Learn how to assess a channel’s monetization performance across all revenue streams, ad performance and CPMs, and determine how geography and macro trends can influence overall monetization of a channel.
Take snapshots of channel revenue
Revenue growth can be driven by strong viewership growth, and great content is the backbone for increasing viewership and engagement. Understanding what content is successful with a channel’s audience creates opportunities to try and recreate that success. The more a channel’s audience grows and engages, the more attractive that channel is to advertisers.
To identify a channel’s ad performance, you can set benchmarks and track revenue growth against monetization goals. You can use the table below as a template to find high-level performance metrics across the channel’s benchmark and current performance (time periods may differ based on your business reporting).
Where to look
You can pull the metrics for revenue, views, EMPs, and playback-based CPM to get a high level snapshot of overall monetization performance. During the assessment, look for what has performed well or not and note any big changes that occurred with the channel’s monetization or programming strategy so you can see how these changes could have impacted revenue. Generally, this is performed by comparing the last 90 days to 90 days from one year prior, which controls for seasonality in the advertising budgets and fluctuations in viewership. Below are some questions to consider answering during your analysis:
- How has each metric changed and are there any trends developing?
- What do you think might have caused the change(s)?
- Was there a change in your content strategy or creative direction that could have affected overall viewership?
- What is the percentage of estimated monetized playbacks of total views? How has this changed over time?
- How has CPM changed year-over-year? Could global conditions, expansion to new markets, or the general advertising environment have impacted channel CPMs?
Let’s look at a fictitious example with the U.S. channel, Amazing Shows, an entertainment channel that creates parodies of popular US television shows. An example monetization performance snapshot was taken based on the last 90 days and compared with the 90 day benchmark from 1 year ago, indicated below:
Last 90 days
90 day data from 1 year ago
Revenue $20k $10k (+100%) Views 15M 10M (+50%) EMPs 5M 2M (+150%) Playback-based CPM $4.00 $4.50 (-11%)
*To calculate the % change, take the numerical value in last 90 days minus the numerical value from 1 year ago, divided by the numerical value from 1 year ago.
Note: Your channel’s EMPs are a proxy for the number of ad impressions, and playback-based CPMs are a proxy for CPMs.
From this information, you can do a quick analysis of channel revenue performance and deduce the following:
- Revenue - Revenue is up significantly from last year.
- Views - Strong viewership growth is a driver in revenue growth.
- EMPs - EMP growth strongly outpaced viewership growth.
- CPMs - CPMs dropped from last year, but are still healthy. This caused a slight drag on revenue growth, but not enough to reverse positive trends in viewership or EMPs.
Based on this information, you could hypothesize that expansion into lower CPM markets may have caused average CPMs to decrease, but overall revenue could have increased due to a 50% increase in viewership and 150% increase in EMPs. Viewership and EMP growth is often consistent with a well implemented channel expansion strategy.
Next, let’s dive a little deeper by reviewing the ratio of Estimated Monetized Playbacks (EMPs) to total views, you can get an approximate percentage of ads shown across total views. Let’s take a look at how Amazing Shows did last year vs this year:
This year, Amazing Shows had a ratio of 33% of EMPs (orange) to total views (blue). Last year, Amazing Shows had a ratio of about 20% of EMPs (orange) to total views (blue).
In the last year, Amazing Shows had a goal to 1) Increase their EMPs by 150% by enabling more ad formats to help them reach their goal and 2) To drive CPMs, they optimized their content for content categorization, advertiser-friendliness, demographics and viewer location. The following is an example of their goal and action plan:
Goal: Increase monetizable playbacks
- Ensure that all high CPM ad formats are enabled.
- Focus on viewership in high CPM markets.
- Promote channel by including a “subscribe” call-to-action at the end of each video.
- Continue to make great content for viewers, engage fans, optimize the channel and build a programming strategy to grow viewership.
Assess revenue by ad type
The next step would be to see how well different types of ads performed on the channel. The CPMs and ad impressions can vary for each type of ad format, depending on country, seasonality, global economic trends, changes in viewership on YouTube—so it’s important to look at how these values affect the various ad types on the different kinds of content.
Where to look
You can measure how well each ad type performed for the channel by using the ad rates report to evaluate the performance of different ad types based on revenue, CPM, and ad impressions for individual or groups of videos (using groups or playlists to evaluate a series). Once you look at the data, consider asking yourself these questions:
- Which ad type generated the most impressions? Which ad type generated the highest CPMs?
- Is the channel optimized to have all ad formats enabled?
Let’s see how the fictitious example, Amazing Shows’, different ad types performed by looking at CPMs per ad type. The different types of ads performed differently and their CPMs can be broken down into 3 categories, high - mid - low:
High CPMs: Reserve ads, non-skippable and skippable (purple, yellow lines) have the highest CPMs and these are sold directly by Google sales teams.
Mid CPMs: Auction-served skippable or bumper ads (red, greens) are the next highest on a CPM basis.
Low CPMs: Display ads (orange) are typically the lowest CPM of the available ad formats, but still can generate substantial revenue with high enough volume.
Insight: Reserve is doing well and to increase the number of these ads, Amazing Shows could check to make sure to turn on all non-skippable and skippable ad formats across all videos.
Note: The CPMs above are illustrative for our fictitious channel, Amazing Shows; actual channels may see a different distribution.
Evaluate how geography impacts revenue
The global economy and fluctuations of local economies can influence ad rates and how ads are targeted due to the development of advertising markets in some countries. By understanding the impact of geography on ad revenue, you can better target international expansion.
Where to look
Review the channel’s revenue, EMPs, and CPMs by country to see how viewer location impacts a channel’s revenue and ask yourself the following questions during your analysis:
- Where are views of your best performing videos coming from?
- Which ad types generated the highest (and lowest) CPM, and from which country (click into each ad type to see geographical distribution)?
- What’s the ratio of CPMs to views in each geography?
Here is a table of data for Amazing Shows over a four week period:
Note: Amazing Shows is a fictitious example. Any resemblance of data to actual channel data is purely coincidental.
With Amazing Shows, the United States had the highest ad revenue and CPMs. Due to high viewership, Brazil had the second-highest, despite Australia and United Kingdom driving higher CPMs. Amazing Shows could consider offering captions in Portuguese for their top watched videos to further increase the viewership and revenue from Brazil. Since this bump in Brazil viewership occurred during the 2016 Rio Olympics, Brazil may be less consistently as prominent in the future.
Draw insights from growth
Once you have your snapshot of revenue performance and a deeper look at how the different ad types and geographies contribute to it, you’ll then want to see how the channel has changed Quarter over Quarter (QoQ) and Year over Year (YoY) to get an idea of how the channel is growing and trends in the performance of specific metrics like CPMs, EMPs and viewership.
Here is a table for Amazing Shows that analyzes YoY and QoQ growth:
Last 90 days
Revenue $20k +100% +15% Views 15M +50% -10% EMPs 5M +150% -15% Playback-based CPM $4.00 (-11%) +90%
Data as of: July 2016
What is the relationship between views and CPMs and how has this trend changed over time?
- Here is an example of seasonal QoQ dip in views but overall strong YoY growth for the channel. Views are increasing in the last year, but Amazing Shows experienced a slight drop in growth in the last quarter. One potential reason could be Amazing Shows programming strategy. Since they pulled this data during the summer when they produce less content, this could help explain the data they are seeing.
The revenue has spiked suddenly - why could this be happening?
- A look at changes in revenue QoQ or YoY showed that revenue increased in the last quarter and is up sharply from the prior year. As noted earlier, Amazing Shows had a goal to increase their EMPs and enabled more ad formats. This spike in revenue could be tied to the increased enablement of ad formats and strong viewership growth.
- Amazing Shows saw a parallel growth of viewership and CPMs during this quarter, most likely due to the promotions of upcoming shows during the Olympics. They expect this trend will revert over the next quarter, once the Olympics finished, but may be offset by viewership growth as they increase content production.
When during the year should we schedule the launch of a new series?
- A look at when during the year you expect the most ads to be shown against the content. Since Amazing Shows parodies popular television shows, there is an increase in viewership when new television shows are released during sweeps in February, May, and November. This can lead to a corresponding increase in CPMs as advertisers target a TV viewing audience.
Note: Since Amazing shows take the summer off from publishing to focus on developing new episodes, there would be a corresponding decline in viewership against number of published videos during the summer.
Macro trends can influence ad revenue
Finally, when reviewing your monetization performance, keep in mind there are broader macro trends that could influence YouTube ad revenue:
- Global supply and demand: Global economic conditions can impact ad rates regionally and worldwide. For example, shifts in a country's local economic environment or monetary policy could affect the strength of the country’s currency and CPMs for that country.
- Advertising industry ecosystem: Trends and seasonal factors can influence ad spend thus impacting ad revenue for YouTube channels. Advertisers tend to spend more money at certain times of the year, like holidays, sporting events, when new shows are typically released annually, etc. Historically, CPMs tend to be highest towards the end of each financial quarter, then drop with the start of the next quarter. The fluctuations in each market will vary so it might make sense to dive into the specific markets the channel is focusing on. [Where to look]
- YouTube-specific factors: As YouTube continues to expand viewership globally, the CPMs in different markets, like Brazil, Russia, etc. may fluctuate as advertisers are catching onto these markets.
These three trends are important to keep in mind to contextualize why performance may be changing. For Amazing Shows, there was high viewership in a fast growing market, Brazil. While viewership growth increased overall revenue, it simultaneously lowered the average CPMs since Brazil’s CPMs are lower than CPMs from the United States.
Tip: Make sure to review the ad revenue, CPMs and geography alongside each other to get a holistic perspective.