaign metrics that DO predict success:
Click-through rate (CTR) – Shows genuine interest in your offer
Cost per click (CPC) – Indicates efficiency of traffic acquisition
Conversion rate from clicks – Shows landing page/offer effectiveness
Cost per acquisition (CPA) – The ultimate performance indicator
When analyzing a new campaign, focus on CTR and CPC first—these are leading indicators that appear before you have enough conversion data. A strong CTR (0.8%+) with a reasonable CPC is a positive early signal, even before conversions start rolling in.
Pro tip: Create a custom column in Google Ads for click-to-conversion rate. The default conversion rate column measures conversions against engagements (usually 10-second views), which can be misleading.
Creating High-Converting YouTube Ads (Without Being a Video Expert)
The final piece of the puzzle is creating effective video ads. The good news? You don’t need Hollywood production values or a massive budget.
In fact, some of the highest-performing YouTube ads are remarkably simple. Let’s look at the essential structure of an effective YouTube ad using my ACC (Attract, Convince, Convert) method:
1. ATTRACT (First 5-30 seconds)
- Grab relevant attention in the first 5 seconds
- Call out your target audience clearly
- Make a compelling promise or ask an intriguing question
- Include your brand name/logo for awareness
2. CONVINCE (Middle section)
- Expand on your initial promise/claim
- Demonstrate the value proposition
- Add credibility elements (testimonials, results, authority signals)
- Address major objections
- Show your offer in action
3. CONVERT (Final section)
- Clear, direct call to action
- Add urgency or scarcity if authentic
- Reiterate the main benefit
- Tell viewers exactly what to do next
- Allow 5-10 seconds of quiet time at the end for action
Simple videos often outperform complex ones. A talking head, smartphone-filmed demonstration, or even an animated explainer can drive excellent results if it follows this structure.
Ready to Master YouTube Ads?
You now understand the core principles of the Pyramid Targeting Technique—the framework that’s helped my clients achieve consistent ROI while minimizing risk.
But knowing the principles is just the beginning. Successful implementation requires:
Deep research to find the perfect targeting at each level
Precise campaign setup to avoid costly mistakes
Strategic optimization based on the right metrics
Compelling creative that converts viewers to customers
If you’re ready to master YouTube ads and implement this system for yourself or your clients, I invite you to join my comprehensive YouTube Ads training program.
In this program you’ll get:
Step-by-step implementation of the Pyramid Targeting Technique
Done-for-you research templates and campaign checklists
The complete ACC Video Ad Builder and Analyzer
The Scenario Testing Calculator to predict campaign performance
Whatever path you choose, remember the fundamental principle of the Pyramid Targeting Technique: start with maximum control and minimal risk, then expand only when you’ve proven success.
Good luck with your YouTube advertising journey!
By Alex King
FOUNDER OF ADZOOLA
Alex King is the founder of Adzoola, a YouTube ads specialist, and creator of the Pyramid Targeting Technique. With 14+ years of Google Ads experience and a background in marketing, Alex has helped businesses across dozens of industries achieve consistent ROAS while minimizing risk. His approach combines strategic targeting, efficient campaign structure, and data + AI + Human-driven optimization.
