Attic Rats, Preroll Ads & Show Your CPM

I was invited to join a web studio yesterday that provides a fixed CPM or cost per 1,000 views. That means the network promises you’ll earn no more and no less per video view… many of my friends have made that choice. It forced me to examine my current CPM and consider how that might change. Is it in my interest to accept a “floor/ceiling” amount? Or am I optimistic it will grow, and eager to benefit from that?

So today let’s look at attic rats, income for online-video ads, and contrast the sorry current state with what industry analysts predict.

Jim Louderback, CEO of Revision3, recently posted an intriguing article/rant about CPM prices… it’s titled “How Rats in the Attic Made Me Realize What’s Wrong With Prerolls.” Let’s examine the highlights to get a sense about why brands and online agencies have artificially depressed online-video advertising (despite shifts from print/TV to this medium).

Attic Rat

Problem (according to Louderback):

Unfortunately, even though those two video ad experiences are as different as rats and wine (KN note: Louderback was inspired having received junk mail for rat extermination and wine), they were probably priced at similar CPMs. That’s because the online video ad market – particularly the pre-roll market — hasn’t progressed nearly as far as print. Those were two markedly different experiences, with wildly different levels of engagement. However, for many buyers, agencies and brands an on-line video pre-roll is valued the same wherever it runs, regardless of viewer intent, ad placement and playback environment. It’s as if Trump and “Take Air USA” paid exactly the same for those two print placements – even though their impact is worlds apart.

Solution (according to Louderback):

If you’re a video ad buyer, understand the value differences between in-banner impressions and engaged in-stream video ads. Focus your energy on the latter, and you’ll get far better results than if you lump the two together. Even though engaged, in-stream video ads will be more expensive, they are still a great bargain – especially if when you target demographic or content affinity along with the in-stream purchase.

Now let’s pull a “you show me yours I’ll show you mine” to see what poor targeting has done to the online-video economy. 

Here’s a question for those brave enough to admit in comments below (feel free to use an anonymous name). What’s your YouTube CPM (income per 1000 impressions)? In other words, how much do you make per 1,000 views? It’s easy to compute: simply take your earnings in a given month, divided by the total number of views you get per month (divided by 1,000).

  • Example: you earned $200 last month. Your videos were viewed 100,000 times. So you divide $200 by (100,000/1,000). You get $200 divided by 100 equals $2.00 CPM.
  • Since YouTube keeps about a half, that would mean the company is fetching about $4 CPM… which is horrendously low if prerolls were used.
  • Show us your CPM?
Good news: eMarketer puts online-video advertising growth at more than 43% in the next year and 35% the next year. As marketers become more targeted and sophisticated, we should easily see a CPM lift of 20-30%.

Author: Nalts

Hi. I'm Nalts.

23 thoughts on “Attic Rats, Preroll Ads & Show Your CPM”

  1. I am new at “getting paid”, but it’s been my experience so far that the ad revenue varies from $1.80-$2.25 CPM, but with this new format on YouTube, I cannot see CPM. It gives me CPC and RPM? As you can see, I am still learning how it all works, but I remember a meeting at Vidcon where Margaret was saying CPM was not the only factor to consider when calculating what you are actually getting paid. I have to look up my notes to refresh what she said, but I remember she did this illustration and at the end of it, you actually made more than the CPM.

  2. This is actually something I actively try to monitor throughout the community since I show estimated earnings on http://SocialBlade.com/youtube . CPM’s vary depending on the country the viewer is in (not the creator) & with ad type (prerolls obv pay much more), and some months (esp sept ’11) pay more then others but on average the feedback I get from people is the range I currently use is pretty good. At the moment that range I’m using is $0.75 to $8 for the eCPM. In sept I was getting reports of people getting much higher cpm’s then even $8.. more like $10 or $12.

  3. Oh on a semi related sidenote, I need to really polish up the tool but at least for my own use I’ve created something that goes through and scans all my videos to ensure prerolls are turned on. I’ve found that youtube likes to automatically turn them off for some reason. Had about 25% or so of my videos missing that setting when I checked in august even though I knew I had turned them on originally. Currently traveling but perhaps I’ll work on that once I return.

    1. To my point Urgo… the estimated earnings you have on Social Blade are a lot higher than what my account with google actually says. My point being that eCPM is not the only deciding factor in how YouTube pays ad revenue.

  4. Tammy, thats not exactly true. Your rate is lower because you aren’t running prerolls. You’ll be closer to the bottom of that range if you’re a ‘mini partner’ where you just have access to the text ads + banner, or chose to just use those. If you turn on the prerolls your rate goes significantly higher.

    1. So what you are actually saying Urgo is that your Social Blade stats are based on Pre Roll ads then. Cause ‘mini partner’ has nothing to do with ads, impressions, ect… they are all counted the same. My point is that eCPM is not all there is too calculating the amount you get paid.

      1. Tammy, my point is SocialBlade gives estimates based on the entire range. Covers lower & higher boundaries. Your quoted range of $1.80 to $2.25 is included in the $0.75-$8 that SB is using. If you aren’t using prerolls you look at the lower number, if you are look at the higher.

        1. Urgo, my point was that was the range eCPM was on my account, we are talking about 2 different issues. What I have been expressing was that eCPM is not the only factor in determining how much you will get paid on ads, pre roll or banner. If you recall, Margaret gave a really neat illustration (I am at work and so can’t relate it), but it was a calculation that show how you actually make more in some cases than what the eCPM says. That’s my point and what I have been saying.

          1. If it makes you feel any better change ecpm to rpm. While outer networks such as machinima might inflate this youtube’s rates are predictable and the range socialblade uses should work for rpm and ecpm.

  5. Still unsure where you are coming from… I really have no feeling surrounding this whatsoever… merely pointing out a misconception a lot of people have calculating how they get paid is all.

  6. I’ll give you my take and experience if it’s worth anything to anyone. With regular adsense I was getting, on average, an $0.85 CPM. I got the offer from a large channel to join them and they offered me a set CPM that was a lot better than the norm. I was skeptical, asked a lot of questions and got a few things I wanted I wanted in writing so it has, so far, worked out fine for me. With what I’m making now I could easily afford rent and food. The only surprise was not getting paid for mobile views but I’m confident that that will start to happen in the future.

    1. Zack, thats a really good question. Personally I turn them on. When you have every ad type checked off (like youtube recommends) they auction them all off and your video gets the highest paying ad displayed for your viewer. It’s ‘true’ that if people skip it you don’t get paid but that helps in retaining viewers.

      YouTube hinted in the past that they are able to detect if people might skip the true view and a preroll would be higher paying but I’m not sure all the logic they put behind that. I haven’t honestly tried much testing of turning off trueview and only using prerolls since they rolled out trueview last.. jan?

      If all your videos have all the ad types on them and you’re still getting $1-$2 I’m guessing you might have a lot of viewers outside of the US. If you look in the CMS at the report there you can see the rpm breakdown by country and many countries pay way less then the US.

  7. My CPM last month was $2.55.

    BTW – in your calculation above, Nalts, you meant to say “take your earnings in a given month, divided by the total number of views you get per month (MULTIPLIED by 1,000).”

  8. Nalts: Will you pls delete my comment above? Don’t like the thumbnail featured.

    My CPM last month was $2.55.

    BTW – in your calculation above, Nalts, you meant to say “take your earnings in a given month, divided by the total number of views you get per month (MULTIPLIED by 1,000).”

  9. Thanks for the shout-out Kevin. Very interesting stuff.

    jim

    PS, I’ll give your dog a 2 MBPM guarantee to come over to Revision3.

    (MBPM = Milk Bones Per Mille – or 1,000 views)

  10. Here is YouTube’s instructions on assessing Studio CPM offers.

    www[dot]youtube[dot]com/watch?v=j9sxd9jZsXw&t=23m40s

    While the instructions are useful, I am left asking myself why has YouTube suddenly become anxious that content creators do no accept bad offers and more importantly why doesn’t YouTube come out and post a warning that sharks are circling on the site.

    In my opinion YouTube has realized that some “studios” are asset stripping new content creators without having the ability to make good on any of the promises the studios are making in order to gain control of those assets.

    So why hasn’t YouTube posted a sitewide warning? I think it is because of YouTube’s relationship with Fullscreen, Maker Studios and Machinima. YouTube do not want to make it difficult for these “beta” companies to operate on the site.

    The real-world solution to this problem is to have a list of YouTube approved studios that have been vetted by YouTube and have agreed to abide by a specific set of standards (which Machinima’s 3 year+ contracts or Fullscreen’s 50/50 ad rev contracts obviously wouldn’t meet).

    For now the best thing anyone can do when faced with an offer is ask to see the studios published accounts for the last five years (or the duration of the company’s existence if shorter). If the studio has never made a profit, you do not want to put your assets in its hands.

    Nalts, there is a studio-owning friend of yours that swaggers around the online video world pretending to be a big noise and pretending to have all the answers, but his financial records show that his company loses hundreds of thousands of dollars every year. Make sure that isn’t the studio that approached you.

    At the end of the linked video YouTube announces the Next Chef and Next Trainer programs where they are going to “turbo charge” someone YouTubers’ channels. YouTube’s idea of turbo charging someone’s channel is to steal traffic from everyone else’s channels because the YouTube “Live Team” is too dumb to actually generate traffic.

    YouTube Inc. still think that the “Live Team” picking who is going to be a winner on YouTube is ok. It has never been ok. It is simply evidence that the YouTube “live Team” are still not trying to help us do better, they are trying to make themselves important and relevant on a site which has survived despite them, not because of them.

  11. Odd that we had this conversation no so long ago Kevin.

    Andy Stack did a presentation at Vidcon explaining why you don’t want to get locked in to a CPM, and showed how the RPM number would be a more accurate representation number to look at. At the time I don’t think most of the people in the room realized why he made the presentation (it was really a presentation about how to read your insight and a preview of the new reporting site) but there were a few clued in people that knew what the inner workings were like and what some of these studios are up to. Obviously the part of the problem is that this is all very new to a lot of people and they are willing to accept these deals without understanding what it all means to them. They’re just happy to get the deal, because that means they’re on the way to “achieving their dream” of making a living off of online video.

    As for the offer you got, don’t do it. You’d be better off starting your own studio. Let me know if you need a gaffer; I don’t know what they do but I think that would be cool to have on your resume.

    1. LOL was that what I couldn’t find in my notes and did not know enough to pay attention too… This has been a very educational post 🙂

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