Monetizing your YouTube channel–whether it’s as an independent influencer or as part of a business model–has become something of a dream for creators around the world. Inarguably, YouTube ads are a large part of leveraging your video content and getting financial rewards for views–but this also requires an intimate understanding of key metrics.
In this article, we’ll delve into the key differences of YouTube CPM vs RPM so you can better interpret your analytics and create an optimized plan for your content creation in the coming quarters.
YouTube CPM vs RPM: An Overview
Both CPM and RPM play a significant role in creating a YouTube ads plan that will best serve the creator. But what are they, exactly, and how can you capitalize on these concepts with your YouTube channel? Let’s take a look.
What Is YouTube CPM?
“CPM” stands for “Cost Per Mille,” which refers to the cost for the advertiser associated with getting 1,000 impressions on YouTube. This essentially translates to the cost to run the ads and get it in front of 1,000 pairs of eyes. The instant the ad appears in a video is considered one impression.
It’s important to note that the CPM reflects the cost of running advertisements before YouTube revenue share. Creators earn a cut of what the advertisers pay to run their ads on your video–so the larger the cost to run their ads, the more the YouTuber will make. In working with an advertiser, it’s important that your audience will resonate with the advertiser’s target demographic in order to increase their Return On Investment (ROI) and boost the likelihood that they will achieve their goals and create a mutually beneficial relationship with the YouTuber.
Factors That Impact CPM
The advertiser will be very curious about the creator’s primary audience demographics. These include characteristics like:
- Seasonal Considerations: Does your niche fluctuate with the seasons, or do you provide “evergreen” content that is viable year-round? As you might have guessed, most advertisers will look for content that remains relevant despite the time of year, as it’s more likely to see consistent ROI. However, particularly if you create content around a weather-specific niche, such as gardening or even quarterly entrepreneurial advice, you could still provide a unique platform for an advertiser looking to sell a related product or service.
- Location of Viewers: Knowing the country where most of your viewers come from can also impact CPM, as the advertiser is pretty much solely interested in getting financial gains from their investment. For example, it won’t do them any good to advertise for a U.S.-specific product or service if most of your viewership lives abroad.
- Age of Primary Audience: Suffice it to say, advertisers are mostly interested in only reaching an audience that has money to spend. If you’re making videos for a younger demographic like children, an advertiser might not be interested in investing in your channel.
What Is YouTube RPM?
“RPM” is associated with the phrase “Revenue Per Mille,” or the amount of money the YouTube creator earns per 1,000 views. After deducting YouTube’s fees, the RPM gives YouTubers an idea of how much money they make for every 1,000 video views they get on the platform.
Why YouTube CPM and RPM Matter?
These two metrics help both the video creator and the advertiser to understand how effective their content or investment is, respectively. As you might imagine, the advertiser is mostly concerned about the CPM, while RPM tends to matter more to the YouTuber. Video creators can earn anywhere from $10-$30 per 1,000 views–though the average is $18 for the same number of views.
How to Calculate YouTube CPM and RPM
Fortunately, the formulas for calculating both YouTube CPM and RPM are relatively simple. They are as follows:
CPM can be calculated by the following formula: 1000 x (Ad Spend / Total Views)
RPM can be calculated by the following formula: 1000 x (Total Revenue / Total Views)
How to Increase Your Ad Revenue (RPM) On YouTube?
While we’ve covered ways to make your channel more palatable to an advertiser, there are ways you can work both sides of the formula by increasing your RPM as well. Fortunately, YouTube RPM is readily available in YouTube’s Studio, so you won’t always have to get out your calculator to figure it out. YouTube Studio also provides an opportunity to find your income generated through sponsorships and brand deals through their online calculator.
Here’s how you calculate your channel’s ad income: RPM x (Average Views / 1000)
Easy Ways to Boost🚀YouTube RPM
When you make the decision to monetize your YouTube channel you’ll want to make sure you’re getting the most out of your videos at every turn. Here are some ways to ensure you’re fully leveraging your content, financially speaking:
- Create a tiered subscription plan, offering paying audience members deeper cuts or exclusive content and opportunities
- If you have a YouTube Premier account, ensure that monetization is toggled on for all ad and video formats
- Leverage other money-earning opportunities such as product promotions, affiliate marketing, etc.
Boost Your YouTube Engagement
Like most things in life, when it comes to YouTube engagement, you get back what you put in or invest–and then some, if you play your cards right. While creating a successful YouTube channel takes a significant upfront investment of time (in terms of consistently creating unique, high-value content), the more views, subscribers, and engagement you can earn, the more palatable you will be to advertisers, sponsors, and other investors.
Want to learn more about how to create viral-worthy video content? Check out our recent article on the topic here!
