What’s really the secret to success on YouTube? A lot of you might say luck, which certainly doesn’t hurt. General public disbelief that turns into fascination has also helped a few (*cough* Rebecca Black *cough*) go viral. But the real key to success comes down to your audience growth and channel subscriptions. So once you’ve got that covered, how do you start making money? How revenue is earned on YouTube is often misunderstood and a lot of inaccurate information is out there. So let’s start by outlining 2 terms you’ll need to know and really, really understand the difference between if you’re looking to get serious about your YouTube channel: CPM vs. RPM.
CPM: This stands for Cost Per 1,000 views. It’s a term used by advertisers and doesn’t directly indicate the revenue a content creator earns. CPM is the cost an advertiser pays for 1,000 impressions of an advertisement, such as a banner ad.
RPM: Refers to Revenue Per 1,000 views. It’s a dollar figure used to express how much a channel earned on average per 1,000 video views after YouTube’s cut and any revenue splits are calculated. The revenue you earn is related to how many advertisements are placed on your videos and what type of ad it is. It’s important to consider though, that if someone skips a pre-roll ad before it’s completed then this would cause it to count as a view that was not monetized. Even though an ad was placed on the video, because it was skipped it was not a monetized view. The calculation for RPM is as follows: revenue earned/total monetized views x 1,000
Why this matters so much: Because there are so many different ad types and corresponding revenue models, it’s important to combine all these into an easily understandable figure.
The Important Difference Between CPM and RPM: CPM is really a term for advertisers and not creators as CPM is what advertisers pay to have their ads served against 1,000 ad requested views.
Keep in mind not all views are monetized! What matters is RPM, which really comes down to TWO KEY POINTS:
- How many ads are placed on your videos
- What type of ad it is
Consistently catering your content to a desired demographic for advertisers is really the only way to improve your RPM. The closer your audience is to what the advertisers want, the more they will pay to reach them.