What Is YouTube CPM? [+ Why It Matters]

With over two billion monthly active YouTube users, YouTube is an undeniably powerful channel for advertising — which means, if you’re a YouTube creator, there are plenty of opportunities for you to make money off the platform. 

For instance, if advertisers pay to display ads on your videos, you can increase revenue in the form of CPM. 

Along with increasing your revenue, CPM is a strong indicator that your content is valuable, and helps you identify businesses with whom you may want to partner down the road. 

Whether you’ve been a YouTube creator for years or are just starting out, CPM is an important metric to understand to ensure you’re maximizing YouTube’s potential as a revenue generator. 

Here, we’ll explore what CPM is, how it’s calculated, and what makes a “good CPM”. 

What is CPM, and how is it calculated? 

CPM, or cost per 1,000 impressions, is the cost an advertiser needs to pay on YouTube for every 1,000 impressions their ads receive on your video.

CPM varies depending on how much an advertiser pays to display the ad. Ad price on YouTube depends on a range of factors, including bidding price, type of ad, and consistency. 

So, for instance, let’s assume an advertiser is paying $9 for an ad, and the ad was seen 5,000 times on your video. To calculate CPM, you’d divide 9 by 5,000 = $0.0018, then multiply $0.0018 by 1,000.

The CPA, then, is $1.80. You’ll receive 55% of that $1.80 — since YouTube takes a percentage of the CPA, as well (45%, to be exact). So if you make $1.80 CPA off an ad, you’ll only keep $0.99.

Additionally, there’s another type of CPM: playback-based CPM. Rather than calculating the cost the advertiser pays for 1,000 impressions, playback-based CPM calculates the cost an advertiser pays for 1,000 video playbacks where an ad is displayed. 

There are free calculators available online, if you don’t want to calculate your CPM manually. And while individual videos’ CPMs might seem small (like the $0.99 made, above), it can add up to a hefty monthly earning if plenty of businesses see your videos as consistently worthwhile platforms for their promotions. 

Why is CPM important? 

As a YouTube creator, CPM is an important metric for analyzing which of your videos are most valuable to advertisers. Since advertising is the primary method for monetization on YouTube, this is critical information. 

To make a full-time career out of YouTube, it’s critical you know which videos can be monetized so you can create a more efficient, long-term strategy to target those types of topics. 

For instance, perhaps you create YouTube videos for beauty, health, and wellness — but you find, in particular, “Drugstore Makeup Tutorials” receive the highest CPMs. This might suggest you should create more content that aligns with that topic. 

Additionally, you might find one business in particular consistently advertises on your videos. If the brand aligns with your own values, you might reach out directly to discuss other YouTube partnership opportunities, like affiliate marketing. 

Average CPM on YouTube 

CPM varies greatly depending on how much an advertiser pays to distribute an ad on your video. 

For instance, let’s say an advertiser pays $10 for an ad that plays on your video, which has 1,000 views. If that’s the case, you’d make $10 CPM (10/1,000 x 1,000). Of course, then, you’ll need to take 45% off that total — making your earnings around $5.

However, in most cases, the videos on which businesses choose to advertise will have more than 1,000 views, making your earnings closer to $7-$10. 

Jilliian Hope, HubSpot’s Senior Manager of Brand Advertising, agrees, telling me her team typically sees an average of $7 to $10 from past campaigns. 

However, CPM varies by country. For instance, one source reports the United States has an average 0.38 CPM, while Spain is 4.38, Switzerland is 3.87, and Mauritius is as high as 7.05. This means the amount of money you make off YouTube depends, in part, on your geography. 

Highest CPM on YouTube

The highest CPM varies by country, but here’s a list of the five highest CPA rates by country, as reported by one source:

  1. Maldives: $15.47
  2. Guadeloupe: $10.97
  3. Denmark: $10.61
  4. Poland: $9.23
  5. Pakistan: $7.54

Additionally, certain niche topics will ultimately have higher CPMs. Industries that a) perform well on YouTube and b) are incredibly profitable, will perform better in terms of CPM. These industries include:

  • Makeup
  • Retail
  • Health
  • Finance
  • Technology 

As a brand, you should use CPM as a metric to help you identify which topics seem most valuable to advertisers, since those topics likely provide the most opportunity for monetization. 

Rather than looking for “quick tricks” to increase your CPM, however, you’ll want to play the long-game by creating a comprehensive YouTube strategy that helps you increase sales, reach new audiences, and grow brand awareness. 

Related Articles

How to Get More Views on YouTube: Strategy From a Top Creator

Wondering how to get more people to watch your YouTube videos? Looking for a strategy you can model? To explore how to get more views on your YouTube videos, I interview Justin Brown on the Social Media Marketing Podcast. Justin is a YouTube expert and video strategist who helps businesses grow an audience and scale […]
The post How to Get More Views on YouTube: Strategy From a Top Creator appeared first on Social Media Examiner | Social Media Marketing.

YouTube is a powerhouse for Google, with revenue up 46% to almost $7 billion

Summary List PlacementYouTube’s advertising revenue hit $6.9 billion in the last quarter of 2020, bouncing back after a pandemic-driven deceleration in the middle of the year. 
That’s up 46% from the $4.7 billion YouTube pulled in in ad revenue over the same period in 2019, and was driven by both brands ads and direct response ads.
On Tuesday, parent company Alphabet unveiled impressive quarterly results, outdoing forecasters’ expectations with overall revenues jumping 23% to $56.9 billion.
All in, YouTube ads account for around 15% of Google’s $46 billion ad revenue for the quarter.  
“Our strong fourth quarter performance … was driven by Search and YouTube, as consumer and business activity recovered from earlier in the year,” CFO Ruth Porat said during an earnings call with analysts on Tuesday night.
CEO Sundar Pichai said more than half a million YouTube channels had live-streamed in 2020, including  artists performing in their living rooms to churches moving their services online.” 
Pichai also highlighted the success of YouTube’s growing TikTok competitor Shorts, a short-form video feature for smartphones. He said: “Videos in our new shorts player are receiving 3.5 billion daily views. We are looking forward to expanding shorts to more countries this year.”
Philipp Schindler, Alphabet’s chief business officer, praised YouTube’s “TrueView for Action” platform, which is designed to help advertisers drive sales by adding prominent “calls to action” and headline text overlays to video ads.
“Just to give you a few numbers, 60% of TrueView For Action customers are new to YouTube and we more than doubled the number of active advertisers using TrueView For Action in the first six months of 2020,” Schindler said.
Are you a current or former Googler with more to share? You can contact this reporter securely using the encrypted messaging app Signal (+447801985586) or email ([email protected]). Reach out using a nonwork device. Join the conversation about this story » NOW WATCH: Here’s what it’s like to travel during the coronavirus outbreak

How to Create YouTube Video Ads That Convert

Want to advertise on YouTube? Wondering how to create YouTube ads that work? To explore how to create YouTube ads that convert, I interview Tom Breeze on the Social Media Marketing Podcast. Tom is a YouTube ads expert and CEO of Viewability, a YouTube ads agency that helps direct response B2C companies scale their businesses. […]
The post How to Create YouTube Video Ads That Convert appeared first on Social Media Examiner | Social Media Marketing.

How to Create a YouTube Channel Step-by-Step

If you’re reading this article, I probably don’t need to tell you that video content accounts for over 74% of all online traffic, or that over five billion YouTube videos are watched every single day.
You already know video is an important channel, and you’re ready to start leveraging YouTube for your own business. I’m here to show you how to do it.

Responses

Your email address will not be published. Required fields are marked *

Receive the latest news

Subscribe To Our Weekly Newsletter

Get notified about chronicles from TreatMyBrand directly in your inbox