Why Your CPM is Low and How You Can Improve It | Papercup Blog
Why Your CPM is Low and How You Can Improve It
June 8, 2023
5 min read
CPMs are the Achilles' heel of many content creators and brands. They're about as elusive and changeable as the YouTube algorithm and massively impact monetization potential.

For content creators looking to troubleshoot their CPM results, here’s an overview of the factors that impact CPMs, average 2023 rates per industry and country, and the steps to take to improve lackluster ad revenue. 

Why is CPM important? 

CPM stands for “cost per mille”. It’s essentially a fancy term for how much advertisers are willing to pay per 1000 ad impressions. Advertisers will bid higher for slots in content that’s predominantly watched by certain demographics, in certain territories, or at certain times of the year. 

CPM is a key indicator of how much RPM (revenue per mille; the amount a channel or creator gets after YouTube’s share of ad earnings) content creators can ultimately take home. If CPM is low, it limits earning potential. Alternatively, addressing markets with high CPMs and niches with high demand can set the foundations for healthy returns.

What affects CPM?

It all boils down to competition. The more desirable an ad slot is, the more competition there is among advertisers, and the higher the CPM they’re willing to pay. 

How valuable advertisers perceive a channel’s audience for their product directly impacts this demand. Relevant factors include:

  1. Viewer demographic. Advertisers have a product to sell. Channels that can demonstrate appeal with demographics that are in demand or have greater purchasing power can generally command higher CPMs.
  2. Content niche. Channels with a specific focus tend to attract audiences in the market for similar products and services. Some of these niches, such as beauty, healthcare, and insurance, make a lot of money through advertising. As a result, advertisers are willing to pay a lot more for access to relevant buyer personas – and to see off the stiff ad-slot competition.
  3. Location. Each country has a different average CPM. Globally, these vary significantly. Countries like the US and Germany have high purchasing power, strong consumer competition, and strong currencies. As a result, they’re more attractive to advertisers and command higher CPMs.

Why does CPM fluctuate?

Demand is never static and is influenced by a whole host of features. As a result, CPM will continuously fluctuate.

According to YouTube, some of the most common factors that cause CPMs to vary within a niche or channel include:

  • Time of year. Expect higher CPMs around the holidays, when advertising tends to ramp up. 
  • Changes in viewer location. Creators can’t control where viewers watch from (although localizing for particular markets can help). If a channel’s viewer demographic gradually shifts from the US to Brazil, CPM will start to decrease. 
  • Available ad formats. Viewers have to actually watch an ad for creators to get paid. The proportion of skippable to non-skippable ads available as ad inventory can impact a channel's potential CPM.

Reasons CPM is low

If a channel’s CPM is uncharacteristically low, some issues could be at play:

  • Lack of advertiser-friendly content. If videos on a channel aren’t being monetized at all, the content might not be suitable for advertisers. Creators could see better returns by censoring swearing or inappropriate language and making things more family-friendly.  
  • Invalid traffic. Channels that buy fake views from bots, tell viewers to click through on ads, or get family and friends to play videos continuously will be penalized by YouTube. These views won’t count towards revenue figures. 
  • Copyright issues. Any content ID claims on a video will impact how revenue from monetization gets distributed.  

However, with niche, location, and target demographic critical to determining advertiser demand, a low CPM is typically the result of content that either: 

  • Is being watched mainly by viewers in geographies with low CPMs.
  • Serves niches where advertisers don’t see much value in their product placement. 
  • Serves audience demographics with low purchasing power. 

Luckily, there are ways to improve low CPMs by targeting demographics and niches with strong advertiser demand.

How to increase CPM

1. Localize content for high CPM locations 

English-speaking markets have some of the highest CPMs in the world. But, with countries like Germany and Switzerland offering high CPMs, too, a savvy localization strategy can help creators precisely target high-value demographics and regions.

Viewers are keen to watch content in their own languages, and creators offering content in other languages can expect higher engagement rates and watch times. Localizing for high CPM markets can drive more viewers from these regions to a creator’s channel and improve average CPM rates over time – increasing revenue potential.  

Creators shouldn’t overlook secondary languages in high CPM countries, either. Underserved demographics, such as LATAM-Spanish speakers in the US, (the US has the second-largest population of Spanish speakers in the world, after Mexico), can bring in more revenue to a channel. Tools like YouTube’s recently-released multi-language audio tracks can help creators capitalize on this opportunity. 

Regions with the highest CPMs 

Adsense keeps pretty tight-lipped about regional CPM rates. However, it’s possible to get a good estimate using creators’ YouTube channel data

In 2023, the highest CPMs on YouTube come from: 

  • English-language countries like the US, Australia, the UK, Canada, and New Zealand. Of these, the US and Australia lead the pack. 
  • Nordic countries like Norway, Denmark, Sweden, and Finland. 
  • Other European countries like the Netherlands, Switzerland, and Germany. 

Generally, there’s a large overlap between the richest countries and those with the highest CPMs. 

The wealthiest countries also top the CPM list. (Source)

2. Niche for the right demographics

For the highest CPMs, creators should target high-value niches and audience demographics with strong purchasing power.  

To appeal to specific demographics, larger companies could improve visibility and searchability by organizing content into different playlists for different topics. Individual creators could specialize in niches that command high CPMs or have strong advertising competition. 

Within these niches, choosing the right content format will maximize ad revenue. Reviews and how-to videos command high CPMs due to their high specificity and industry relevance. They’re also more likely to attract audiences interested in solving a particular problem – increasing their value to advertisers. Plus, they’re formats that lend themselves well to brand partnerships and affiliate marketing, so could lead to other monetization options in the future.

Niches with the highest CPMs on YouTube in 2023 

YouTube CPMs vary wildly across geographies and niches. In 2023, they generally range from as low as a couple of dollars up to $50. On average, they stick to the lower end of this range, so anything from $3-8 could be considered passable. 

Obviously, higher is better. Here are the ranges for some niches with the highest YouTube CPMs in 2023: 

The 10 most expensive niches for advertisers. (Source). 

3. Optimize existing content

For a quick win, content creators can optimize their videos for YouTube search by targeting relevant industry keywords in their titles and descriptions. This can help boost the position of content within YouTube search results, which could improve its desirability for advertisers. It’ll also help signal the content’s relevance in a particular niche or industry, which should help unlock the higher CPMs within a target niche.

Play to existing strengths to get results

CPM is a critical way of assessing channel monetization. By working through the steps above, channel owners can command higher CPMs, increase content revenue, and demonstrate the healthy level of reach necessary to seal the deal on brand partnerships. 

However, creators should balance monetization potential with credibility when building a YouTube content strategy. Speaking authentically to relevant audiences will produce the best results with both viewers and advertisers in the long run. To do so, channel owners can consider topical expertise, play to brand strengths, and use strategies like content localization to engage global audiences.

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