What Does "CPM" Mean on YouTube?
Are you working to maximize your profits on YouTube? Are you looking to grow your channel so that you can have massive reach and you can continue to make the content you’re passionate about? Well, you’re in the right place.
Today, we’re going to talk about CPM on YouTube. It’s an important metric that you need to keep track of as you grow so that you can maximize your income from ads on your channel and develop a good relationship with your advertisers.
We’re going to talk about CPM, what it means, how to use that data, and also how you can strategize to get sponsorships for your YouTube channel. Let’s jump in.
What Is CPM?
CPM is an acronym that stands for “cost per mille.” Mille means 1,000, so CPM refers to how much advertisers are paying for each 1,000 views their ads get on your YouTube videos. You might hear it used interchangeably with the acronym CPT, which stands for “cost per thousand."
Obviously, this is an essential metric for you as a creator. The higher your CPM, the more money you make from each ad you air on your channel.
For example, if an advertiser pays 15 dollars for an ad on YouTube that runs on your channel, and that ad is viewed 5,000 times, you have a CPM of three dollars.
Why Is CPM Important?
Your channel’s CPM is critical. If you want to make good money through advertisements on YouTube, you need to keep track of your CPM to make sure that the ads viewed on your channel are valuable to potential advertisers.
Think about your CPM as a measure of how valuable your channel is. If you have a low CPM, it means that your channel is not in high demand for advertisers. They’re only willing to pay a small amount for every thousand ad views they get.
If you have a high CPM, it means that your channel draws in a lot of ad views, which means that companies are more likely to pay you more money for the ad space on your videos. This translates to more money in your pocket, so it’s an important metric to keep track of.
CPM, CTR, and Conversion Rates
So, what makes your channel valuable to advertisers? Unsurprisingly, a company measures an advertisement’s success by how many products it sells. That’s where CTR and conversion rates come in.
CTR stands for “click-through rate.” While CPM keeps track of how many people see the ad in question, CTR keeps track of how many people click on that ad to learn more. CTR is a big deal to advertisers. If viewers click on an ad, they’re much more likely to become customers.
That brings us to conversion rates. Conversion rates answer this question: Of the people who viewed or clicked on the ad, how many of them actually turned into customers? This is the most crucial factor that will help or harm your CPM.
If you have a high conversion rate, brands will jump at the chance to get ads on your channel and pay to do it. Likewise, companies have less incentive to pay top dollar for ads on your videos if your ads don't turn into very many sales.
What’s an Average CPM?
It’s important to know the average CPM on YouTube. That way, you can have a good benchmark of success to keep track of so you can accurately assess how well your channel is doing in the ad space.
In 2021, the average CPM in the US was about $7.60. That number fluctuates a lot, and there are dozens of factors that keep it ebbing and flowing, such as time of year and the competitiveness of advertisers.
That said, the biggest factor that affects the average CPM is what content niche you’re in. Certain types of content have much higher CTR and conversion rates than others, generally speaking, so you’ll be able to get higher CPM if you make content in those niches.
Business-related content on topics like affiliate marketing, investing, and dropshipping typically has super high CPM. The tech world also has very high rates on content like tech product reviews, web development, and VPNs. These higher CPMs can be around 12 or 13 dollars.
Lower down on the totem pole are niches like cooking, entertainment, or music. These niches tend to have CPMs around two to four dollars.
How To Calculate Your CPM
If you want to make good money on YouTube, you need to start tracking your CPM. That way, you can identify what’s working and what’s not working so you can adjust and maximize your ad space. In order to do that, you need to know how to calculate your CPM.
A simple math equation can get you there! All you need is access to your YouTube Studio so you can see the data. Start out with just one of your monetized videos to get a solid data point.
First, find out how much your total ad payout for that video was. This is the number that the advertiser paid for the space. Remember, not all of that money makes it into your pocket. YouTube takes a 45 percent cut of all ad revenue, so make sure you look at the total ad payout and not just your share of it.
Next, find out how many views the ad in your video got. This number will calculate viable views that meet a certain watch threshold.
Take the total ad payout and divide it by the number of views. Then multiply that number by 1000, and you’ll get your CPM. Now take that number and compare it to the average CPM in your niche, and it’s time to start making adjustments to your channel to maximize your profits.
How To Boost Your Channel’s CPM
It is definitely in your channel’s best interest to boost your CPM. A higher CPM means more money in your pocket, so here are some things you can do to refine your channel’s ads and grow your revenue as a YouTuber.
Pick the Right Ads
Remember, what makes your channel’s ad space valuable is how many products those ads sell. Higher CTR and conversion rates mean that brands will pay more for those ads.
You know your content and audience best. Run ads on your channel that relate to your audience and the type of content you make. Choose ads that your fans will be interested in, so they’ll be more likely to click on those ads and make purchases.
If you don’t know which ads to pick, try running a few different types of ads on your channel in different videos. Go back and see which ads did the best, and then continue to run those types of ads. It might take a bit of time and effort, but it’s worth it.
Ad Placement
Where you let ad breaks roll in your video will also determine the effectiveness of those ads. Ads at the very end of the video don’t typically get a lot of views, so you probably don’t want to place too many there.
It’s always a good idea to include mid-roll ad breaks if your content is suited for it. This way, you get more ad views per video. Just make sure that these ads fall at good places throughout the video and that they aren’t too disruptive.
Make Advertiser-Friendly Content
Advertisers typically don’t jive with offensive content. If your videos have violent content, display weapons, or use excessive amounts of obscenities, this will hurt your CPM. When advertisers run ads on your channel, they attach their names to you. So make sure your name is valuable and doesn’t exclude certain audiences.
If you want to boost your CPM, make sure your content is at a “PG-13” level. Typically, if you follow the YouTube community guidelines, your content should be okay. Just make sure that your content is respectable if you want to maximize your ad revenue.
Content for Adults
Advertisers obviously want to target people with money so they can make purchases. That means if your content is targeted mostly at children, your CPM will likely be lower.
If you’re trying to boost that CPM and make some more money, try expanding your audience to include an older age bracket. They’ll be much more likely to click on ads and make purchases than kids will.
Optimize Your CPM and Make Money!
Your channel’s CPM is one of the most important pieces of data you have if you’re trying to make a living on YouTube. So, if you’re serious about your influencer career, take all of this information, start keeping track of your CPM, and do what you can to boost it. Your wallet and your channel will thank you!
For more information about becoming an influencer and for helpful AI tools that can assist streamers in content creation, check out the Powder blog!
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