Source of cash flow on Youtube - AudienceGain

 To begin with, let’s reckon that your channel has 4000 watch hours and 1000 subscribers, and you’re officially approved to monetize from your Youtube channel. 

By joining the program, creators can make money by inserting ads into their videos. Ads are filtered by Google and the amount of money creators received will be based on watch time, duration and demographics (gender, country …) and so forth. 

Now, we’ll divide your earnings by two sources. One is the revenue earned from advertising, the other is money earned from the video views from users. 

The money of Ads from Google Adsense

Adsense is an advertisement distribution platform under control of Google. To be more detailed, you need to link your channel to the Adsense account in order to be approved to join Youtube Partner Program. Your audiences watch your videos and you can get the money to your pocket. 

Keep in mind that the money from the distributed advertisements (from Google Adwords) are dependent on three parties: the advertisers, Youtube itself and the creators.

Basically, Google partners with companies and brands that want to promote their product campaign on Youtube, in the form of advertisements. Afterwards, Google Adsense (now linked to creator’s Youtube videos) will display ads on the creator’s videos. 

As a result, if a viewer clicks on the ads and watches them, the creators can make money from Youtube. However, all three parties involved are not entitled to the full 100% of the amount of revenue. 

Now let’s focus on only the money that creators can make, which is based on these indicators. 

CPM

Cost per 1000 impressions

CPM stands for “cost per 1000 impression”. Advertisers running CPM ads will set the desired price for each 1000 ad served, choose a specific ad placement to show ads, and pay each time their ad appears. 

In other words, this is the cost that the advertisers pay for the platform and the creators. You can see this figure in the Tab Revenue of Youtube Analytics tools. 

On top of that, the amount of money that Youtube and creators receive depends on what kind of advertising it is. If it’s the non-skippable ads, the amount (for an impression) equals to CPM.

As for other types of ads (skippable in-stream ads, sponsorship card) the amount will be higher.

Besides, CPM ads are not always displayed, it depends on the geographical location of the  viewers, which means that not 100% of the people who watch the video will always appear in the advertisement.

For example, in the U.S, normally one ads click cost from $0.5-$1. So for example there is a rate of about 5% of people will click on the video every 1000 viewers (also called CTR). That means about 20 clicks/1000 views equals $10-$20. Remember that this is the price advertisers pay for Youtube and creators. 

RPM

RPM – Revenue per thousand views

Revenue per thousand views (RPM) is the amount you make from multiple revenue streams per 1,000 video views. The RPM is calculated as follows: (total revenue / total views) x 1,000.

In fact, Youtube creators misunderstand this metric with CPM. While both of these parameters appear similar, they are actually slightly different. RPM is indeed more useful for creators trying to grow their channel and find out where their monthly income comes from.

To be more specific, while this figure will measure the amount per 1,000 ad impressions before YouTube shares that revenue ( by%) with content creators, the RPM shows the actual total revenue of the content creator (from both advertising and other forms) after YouTube has discounted.

The other forms here can be the monetization features, affiliate marketing, selling creators’ products and so on. 

While there is no change in the amount of shares with creators, it helps creators understand and know exactly how much money they make and how YouTube shares revenue.

However, the advertisers do not officially public how to calculate the metrics , but only provide the creators for monitoring. 

CPC

CPC – Cost per link

Cost per click (CPC) is the amount you earn when a viewer clicks on the ad. The CPC is different for different types of ads. 

CTR

CTR – Impressions click-through rate

Impressions click-through rate (CTR) is the percentage of YouTube impressions converted to views. This metric shows how often viewers watched a video after seeing it.

Let’s say you have 5 clicks and 1000 impressions, your CTR will be 0.5%. The higher this metric is, the more visitors click on the ads. Consequently, advertisers will have to pay more money for Youtube and creators. 

See more: https://audiencegain.net/the-keep-in-mind-indexes-to-understand-how-youtube-monetization-works/

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