Understanding YouTube RPM and Your Channel's Real Revenue

RPM, CPM — what do these strange abbreviations mean on YouTube? In this post, we'll explain what RPM is (and isn't) regarding your channel's revenue.

As one of the highest-paying social media platforms in the world, YouTube has always been lucrative for potentially earning big paychecks. Making money through Google AdSense is also pretty straightforward; if your viewers watch ads on your video, you get paid based on that!

Almost every creator who starts out on YouTube has the same goal, which is reaching monetization status. And most of the time, creators look at CPM (cost per 1,000 impressions), to understand how profitable their channel is. However, there’s a better way to see the monetary value of your content! In the video below, Rob shows us how much YouTube pays per 1000 views to the creators and what goes on behind that. Watch it here!

Unlike CPM, which is pretty outdated, RPM takes into account the various ways a monetized channel can generate income. Let's understand the difference better.

RPM vs CPM: The Two Metrics Of Monetization

First off, RPM is not to be confused with its close relative, CPM (cost per mille). While CPM focuses solely on ad revenue, RPM (revenue per mille) is the all-encompassing metric. It includes not just ads but channel memberships, Super Chats, and even YouTube Premium revenue. So while CPM shows you what advertisers are paying, RPM estimates what you'd earn after YouTube takes its cut.

And, by the way, YouTube receives 45% of your ad revenue and 30% of your fan-funding revenue.

Notably, RPMs do not show what you've actually earned, but they're closer to reality than CPMs.

Finding Your RPM: A Step-by-Step Guide

Like every other metric, you can look at the numbers on your YouTube Studio to find your RPM. Follow these steps:

1. Head over to the YouTube Studio and click on the Analytics section from the left-hand menu bar.

2. Next, open the Revenue tab in the top navigation bar and click on See More.

3. From the drop down menu, select the RPM option.

4. Take a look at your overall RPM for a specific date range. Notice how the vidIQ channel has an RPM of $2.73 and a CPM of $15.74 (for the month of August). CPM is typically the higher number, while RPM is more realistic.

If you want to calculate RPM for yourself, it's not too difficult. Take your total revenue for a given period, divide it by the total number of views you received, and then multiply by 1,000. Here's the formula to make it even simpler:

RPM = (Total Views/Total Revenue) × 1000

Fun fact, the average in RPM in 2023 is between $1.25 to $2.5. So, if you’re wondering, What is a good RPM for YouTube?, $2 or more is the sweet spot.

Certain factors influence the behavior of your channel’s RPM. They are as follows:

Viewer's Geographic Location

Advertiser spending varies significantly across different regions. For instance, advertisers are willing to pay more for viewers in economic hubs like New York and London than in areas with a weaker economic landscape. This discrepancy is because the economic conditions, cost of living, and local purchasing power in each region affect how much advertisers are willing to invest.

Video Length

YouTube allows the inclusion of more ads in videos longer than 8 minutes, potentially increasing revenue. However, longer videos risk losing viewer engagement, balancing the benefits of additional ad spots with the need to maintain viewers' interest.

Niche and Content-Type

Different niches have varying RPM rates due to advertiser preferences and audience demographics. For example, finance and digital marketing channels often enjoy higher RPM rates because of the lucrative nature of their content and their audience's potential for higher disposable income. Yet, anomalies exist, such as gaming channels and music channels, which can sometimes outperform the average earnings in their category.

Read More: The 47 Best YouTube Niches, According to Viewers

How To Boost Your RPM?

Ready to give your RPM a facelift? Here's how:

  • Turn on Ads: Make sure you’ve turned on all ad formats and at every eligible position on your videos.
  • Engagement is Key: The more likes and shares you get, the more YouTube's algorithm favors you. And guess what? A favored video equals more views, and, possibly, a higher RPM.
  • Diversify Your Revenue: Don't rely solely on ad revenue. Explore channel memberships and Super Chats to give your RPM a boost.

These actions will bring about a holistic change to your channel for the better and your improved RPM will reflect that!

What RPM Doesn’t Say

Smart creators diversify their income streams beyond YouTube ad revenue. They engage in brand partnerships, sell merchandise, offer online courses, or use fan funding options available on YouTube. This diversification helps creators maximize their earnings potential and not solely rely on the fluctuating ad revenue model.

RPM may be the go-to metric for a snapshot of your channel's financial health, but it's not the all-knowing oracle. So, what's missing from the RPM narrative?

  • Merch Sales: If you're rocking that merch shelf and raking in sales, RPM doesn't factor that in.
  • Brand Deals & Sponsorships: Cashing in on brand collabs? Awesome, but RPM won't include this (unless it's through YouTube BrandConnect).
  • Indirect Revenue Streams: Offering consulting services or hitting the speaking circuit? RPM turns a blind eye to these income avenues.

Here's where it gets tricky. RPM lumps together various revenue sources, making it a bit of a mystery box. You might see your RPM dip even when your views are soaring—why? Because not all those views are ad-enabled. On the flip side, your RPM could be climbing even if your view count hasn't budged, thanks to new Channel Memberships.

Our advice? Don't rely solely on RPM to gauge your channel's financial pulse. YouTube offers a smorgasbord of analytics to help you decode the fluctuations in your RPM. Use them to get the full picture.

Time To Get That RPM Up!

It may look like a long-winded process, but taking deliberate steps to improve your channel’s RPM is a crucial goal in the path to making it as a full-time creator.

RPM is more than just a number; it's a comprehensive look at your channel's earning potential. The next time you're knee-deep in analytics, give your RPM the attention it deserves. Trust us, your future self will thank you.

And if you’ve just unlocked monetization on YouTube, use these tips to boost your ad revenue!