With over two billion active YouTube monthly users, YouTube is an undeniably powerful advertising channel – which means if you are a YouTube creator, there are plenty of opportunities for you to make money on the platform.
For example, if advertisers pay to display ads on your videos, you can increase your income in the form of CPM.
In addition to increasing your income, CPM is a strong indicator of the value of your content and helps you identify businesses that you might want to partner with in the future.
Whether you’ve been a YouTube creator for years or just starting out, CPM is an important metric to understand to ensure you are 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 that an advertiser has to pay on YouTube for the 1,000 impressions their ads receive on your video.
The CPM varies based on the amount paid by an advertiser to display the ad. The price of ads on YouTube depends on several factors including auction price, ad type, and consistency.
For example, suppose an advertiser pays $ 9 for an ad and the ad has been viewed 5,000 times on your video. To calculate the CPM, you need to divide 9 by 5,000 = $ 0.0018, then multiply $ 0.0018 by 1,000.
The CPA is therefore $ 1.80. You will receive 55% of that $ 1.80 – since YouTube also takes a percentage of the CPA (45%, to be exact). So if you earn $ 1.80 in CPA on an ad, you will only keep $ 0.99.
Additionally, there is another type of CPM – reading based CPM. Rather than calculating the cost paid by the advertiser per 1,000 impressions, Playback-Based CPM calculates the cost that an advertiser pays for 1,000 videos. readings where an ad is displayed.
There is free calculators available online, if you don’t want to calculate your CPM manually. And while the CPMs of individual videos may seem low (like the $ 0.99 earned above), it can be a high monthly payoff if many companies see your videos as still great platforms for their promotions.
Why is CPM important?
As a YouTube creator, CPM is an important metric for analyzing which of your videos is most valuable to advertisers. Since advertising is the main method of monetization on YouTube, this is essential information.
In order to have a full-time career on YouTube, it’s essential that you know which videos can be monetized so that you can create a more effective long-term strategy for targeting these types of topics.
For example, maybe you create YouTube videos for beauty, health, and wellness – but you find, in particular, that “Drugstore Makeup Tutorials” receive the highest CPMs. This might suggest that you should create more relevant content for this topic.
Also, you can find a specific company that regularly advertises your videos. If the brand matches your own values, you can contact directly to discuss other YouTube partnership opportunities, like affiliate marketing.
Average CPM on YouTube
CPM varies very based on the amount paid by an advertiser to serve an ad on your video.
For example, let’s say an advertiser pays $ 10 for an ad that appears on your video, which has 1,000 views. If so, you will get a CPM of $ 10 (10/1000 x 1000). Of course, then you will need to withdraw 45% of that total, which will earn you around $ 5.
However, in most cases, the videos that businesses choose to advertise on will have over 1,000 views, which brings your earnings closer to $ 7-10.
Jilliian Hope, senior director of brand advertising at HubSpot, agrees, telling me her team typically sees an average of $ 7 to $ 10 from previous campaigns.
However, the CPM varies by country. For example, a source reports the United States has an average of 0.38 CPM, while Spain is 4.38, Switzerland is 3.87, and Mauritius is 7.05. This means that the amount you earn from YouTube depends in part on your geography.
Highest CPM on YouTube
The highest CPM varies by country, but here is a list of the five highest CPA rates by country, as shown by a source:
- Maldives: $ 15.47
- Guadeloupe: $ 10.97
- Denmark: $ 10.61
- Poland: $ 9.23
- Pakistan: $ 7.54
Additionally, some 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:
As a brand, you should use CPM as a metric to help identify topics that seem most interesting to advertisers, as those topics probably offer the most monetization opportunities.
Rather than looking for “quick tips” to increase your CPM, however, you’ll want to play the long game by creating a YouTube strategy that helps you increase your sales, reach new audiences and increase brand awareness.