What Is CPM on YouTube? Explained for Beginners

what is cpm on youtube

What Is CPM on YouTube? CPM YouTube, Explained for Beginners

Ever wondered how you can take your love for watching and making YouTube videos and transform that from a hobby into a fully-fledged business?

If like many people, you have thought about how to fully utilize YouTube, then you might be interested to know more about YouTube and the interesting world of CPM rates.

We get it, you are new to the world of monetizing YouTube, and right now you may well be asking yourself, “What is CPM on YouTube?”

Don’t worry, we’ve got you! This straightforward article will help demystify the process of video and channel monetization. Read on to find out more about CPM and how it can help you make money from your YouTube channel.

What Is CPM On YouTube?

Simply put, CPM is an abbreviation for Cost Per Mille. The word “mille” stands for a thousand views.

This means that every time an ad reaches the thousand views mark, you get paid. The more views your channel receives from YouTube viewers, the more money you get paid.

So if you are serious about making money on YouTube, it is important for you to understand how this metric works. However, with that all said, it is important to note that there are a few nuances to be aware of too.

You Have To Pay The Tube

When you have figured out your CPM, it is good to take a moment and realize this fact: as good as the initial CPM figures may look, it is crucial to note that you will not receive 100% of the calculated revenue.

As is normal for many similar services, YouTube will take a hefty 45% from your projected income.

This may sound disheartening at first glance, but it is NOT a reason to quit.

Keep in mind what YouTube is providing as part of its service (channel, traffic, and a hub for all this): the value they are offering, the potential for making money and building an audience; all of this is extremely good.

Make peace with the fact, and understand why YouTube will take this amount from your income. Simply use this fact to motivate you to use the information found in this article to get more views.

How CPM & YouTube Work In Unison?

YouTube uses formulas, stats, and a variety of analytical tools to accurately figure out the effectiveness of an advertising campaign in regard to a channel.

CPM is the foundational measurement tool for these stats and assessments. It serves as a basis for what additional formulae and tests (if any) will be applied to a channel, and advertising campaigns respectively. CPM basically helps YouTube conduct effective research and arrive at conclusive results.

CPM means an amount of money you can get for the promotional material that was placed within your video. With all that said, and CPM YouTube explained, read on to take a more comprehensive look at the subject.

RPM & CPM

CPM is a numerical definition that shows you how much of your income will be shared with YouTube. However, this involves another area, RPM.

RPM is an abbreviation for Revenue Per Mille which is used to calculate your take-home income, after factoring in YouTube’s share.

The amount of CPM is in direct proportion to RPM. They both are important metrics when calculating your profit levels (present and future). However, they have slightly nuanced meanings.

Simply put:

  • CPM is of more interest to advertisers on your channel
  • RPM is important for creators

Unfortunately for those that are not in the know, YouTube is not in the habit of reaching out and informing creators of what their RPM value is. This is why many creators do not know their channel RPM.

However, despite YouTube not reaching out to/sharing with creators about this information, the RPM metric for each channel can still be obtained by you. It just takes a few steps, as listed below:

  • Open your Adsense account
  • Go to “Settings”
  • Check “Payments”
  • Look at the numbers for the last month
  • Enter YouTube Analytics
  • Then Monetized Playbacks

Use the following formula to make calculations:

Monthly income / Number of monetized views X 1000.

For example, let us say that you earned $200 for the last month and managed to get 50,000 views. So, 200/50,000 x 1,000 = $4. That means you’ve got $4 for every 1,000 views.

How To Find Out The CPM For Your Channel

Accurately figuring out the CPM YouTube ad rates can be tough. This is because of the instability of this particular metric. As a general rule, CPM tends to fluctuate on a constant basis throughout the year.

CPM is generally determined through the following factors:

  • Country
  • Niche
  • Audience Type
  • Inventory
  • Content

Despite the fact that CPM rates change so frequently, it is still possible to calculate the value.

The formula is similar to that of the RPM calculation, but we use the number of people (your audience) instead of the number of monetized views. The result comes to the price for every thousand impressions that an advertiser gets.

For example, an investment of $10,000 into an advertising campaign entailed 4,700,000 views. That means the CPM is equal to ($10,000/4,700,000)x1000 = $2.13, which is the amount of money an advertiser should pay for a thousand views. For example, the YouTube average CPM is $2.

Increasing Your CPM

Most creators tend to focus on growing subscriber numbers as they see this as a measuring tool for success. Despite this making logical sense, the fact remains that there are many YouTube creators that have in excess of a thousand subscribers, yet still barely make any money.

Increasing subscriber count will certainly bring you awareness and rank you favorably within the YouTube algorithm, however, monetization is what will allow you to fully utilize your audience in a financially beneficial way.

In order to start to monetize your channel, the first major step is to become a member of the Partner Program to monetize through Google AdSense. To do this, you have to have no less than 1,000 subscribers and have reached 4,000 hours of total watching time in the past twelve months.

Furthermore, looking into professional YouTube Ad solutions can also be very helpful too.

How To Boost Your Monetized Views

Here are a few tips on how to multiply the level of your monetized views. The list is not exhaustive, but it certainly covers the basics of what you’ll need in order to create a successful channel.

  • Increase traffic through relevant keywords, tags, and sharing your videos
  • Create your own content as opposed to uploading clips
  • Attract subscribers naturally
  • Don’t buy them for bonuses/money
  • Research competitors to find their strengths and weak points
  • Publish respectable content, avoid placing videos that promote violence, drugs, etc.
  • Upload regularly to keep your channel active and ranking highly
  • Utilize professional social media marketing agencies
  • Check your YouTube Analytics, look at your metrics

Also, here are some recommendations to improve your video’s quality:

  • Add subtitles and closed captions
  • Introduce valuable information or entertainment
  • Think of meta tags (title and description)
  • Use playlists to encourage users to watch more
  • Include a time-stamp in the video description
  • Use interesting and suitable soundtracks
  • Make your videos bright, use advanced visual effects, etc.

CPM rates

In order not to create false hope about the cost of YouTube ads, study YouTube stats before creating and placing content on your channel. It will help understand the current situation fully and correctly.

You can also use information like this to analyze your competitors, allowing you to compare your channel and growth to theirs. This can be an excellent practice as it helps you to create an informed and actionable strategy.

CPM By Country

CPM is also dependable on geographical location. To make more money, target video in one of the 11 countries with premium rates. To do this effectively, methods like geo-fencing can be very effective.

The list of the countries with the highest YouTube advertising CPM is fairly stable, but some countries can trade positions on the list from year to year.

Here are the leaders:

  • Germany
  • Australia
  • Canada
  • United Arab Emirates
  • Algeria
  • New Zealand

CPM Rates By Type Of Video

YouTube advertising costs are tied to content quality. However, some external factors are not within the control parameters of creators. The main reason is that video advertising is closely linked to consumer demand.

To clarify the nuances, let’s consider the example of the United Kingdom – one of the countries with the highest CPM rates ($3–$6 on average). Plenty of British publishers use the Ad Exchange platform to sell media advertising.

Its CPM rates are based on a set of factors (location, engagement, etc.) and reach the range of $3–$8. The publisher can choose the type of ad to display. And, the network offers in-stream video ads that can be skipped but saves the same revenue for an impression at the same time.

Pre Roll ads are widespread and rather common. This is a message that you have to watch before the content. In addition, they can be very irritating, because there’s no option to skip it immediately. However, by presenting them in a witty and entertaining manner, you can reach a CPM of $3–$8. The same is true for Mid Roll ads that are played in the middle of the clip.

Outstream video ads are displayed within the limited ad space between images and other pieces of content. They boast the CPM rate of $4–$8. Such ads are extremely viewable because they have no strict placement.

Native videos can bring $5 or more because they are not annoying and they’re created within the channel concept.

Is CPM The Only Way To Monetize?

If ads are not an attractive option for you, there are other alternatives that you can try in order to make money from your YouTube channel. These include the following:

Channel Memberships

By taking advantage of paid subscriptions for your channel and offering additional benefits to your subscribers. For example, this can be exclusive content, support, custom emojis and stickers, live chat access, and so on.

This option is open to YouTube creators who:

  • Are part of the YouTube Partner Program
  • Have at least 1,000 subscribers
  • Make content that is not labeled as “created for children”

Affiliate Marketing

It’s also profitable to recommend goods—not directly—but through the affiliate links to get decent commissions after the customer has placed an order. To do this:

  • Add the associated website to your channel and then get an affiliate link
  • Point the audience to a URL that will lead to an affiliate’s website
  • Insert affiliate links in the content

Sell Products

If you have a brand that you have built, this option is a great idea.

You can sell:

  • T-shirts
  • Bags
  • Cups
  • Other merchandise

You can also create and sell original educational courses such as:

  • E-books
  • Online classes

It’s possible to promote products and increase sales when your goods are presented on Etsy and similar platforms.

Branded Content

To succeed within the area of branded content you need to produce content that your customers will enjoy watching. Your audience must be able to count on getting value from your videos, a value level that increases from one video to the next.

For example, you decided to create a series about home renovation:

  • The first clip can deal with building
  • The second can show the best ways of decoration
  • You can tell about gardening, and so on

Maximizing Your YouTube Channel

Now that you know the answer to what is CPM on YouTube, and you’ve gained a few tips and strategies on how to successfully monetize your YouTube channel, it’s time to fully utilize this information.

A great way to do this is to start with our automated advertising solutions. Here at Media Shark, we offer a comprehensive option with our Programmatic Advertising solution.

We provide you with bespoke guidance, helping you to map out and reach your YouTube channel aspirations. 

Why wait? Get in touch with us and let us help you start monetizing your YouTube channel today!

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