The world of YouTube is filled with words like CPM, eCPM, CPC, RPM and many others. There are so many acronyms in here that you forget the functional value that you are going to get. Sometimes, acronyms confuse YouTubers as they mean different things depending on context. For example, Cost per mile (CPM) is referred as how much money it costs for the company to run advertisements on YouTube. Whereas eCPM or RPM is actually how much revenue a YouTubers is going to generate from monetization of these advertisements.
So, let’s discuss both factors
CPM is the cost to advertisers when ads are served a thousand times. So, from an advertiser’s perspective, CPM is the rate they are willing to pay to serve 1000 impressions of their advertisements on YouTube. When an advertiser bids $2 on their AdWords account, this means the advertiser is willing to pay $2 for every thousand impressions on the monetized YouTube channels.
When an advertiser checks his Ad Sense performance report, CPM is known as a Revenue Per Mile (RPM). According to Google, RPM reports are advertiser’s impression-based revenue. Since ads are not displayed at even bundles of thousand impressions, all impressions served on the advertiser’s site, regardless of bid type, are combined and averaged in their report to show the advertisers effective revenue for 1000 impressions of the YouTube’s network.
The CPM metric is not designed for creators; it’s designed for advertisers. It’s how much advertisers pay, not how much creators make – Hank Green
From Youtubers perspective, CPM rates are the average revenue of what a YouTube channel has generated for a specific period. As every country lodges a different bidding rate, Google will take an average out of a YouTube channel as their share of revenue. In other words, CPM pays the affiliate for putting the banner or any ad on their high traffic page. So, for every thousand impressions, a YouTuber’s channel directs, he/she gets paid.
How To Calculate CPM for YouTube
Marketers calculate CPM by using the following formula.
The Cost of every thousand impressions (CPM$) = marketing cost ($)/ Impressions Generated (#in Thousands).
Example – The total cost for a working campaign is $20,000 and the total estimated audience is 5,900,000.
Then the marketers CPM will be ($20,000/5,900,000)*1000 = $3.38/thousand views.
Why my CPM is decreasing?
Don’t panic when your CPM rates decrease. According to YouTube’s Content Head – Robert Kyncl; the key part of a growing platform is opening up the inventory, which enables more partners to succeed by monetizing their content. This can lead CPM’s to fluctuate is the short term, but it’s good for the partner ecosystem long term. We are seeing this happen as overall partner viewership, revenue and subscriptions are on the rise. Many Youtubers have observed that there is a dreaded drop of CPM rates at the beginning of the year, as many advertisers shift their focus on Valentine’s Day.
So, when your money doesn’t match up, then you have to check how many Youtubers are actually applying to your channel.
What is eCPM/RPM?
As we mentioned above, eCPM (RPM) is what you actually make from the advertisements on your YouTube channels. YouTubers think that they are short of money due to their low eCPM stakes, but just because you are getting a $15 eCPM, do not mean you are going to get $15 for every thousand views. What is means is you are going to get $15 on every monetized view. NOTE that only 40 – 50% of all views are monetized in CPM.
RPM or effective CPM (eCPM) is the average revenue generated by a thousand views and is the relevant metrics for a YouTube creator. If you are affiliated with a Multi-Channel Network, then these YouTube networks take their cut after this.
How to calculate eCPM/RPM?
If your videos received 3,000,000 views over the past 14 days, and you earned $5000 from ads during that time. To calculate your anticipated eCPM, divide your earnings by your monetized views, then multiply by 1,000.
In this case, your eCPM would be $1.6
How to check your eCPM
To check your eCPM rates, visit your YouTube channel, CLICK –>Creator Studio –> go to your analytics –> Click Ad Rates. There you can see how much playbacks you are getting and how much you make money on.
How to improve CPM rates on your YouTube channel
To improve your CPM rates, you basically have to optimize every factor of your YouTube channel that is affecting monetization.
Meta Data is essentially what will get a YouTube user to click and view your video. It is cumulative of title, descriptions, thumbnails, and tags used for the video. If used properly, they will work in tandem to get you the maximum YouTube views possible.
Thumbnails are the Miniature visual windows or ‘mini- posters’ to each and every video on YouTube respectively. If you want your video to clock in more views than Thumbnails integrate an important part of the metadata which needs to be properly optimized to gain you traction in multiple ways.
A catchy title can get you clicks, but it’s the video’s content which will ensure that a user actually watches it. And YouTube no longer takes just clicks/views into account when deciding search rankings. Watch time is the most important metric. So, hence, ensure that the title of the video is catchy, but at the same time, also matches the content within the video.
To read more on YouTube optimization and ranking, you can download our free YouTube guide for a complete YouTube optimization.
Increase Your Watch Time = Improved Ranking in Search
YouTube now has prioritized YouTube channels as per their viewership and subscriber base. So, YouTubers with more than 1 million subscribers will have a different set of advertisers bidding for their ads. In the same way, channels with more than 500,000 viewers have a separate target audience.
So, if you increase your watch time, then your videos will have a ranking which is proportional to advertisements upon proper monetization. Remember, YouTube recently has started DEMONETIZING YOUTUBE CHANNELS who do not follow the community guidelines.
Read more: IS YOUTUBE BLOCKING MONETIZATION FOR ANTI SJW CONTENT | DEATH OF FREE SPEECH OF CREATORS?
Cost Per Click is the amount an advertiser pays each time when a YouTube user clicks and ad. This metric is for in-display ads on YouTube which have a familiar scenario for a display campaign on Google search engine. You have to note that, Cost per click is not possible on True Value advertisements or any video related ads. Video and other rich media ads follow Cost Per engagement metrics
Alternatives to CPM
Not all YouTubers earn through effective monetization. There are many other ways a YouTuber can earn money. A YouTuber can sell products or merchandise to generate some revenue. Consider Philip DeFranco, who publicly said that, he never relies on monetization for revenue. If your YouTube channel is successful, then you can try this method. You can also affiliate with a product which resonates with your YouTube channel.
So, here are the basic information you need to know about cost per mile metrics and cost per revenue rates. Let us know if you want us to cover any other topic regarding YouTube monetization.
Being an artist, movie buff and a media enthusiast, content writing is my career train. I am a proud alumni of Symbiosis Institute of Media Communication (Pune) and currently working for Vidooly.