What is YouTube CPM? (+ Why it’s important)
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YouTube is a powerful advertising platform with over two billion monthly active users. As a creator, this means you have plenty of opportunities to make money. Understanding YouTube CPM is essential to unlocking its potential.
CPM, cost per 1,000 impressions, is an essential metric that determines how much advertisers pay to reach viewers through your videos.
It is commonly used across various paid media platforms to describe ad spend per 1,000 people reached by the ad.
By maximizing your YouTube CPM, you increase your revenue and demonstrate the value of your content. In this article, we’ll explore what CPM is, how it’s calculated, what constitutes a “good CPM,” and much more.
Contents
What is CPM and how is it calculated?
CPM, or cost per 1,000 impressions, is the cost an advertiser has to pay on YouTube for every 1,000 impressions their ads receive on your video.
The CPM varies depending on how much the advertiser pays to display the ad. Advertising costs on YouTube depend on a number of factors, including auction price, ad type, and consistency.
To calculate CPM, divide the amount an advertiser pays for an ad by the number of views a video has. Then multiply by 1,000.
For example, let’s say an advertiser pays $9 for an ad viewed 5,000 times on your video. To calculate CPM, divide nine by 5,000 = $0.0018, then multiply $0.0018 by 1,000.
This gives you a CPM of $1.80. YouTube takes 45% of your CPM, which means you will receive 55% of that $1.80. So if you earn $1.80 CPM with an ad, you will only keep $0.99.
Additionally, there is another type of CPM: read-based CPM.
Rather than calculating the cost an advertiser pays per 1,000 impressions, playback-based CPM calculates the cost an advertiser pays per 1,000 video plays where an ad is displayed.
There are free calculators available online if you don’t want to calculate your CPM manually.
And while individual video CPMs may seem low (like the $0.99 above), they can add up to significant monthly revenue if many businesses view your videos as consistently valuable platforms for their promotions.
Why is CPM important?
As a YouTube creator, CPM is an important metric to analyze which of your videos are most valuable to advertisers.
With advertising being the primary method of monetization on YouTube, understanding how CPM works is essential to ensure you’re maximizing your revenue.
To make a full-time career on YouTube, it’s essential to know which videos can be monetized so you can create a more effective long-term strategy for targeting these types of topics.
For example, maybe you create YouTube videos about beauty, health, and wellness. But you see that “Drugstore Makeup Tutorials” receives the highest CPMs. This suggests that you should create more content relevant to this topic.
One of the best ways to increase your CPM is to make your channel a great place for advertisers to place their ads.
YouTube search found that ad exposure (ensuring their ads reach users multiple times per week) significantly improves ROI.
Advertisers who regularly place ads on your videos benefit them, earning you a higher CPM and increased revenue.
Additionally, if you find a particular company, they regularly advertise on your videos.
If the brand aligns with your values, you can contact us directly to discuss other YouTube monetization opportunities, like affiliate marketing or brand partnerships.
Average CPM on YouTube
CPM varies very based on how much an advertiser pays to show an ad on your video.
Let’s say an advertiser pays $10 for an ad running on your video with 1,000 views. If so, you would earn $10 CPM (10/1000 x 1000). Of course, you’ll need to reduce that total by 45%, which will net you about $5.
However, in most cases, the videos that companies choose to advertise on will be viewed over 1,000 times, putting your revenue closer to $7-10.
Jillian Hope, senior brand advertising manager at HubSpot, agrees, telling me that her team typically sees between $7 and $10 on average from past campaigns.
It’s important to note that CPM is just one metric you can use to analyze and improve your YouTube performance.
For example, YouTube analytics provide statistics such as revenue per thousand (RPM)which shows how much you earn per 1,000 video views across multiple revenue streams.
Highest CPM on YouTube
The highest CPM varies by country, but here is a list of five highest YouTube CPM rates by country from 2022 to 2023:
- Norway: $43.15
- Germany: $38.85
- Moldova: $29.50
- Algeria: $24.50
- South Korea: $17.00
Higher CPM rates also relate to the content of your videos. Some categories generate higher CPMs than others. Some popular content niches on YouTube that generate high CPMs include:
- Make up
- Retail
- Health
- Finance
- Technology
But video topics aren’t the only factor that can cause your CPM to fluctuate. Many creators report peaks and valleys in their CPM throughout the year.
For example, seasonal holiday purchases in November and December can temporarily increase YouTube revenue in certain niches.
To start
As a creator, you should use CPM as a metric to help you identify which topics seem most interesting to advertisers, as these topics likely offer the most monetization opportunities.
Rather than looking for “quick tips” to increase your CPM, you’ll want to play the long game by creating a comprehensive YouTube strategy that will help you increase your sales, reach new audiences, and increase brand awareness.
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