The keep-in-mind indexes to understand how Youtube monetization works!

 Whether you’re a first-time creator looking to increase your YouTube views and subscribers, or an experienced video marketer looking to widen your brand reputation on YouTube, the first step to mastering the platform is the processing of numbers and acknowledge how Youtube monetization works

how does youtube monetization work

Prominent Youtube statistics throughout the decade

Here are some data on important Youtube statistics and we bet you don’t want to skip these:

  • Youtube has 2 billion logged-in users.
  • People upload 500 watch hours of videos every minute.
  • Each visitor spends 11 minutes and 24 seconds per day on Youtube on average.
  • 70% of what people watch on Youtube is determined by its recommendation algorithm.
  • In the U.S alone, Youtube will make 5.5 billion dollars in advertising in revenue in 2020.
  • The number of channels earning $ 10,000 or more per year on YouTube has grown by 50%, annually

And many more, which proves that the attraction of this platform has no signs of decreasing for the creators who want to make money from Youtube itself. 

This post will break down the basic indexes you need to know about how to monetize from your channel, the money range based on the number of views you get. 

Source of cash flow on Youtube

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

how does youtube monetization work

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

how does youtube monetization work

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

how does youtube monetization work

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

how does youtube monetization work

CTRImpressions 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

The money from video views

On monetized Youtube channels, apart from the amount of money that creators earn from advertising, Youtube will pay them based on the views that the video receives. Now the business just works on the money-making platform and its creators. 

Impressions click-through rate

The money generating from video views

That being said, Youtube is extremely secretive about its algorithms function, and so is how the Youtube monetization works on the charge per views to pay the creators. There is no specific amount that is published. All we know is that big YouTube channels with huge coverage are sure to make a great fortune. 

In general, how much YouTube pays the creators depends on many factors, such as:

  • The number of views your video received
  • The number of clicks an ad received
  • Advertising quality
  • Adblockers
  • Video length

For more details, with 1000 advertisement views of one video, creators can make money on Youtube up to $30 from ads, plus with $3-$5 from views. This is a very high profit for large Youtube channels.

With that being said, for every 1,000,000 views, the figure is $3000-$5000 from video views,  which makes the goal of becoming an Youtube influential person very appealing. On the other hand, as we noted, the money you get also depends on how many ads appear on your videos.

FYI

YouTube DOES NOT pay you based on the number of subscribers on your channel. Subscribers are the people who choose to follow your account so they can easily access your latest videos. When you post a video, it will show up on their homepage automatically. 

A total of 30 seconds counts as one YouTube view. In case you watch the first 20 seconds then skip to the middle of a video while watching, then watch for another 10 seconds, the view’s still eligible. Therefore, it is not necessarily continuous, as long as the total is over 30 seconds.

As for repetitive views count, if you watch the same video multiple times a day, YouTube will eventually stop counting views. This is nothing else but prevents you from taking advantage of the algorithm.

Repeated views will be counted, but only up to a certain point.

Want to know more about how Youtube monetization works?

Well, Youtube’s earnings have grown into a conundrum. We hope that this article can provide you with an overview of how Youtube monetization works, based on the mentioned indexes above. 

Join us and leave a comment on the section below to let MySeoTech know if you have any question or opinion on this topic to calculate the potential amount of money you make on Youtube


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