Being a YouTuber, maybe you achieved monetization goals on your YT channel. But your channel is not generating the desired revenue you thought it would from running ads. A lower YouTube CPM could be the culprit behind your channel not being able to ramp up revenues despite monetizing it.
Confused about what is YouTube CPM? Understanding YouTube CPM is the key to unlocking its immense potential and ramping up ad revenues. It is a commonly used term in the YT fraternity. When you know what is YouTube CPM, you can maximize its gains and demonstrate the value of your content.
Table of Contents
What Is CPM On YouTube?
CPM or Cost Per Mille is the cost an advertiser needs to pay to YouTube for every 1000 ad impressions. Every time that an ad is displayed, it is counted as an impression. CPM is variable depending on you much the advertiser pays to display the ad on the creators’ videos. It also depends on factors like bidding price, ad type, and consistency.
Besides, YT has also introduced playback-based CPM. It is the cost an advertiser pays for 1,000 video playbacks where the ad is displayed. It focuses on the advertiser cost for video playbacks that include more than one ad.
How To Calculate YouTube CPM?
Since you got an overview of what is CPM on YouTube, let’s understand it further using numbers and a simple example. CPM is calculated by dividing the amount paid by the advertiser for an ad by the number of views the video has. Then multiply it by 1000.
CPM= Amount advertiser pays for an ad/ Number of views a video has X 1000
Consider an example where the advertiser is paying $10 for an ad. Suppose the video has received 2000 views or impressions. To calculate the CPM, divide $10 by 2000 and multiply the result by 1000. The total CPM for the advertiser would be
$10/ 2000 X 1000= $5.
So, the advertiser pays $5 to YT for running an ad. Surprisingly, the content creator doesn’t receive the complete $5. YouTube keeps a decent 45% of this revenue generated, and the remaining 55% is shared with the creator. Therefore, YouTube takes its cut of $2.25 from $5 and shares the remaining $2.75 with the creator.
Also note that CPM takes into account unique views and doesn’t include repeat views or views with a watch time of less than 30 seconds. Sometimes, you may have situations where your total number of views is greater than the number of views you’re compensated for.
By now, you must have a better idea of what is CPM YouTube and how to calculate YouTube CPM for your channel.
Why Is CPM On YouTube Important To Understand?
To leverage the most out of YT as a creator, you must have an in-depth understanding of YouTube CPM. A few significant reasons why you should know the metric CPM on YouTube include:
- It helps you to analyze which videos from your channel are most valuable for advertisers and provides insights to increase your primary source of revenue on YT.
- CPM on YouTube helps you to identify the content categories that receive the highest CPMs. It also indicates the type of content you should focus on to make the most in that particular category.
- Knowing the minor differences between what is playback-based CPM and impression-based CPM, you can create a highly efficient, long-term strategy to monetize the different videos on your channel.
- Observing this metric consistently and making adjustments helps to generate higher ROI from the ad through your videos. It enables advertisers to regularly place ads on your videos, thus boosting your ad revenue.
- It also increases YouTube monetization opportunities like brand partnerships if your content aligns with the brand values.
Highest CPM YouTube Based On Content Categories
CPM rates also vary according to the content niches of your videos. Some content categories generate higher CPM than others due to their higher preference among the audience.
Popular categories with higher CPMs include:
- Health
- Retail
- Finance
- Investment
- Technology
- E-commerce
- Real estate
- Makeup and Beauty
The CPM is not necessarily higher throughout the year in these categories. Moreover, creators report highs and lows in their CPM during different times of the year.
Factors That Influence CPM On YouTube
The actual CPM rates can vary widely across different parts of the world. The crucial factors that can affect CPM on YouTube include:
1. Selected Industry
The content category of your channel greatly influences your CPM numbers. Few industries are found to report higher CPM numbers compared to other content categories.
2. Location
CPM rates are variable in different countries. The average CPM on YouTube in the US is estimated to be around $38.
3. Ad Formats Used
CPM is often found to be higher for non-skippable ads compared to skippable ads and static display ads. Different ad formats tend to generate different CPM.
4. Time Of The Year
Since there is a bidding process involved, the CPMs for advertisers could be higher when the competition is high for ad space. For instance, the seasonal shopping time around October to December can temporarily increase the CPM numbers in certain niches and certain parts of the world.
How Can You Increase Your CPM On YouTube?
As a creator, your earnings from YouTube videos depend on consistently higher CPMs and, consequently, higher RPMs. Getting more YouTube views on your videos is a battle-proof strategy to keep your YouTube CPM consistently higher.
Here are a few strategies to boost this critical metric
1. Select The Right Niche
The niche you select must be a combination of your passion and a high CPM-generating category. Creating content for a niche with lower CPM rates will not yield decent revenue in the long term. Consider the industries stated above and make an informed decision when selecting a niche for your YouTube channel.
2. Choose Countries With high CPM Rates
CPM rates constantly change and vary from country to country. However, creating video content that targets the viewership of countries with high CPM rates can boost your earnings as well. Similarly, if you have a large audience base and wish to target multiple countries, you can upload videos in different languages and use a translation tool to increase the accessibility of your content.
3. Leverage Insights From YT Analytics
YouTube analytics contain some crucial information about the total estimated revenue, impression, and playback ad revenue. Monitoring the insights from YT analytics can help you identify the missing spots and major fluctuations in the performance of your videos, establish a baseline for CPM, and develop strategies that can significantly improve your CPM numbers.
4. Create Audience And Advertiser-friendly Content
Focus on creating content that abides by YouTube’s advertiser-friendly guidelines and aligns with the interests of your audience. Dive deeper to know the needs and desires of your target audience and create content that makes their life better. It gives you the opportunity to place more ads on your user-friendly video content.
Conclusion
We have covered what is CPM on YouTube, what is playback based CPM, the factors that influence CPM, and the strategies that you can use to increase this vital metric. Getting a higher number of YouTube views is the key to increasing the CPM on your YT videos. Rather than looking for some quick fixes, focus on building a long-term comprehensive strategy that helps you expand your viewership, reach new audience segments, increase CPM rates, and grow your personal brand.
Frequently Asked Questions
Q1. Which Countries Have The Highest CPM On YouTube?
The highest CPM varies from country to country. However, here is a list of the top 5 countries with the highest YouTube CPM rates.
- Norway: $43
- Germany: $38
- Moldova: $29
- Algeria: $24
- South Korea: $17
Q2. What Causes YouTube CPM Numbers To Change?
YouTube CPM numbers can change based on a lot of factors, like:
- Duration Of The Year
- Viewer’s Location
- Changes in available ad Formats
Q3. Is There A Difference Between CPM and RPM?
CPM is the total amount advertisers pay to YouTube for 1000 impressions on their ads. RPM is the amount content creators earn from advertisers for 1000 ad impressions. RPM is often lower than CPM and is the revenue calculated after YouTube takes its 45% cut from ad revenues.
Q4. Can I Create Alternate Revenue Streams Rather Than Relying On YouTube CPM?
It is always recommended to have alternate revenue streams to complement your earnings as a YouTuber. You can explore opportunities selling your own merchandize, affiliate marketing, or sponsorships from relevant businesses.
