What Is YouTube CPM? How It Works & How to Increase It

As a YouTuber, you may have achieved monetization goals on your YouTube channel. However, your channel is not generating the desired revenue you expected from running ads. A lower YouTube CPM might be the reason your channel’sn’t generating more revenue despite being monetized.

Confused about what is YouTube CPM? Understanding YouTube CPM is key to unlocking its immense potential and increasing 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.

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 an ad is displayed, it is counted as an impression. CPM is variable, depending on the amount the advertiser pays to display the ad on the creators’ videos. It also depends on the bidding price, ad type, and consistency.

YT has also introduced playback-based CPM, the cost an advertiser pays for 1,000 video playbacks in which the ad is displayed. It focuses on the advertiser cost for video playbacks that include more than one ad.

How Does YouTube CPM Impact Creators?

Advertisers pay YouTube for per 1000 impressions(CPM). This amount is shared with the creator and YouTube because ads are placed on the creator’s channel. The creator gets 55% and YouTube keeps 45%.

For example, if the ad CPM is $10 and it gets 100,000 views. The total revenue will be
{ (Total Views/1000) x Ad cost }. In this case, the { ( 100,00/1000 x 10) } = $1000.

If we deduct YouTube’s cut, they get $450 (45%), and you will earn $550 (55%).

Considering the calculation, the creator is profitable, but it depends on the Ad cost. Some factors affect the CPM. Such as Industry, niche, location, ad format, etc.

These factors can affect creators’ earnings. Even you have millions of views and subscribers. If the ads that are running on your videos have a low ad cost, you will earn less.

How To Calculate YouTube CPM?

Now that you have an overview of CPM on YouTube, let’s delve deeper using numbers and a simple example. CPM is calculated by dividing the amount paid by the advertiser for an ad by the video’s number of views. 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 YT $5 to run an ad. Surprisingly, the content creator doesn’t receive the full $5. YouTube retains a decent 45% of the revenue generated, with the remaining 55% shared with the creator. Therefore, YouTube took its cut of $2.25 from $5 and shared the remaining $2.75 with the creator.

Additionally, CPM takes into account unique views, excluding repeat views and those with a watch time of less than 30 seconds. Sometimes, you may have situations where your total number of views exceeds the number of views you’re compensated for.

Another metric used to calculate CPM is the identification of total earnings. Consider the total revenue earned from YouTube ads. You can find the total number of views and revenue from YouTube Analytics.

By now, you must have a better idea of what is CPM YouTube and how to calculate YouTube CPM for your channel.

Key Differences Between CPM and Other Monetization Models

Understanding models like CPM, RPM, CPC, and CPA is essential for maximizing revenue and comprehending audience behavior. Because while CPM is crucial for YouTube, other models will provide you with unique insights and revenue strategies.

CPM (Cost per Mille)

• It focuses on cost per 1000 ad impressions.
• So, the revenue depends upon the number of views.
• This model is ideal for brand awareness campaigns where reach is a priority.

CPC (Cost Per Click)

• As the name suggests, revenue is generated per click on an ad.
• So, the emphasis is on engagement and not impressions.
• This model is best suited for advertisers aiming to drive direct response actions, such as website visits.

CPA(Cost per Acquisition)

• Revenue is generated only when a specific action is taken, such as a purchase.
•  This model is result-oriented.
• It is often used in affiliate marketing.

RPM(Revenue per Mille)

• In this model, revenue is generated per 1000 page views.
• It combines the channel’s revenue potential with all revenue streams.
• It also improves the overall monetization effectiveness.

Why Is CPM On YouTube Important To Understand?

To leverage the most out of YT as a creator, you must understand YouTube CPM in-depth. A few significant reasons why you should know the metric CPM on YouTube include:

1. 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.
2. CPM on YouTube helps you 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.
3. Understanding the minor differences between playback-based CPM and impression-based CPM enables you to create a highly efficient, long-term strategy for monetizing the various videos on your channel.
4. Consistently monitoring this metric and making adjustments can help you generate a higher ROI from your video ads. It enables advertisers to place ads on your videos regularly, thus boosting your ad revenue.
5. It also increases YouTube monetization opportunities, such as brand partnerships, if your content aligns with the brand’s 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 CPMs than others due to the audience’s higher preference for them.

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 have reported higher CPM numbers than 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 from October to December can temporarily increase the CPM numbers in specific niches and 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 combine 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 also boost your earnings. Similarly, suppose you have a large audience base and wish to target multiple countries. In that case, you can upload videos in different languages and use a translation tool to increase the accessibility of your content. Using a YouTube money calculator can help estimate potential earnings and refine your strategy accordingly.

3. Leverage Insights From YT Analytics

YouTube analytics contain 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 significant 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 your audience’s interests. Dive deeper to know the needs and desires of your target audience and create content that improves their life. It allows you to place more ads on your user-friendly video content.

5. Diversify Revenue Sources

When you aim to increase the YouTube CPM, it only makes sense to expand your revenue sources.  You can start merchandise sales, channel memberships, and brand partnerships to grow your monetization options.

6. Ad Placements

You need to carefully place ads between videos to avoid spoiling your audience’s viewing experience. It will lead to better engagement and higher CPM.

7. Video Length

Longer videos mean more ads. Therefore, to achieve a higher CPM, consider uploading longer videos. However, it is essential to maintain the video’s quality to improve viewer retention.

8. Optimize SEO

A well-optimized video with a higher ranking on the SERP attracts more views and high-paying advertisers. Therefore, optimize video titles, metatags, and meta descriptions.

Conclusion

We have covered what CPM is on YouTube, what playback-based CPM is, the factors that influence CPM, and the strategies you can use to increase this vital metric.  Getting more YouTube views is the key to expanding the CPM on your YT videos. Rather than looking for quick fixes, focus on building a long-term comprehensive strategy that helps you develop 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 are the top 5 countries with the highest YouTube CPM rates. Norway with $43, Germany with $38, Moldova with $29, Algeria with $24, and South Korea with $17.

Q2. How much is CPM per 1,000 views?

YouTube’s CPM ranges from $13.03 to $15.34 per 1000 views.

Q3. What’s a good CPM for YouTube?

Depending on factors such as content niche, audience location, video length, and ad placements, a good CPM can range between $3-$10. However, high-demand niches like finance or tech CPM can also exceed $20.

Q4. Which niche has the highest CPM?

Finance and investment YouTube channels usually have the highest CPM. Additionally, niches like business, tech, and digital marketing offer reasonable CPM rates.

Q5. Why does the YouTube CPM rate fluctuate?

CPM rates fluctuate due to various factors, including seasonal changes, demographics, ad placement, ad format, niche shifts, watch time, and ad demand. These factors impact the CPM rate, which in turn affects creators’ earnings and advertisers’ spending.