Not fully understanding CPM

BrainDead Werx

BrainDead Werx

Loving YTtalk
Alright, so before I begin, I have read plenty of articles on CPM, but most are like reading a Harvard Law textbook. I'm not stupid, but maybe I just need some laymen speak...

So I partnered with an MCN (Freedom! which is with any.tv) and my CPM is at $151.84 (last 30 days). But I'm not making much money. I'm only bringing in $40-$60. How come my CPM is so high but my revenue is so low?

EDIT: Oh, and my share is 60% from Freedom!
 
I'm assuming you're getting the $151.84 CPM number in Ad Performance? If so, gross CPM $151.84 minus 45% = Net CPM $83.51, minus 40% = $50.10 RPM (revenue per mille aka thousand monetized views). Your CPM will start to average out when you start getting more than a few hundred monetized views every month.
 
I too know what it's like to be not stupid. Carry on the good cause brother. Carry on.
 
Are you sure your CPM is $151.84? That seems rather high... maybe you're looking at your estimated earnings?

Anyways though, about CPMs, here's an extract from our FAQ, hope it helps!

First of all, what's "CPM"?
CPM stands for Cost Per Mille, or Cost Per Thousand. It's the amount of money that an advertiser pays per 1000 views of his ad. Off this CPM, YouTube takes a portion (roughly 45%) for themselves. We're left with what is called the RPM, or Revenue Per Thousand.
This is how much money the channel is earning. Your network takes a percentage of the revenue in exchange for its array of services.

Got it? Great!
What defines my CPM?
There are a few different factors that are taken into consideration when defining the CPM:
- Channel Audience
- Channel Content
- The Economy
- Seasonal Trends

Let's explain each of these things one by one:
Channel Audience
Advertisers have a target audience when they place an ad. Let's take an example: If Sony wants to run a campaign to promote their PlayStation 4, they might be targeting Men in Europe & North America, ages 18-25. If your channel's demographics fall into this category, your channel will display PlayStation ads. Another part of your channel taken into consideration under this category is your viewership. Larger channels (with the same viewer demographics) will always have higher ad revenues because the viewers have a bigger chance of watching the ad longer (if it's a pre-roll ad).
Channel Content
Let's grab our PlayStation example once again. Sony is also going to want to target their ads to gaming channels, rather then say, fitness channels (yes those do exist). Therefore, CPMs for gaming channels will grow when a major gaming-related ad campaign is going on. Seeing as most of our partners are gamers, it's fair to say that if the gaming industry was to weaken, ad revenue would decrease.
The Economy
This one's easy to understand: advertising is influenced by the amount of money that's put into it, so less money means less revenue on your channel. Simple as that.
Seasonal Trends
This one may be the most important of all 4, because it's the one that influences CPMs most.
During mass shopping periods of the year such as Christmas, September (Back to School shopping), and Summertime, CPMs can be up to 5 times higher than during the slower months (January, February). This is due to advertisers wanting to promote their products as much as possible during these periods of increased spending. Unfortunately, after seeing high CPMs for a certain amount of time, you'll see that they can abruptly go down once the sprees are over. This is typically seen in January and February of every year, just after Christmas (biggest advertising period of the year). It is not uncommon to see a December CPM of 15$ drop to 4$ in January for example.

You can always check your current CPM on YouTube Analytics (Ad Performance), if you're a member of a network that is transparent about that.
 
Here's an attempt at a "not a law book" answer.

Advertiser wants to buy ads. They pay $X per thousand views. This is CPM, or Cost per mille (cost per 1 thousand).

Your CPM that you see is nothing more than an average of all of the advertiser campaigns that ever touched your channel. Some will be high, some will be low. However you only get paid when an ad is shown. This is the "monetized playbacks" number in Analytics. That's how many times an ad was shown on one of your videos.

So, you just multiply the CPM value Google gave you by the number of views that had ads. This is the total amount of money advertisers spent on the ads that showed on your channel.

From there, you drop 45% of the money because YouTube keeps that and then you drop 40% of what's remaining because Freedom keeps that. You get what's left.

And last but not least, there is no network around that provides enough value to a smaller channel in exchange for 40% of your revenue. Drop Freedom like it's hot, because they're not and that's a terrible revenue share. (based on the numbers you provided, I'd estimate you have 800-1200 monetized views in the 30 days. You're also paying Freedom somewhere between $26 and $40 a month).

Also, the reason your CPM is so high is partially because you don't have a lot of monetized views. $151CPM is extremely high, but that's just due to the way google averages things. If you had more views, you'd see the CPM value drop even though total earnings will go up.
 
Ok, thanks. So I seriously need to build a better audience/advertise myself more so I can get more monitized views. I thought it was weird I am making kind of low revenue with a high CPM.

I am considering leaving Freedom! because they are still very new and the help they provide is fairly small. Been considering Fullscreen since I got an invite. I've been told a small channel should join a network to try and grow because they have tools to help you grow, but there are also a number of people who are hugely anti-network. Without starting a war, should I just leave Freedom! and go with AdSense, or leave and join another one?
 
To be honest, make your life easier and join a decent Freedom VN. Freedom itself is an honest company that pays on time and does everything with transparency. Some VNs (Virtual Networks) add a lot of extra value to the partnership. Take a look at the "Friends of Freedom" subforum on the freedom forums :) (can't link, no perms)
 
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