Explaining The Difference Between YouTube CPM And YouTube RPM
If you are planning to monetize videos that you have uploaded on YouTube, it’s very important that you learn of the difference between CPM and RPM. A lot of YouTube users still don’t know what separates the two terms from each other. This often causes a lot of confusion with regards to the amount of earnings they make from their content. In this simple guide, we are going to show you the difference between CPM and RPM. The very first thing you should know about is that CPM pertains to the cost being paid by advertisers while RPM pertains to the average amount that YouTube pays for a particular content creator. With that said, the amounts are always different from each other. After all, we are talking about averages here.
YouTube CPM is an acronym for “cost per mille”. It would be a lot easier to think of it as “cost per thousand”. In the economy of YouTube, CPM is the amount that an advertiser pays the video-sharing company for every 1,000 views. For example, let’s assume that you are an advertiser buying ads on YouTube. For every 1,000 views that your ad gets, you are going to pay $30. In this scenario, the CPM would be the $30. As you can see, the CPM is merely an amount associated with advertisers. With that said, it doesn’t directly indicate the amount of revenue that a video creator earns. Of course, you can always look at CPM to try and gauge how much money a content creator makes but you can’t use the amount to accurately determine the amount.
YouTube RPM, on the other hand, is an acronym for “revenue per mille”. In the simplest of terms, this is the average amount that a content creator makes every time his videos are seen 1,000 times. The RPM is determined using a simple formula. You merely divide the estimated earnings over the number of page views then multiply the resulting number with 1,000. For illustration purposes, let’s say your estimated earnings is at $10 and your videos have been viewed 500 times. Using the formula we just mentioned, you will come up with $20 as the RPM. Of course, you need to understand that RPM varies for all YouTube channels. Some have high RPMs while others have very low RPMs. In most cases, the difference lies in the type of videos that a content creator uploads on the site. You have to keep in mind that some advertisers pay top dollar for their ads while others pay the minimum rates.
CPM and RPM
You must also know that YouTube CPM rates vary. Usually, the deciding factor is the competitiveness of the niche of the advertisements. For example, an advertiser pays more for insurance advertisements than what he would pay for apparel advertisements. This is because there are a lot of advertisers competing to have their insurance ads shown on relevant YouTube videos. Think of it as a bidding process wherein the advertisers bid to have their own ads highlighted. Naturally, as the competition gets tougher, the CPM also goes higher. If you are a YouTube content creator, you can earn more revenue from advertisements that fall under high CPMs.
By taking into account these differences between CPM and RPM, you can glean information on how you can significantly increase whatever revenue you are currently generating from your videos. You can improve your RPM by focusing on making videos on niches that are deemed profitable. The bottom line here is that your earnings will depend on the quality of the advertisements that gets shown alongside your videos. You also have to consider the fact that there are several types of advertisements and revenue models. Let’s just mention here that if more ads are shown alongside your videos, it follows that you are going to earn more.
In conclusion, if you truly understand the difference between CPM and RPM, your experience as a YouTube content creator will be much better. If you notice a drop in your RPM, then you will know how to handle the situation because you are aware of what’s causing the drop. Understanding how CPM affects your earnings will also help you come up with ideas on how to create content around profitable niches. Knowing the difference between the two terms provides you with an advantage over your competitors..