With more than 2.3 billion users and growing, YouTube remains one of the largest platforms out there. If your business isn’t taking advantage of this exposure, you may be missing out on something big.
By advertising your business and its products and services on YouTube, you’re going to be able to reach a huge audience. All you need to know is the CPM.
But, what is YouTube CPM, and how much is a good CPM?
To learn all about CPM, keep reading. We’ll share these answers and more.
What Is CPM on YouTube?
CPM stands for cost per mille. In the marketing world, mille is 1,000. Thus, CPM on YouTube refers to the cost per 1,000 impressions.
The CPM is the cost that each advertiser needs to pay for every 1,000 impressions that a single advertisement gets on a creator’s video.
The cost depends on the price that the advertiser pays to have their advertisement on a YouTube video. This may range depending on the creator, the industry, the topic, and more.
Each creator is going to get a CPM value for each video that they have. This is not the amount of money that the creator is making nor is it the price of a single advertisement. Rather, it’s the collective amount of money that that creator is making per 1,000 views with the advertisements running on that video at that time.
Noting this difference is critical to your understanding of YouTube ads.
How to Calculate YouTube CPM
In order to figure out the CPM of a YouTube video, YouTube takes advertisement price into consideration. From there, it divides by the views on a video then multiplies that number by 1,000.
For example, let’s say that an advertiser is paying $20 for an ad, and the video got 10,000 views.
$20 divided by 10,000 is $0.002. $0.002 times 1,000 is $2.
In this example, $2 is the CPM.
From here, YouTube takes 45% of the cut and the creator keeps 55%. This means that, in this example, the creator is left with $1.10 per 1,000 impressions.
Does CPM Change?
CPM is constantly fluctuating. The CPM for one video may change multiple times within one week.
CPM changes for many reasons. The most common reasons for a changing CPM include a change in season, a change in viewer geography, and a change in available advertisements.
A change in the season can influence CPM because of buyer habits. Consumers are more likely to buy things around certain times of the year like December and February. During these times, advertisements cost more.
Viewer geography can also change CPM. This is because there are different levels of competition in different markets around the world.
Lastly, a change in available advertisements can also change CPM because of advertising value.
The kind of ads that you’re running influences your CPM. For example, an advertisement that the viewer can’t skip is going to cost more than an advertisement that the viewer can skip. So, if non-skippable ads are the only ones available, you’re going to be paying a higher CPM.
Average CPM on YouTube
The CPM changes with each video. It depends on your cost, your location, the length of the video, the industry that you’re in, and more.
CPM is constantly changing and evolving, taking more and more information into account.
The CPM can range from a few cents to about $20. This number is going to change with each individual video that you post.
With this in mind, it’s important to note that the average CPM on YouTube is $2.
Considering the exposure that your advertisement can get on a platform like YouTube, $2 is a great price to pay per thousand views. Both small businesses and large corporations can take advantage of this kind of pricing.
What Kind of YouTube Videos Have the Highest CPM?
One of the factors that YouTube’s algorithm uses to determine CPM is popularity. Depending on the kind of video that you’re advertising on, your CPM is going to differ.
Industries that are profitable and perform well are going to make higher CPMs. Here are a few examples of those industries that may make higher CPMs on creators’ videos:
- Lifestyle and beauty
- Retail
- Health and wellness
- Finance
- Technology
If your content falls under any of these categories, you may have to pay a higher CPM. This may sound discouraging, but the greater price is worth the exposure.
The CPM is higher for these industries because they’re more popular. You’re going to be paying more money to get more exposure on YouTube videos. It’s a fair trade-off.
If you aren’t going to be advertising content on these kinds of videos, you can take advantage of a lower CPM. However, it may be harder to get the exposure that your business is looking for.
What Is a Good CPM on YouTube?
Unfortunately, there’s no perfect way to determine whether or not a CPM is good. Rather than looking for a specific value, you should be considering your advertising budget and the industry that you’re in.
The best way to ensure that you don’t go over your marketing budget is by setting a limit for your YouTube ads. This means that you’re going to choose a non-negotiable advertising budget specifically for your YouTube ads.
Once you reach this number, you turn off your advertising until the next month.
If you’re worried about getting the best value that you can, you should consider the average CPM. Less popular markets shouldn’t be paying more than the average of $2. However, more popular markets need to consider that they may fall above the average.
Conquering Digital Marketing
Understanding YouTube CPM is critical for marketers. If you’re going to create a digital marketing strategy on YouTube, CPM is one of the first things that you need to take into consideration.
Your marketing team should budget for this rate and consider spending more at different times of the year.
If you need help navigating YouTube and CPM, you can depend on Media Shark. We can help you make a winning marketing strategy on YouTube and elsewhere.
What are you waiting for? Get in touch with the experts now!
