Have you ever thought about how to calculate your ad revenue?
There is a “publishers’ success formula” (as we like to call it), you should know! It’s worth keeping in mind that your ad revenue doesn’t depend only on your monetization partner and the number of ads displayed.
It also depends on your website’s audience, its loyalty, engagement, and quality of your ad inventory.
In this article, you will learn how this formula works and how to estimate the revenue potential by using your own Google Analytics and/or Similar Web data. This formula will also work for your advantage while employing different website growth strategies.
Table of Contents:
- Key metrics of calculating your ad revenue
- How to calculate ad revenue by using Google Analytics? | Step by Step Guide
- How to calculate ad revenue by using Similar Web data?
- How can a publisher’s success formula help to grow both– website traffic and revenue?
- 5 proven strategies to grow your website metrics
Key metrics of calculating your ad revenue
The success formula is quite simple; it’s basically a mathematical multiplication of certain website’s and monetization metrics, while the “success” itself is revenue.
Website key metrics include: users representing your website’s audience, their loyalty, and engagement.
Monetization metrics include: your ad inventory and advertising price in CPMs.
To calculate the formula consider one month as a period.
As you can see, the formula represents the general understanding: “the more users come to a website, the more revenue there is.”
Actually, things are more complicated.
The number of users influences the revenue potential, but the full picture consists of understanding how often and how engaged these users are while having some ads on a website.
Audience– these are the users who are visiting your website for over a month.
Loyalty– is a metric, showing how many times users return to a website on average per month.
Engagement– is a metric that shows how many page views on average users generate during their visit session.
Ad Inventory– the amount of available ad space on the publisher’s website. It also refers to the number of ad placements available to sell to advertisers.
Price– it represents the amount of money for how much you sell your ad inventory. The price is calculated in banner impressions, usually as a CPM (1000 impressions).
Each metric on its own represents a different strategy and approach in how to increase the ad revenue.
Before we dig more into strategy, let us give you an example of how you can use Google Analytics to calculate the success formula.
How to calculate ad revenue by using Google Analytics? | Step by Step Guide
Let’s review the formula once again and change the metrics according to Google Analytics:
1. Open your Google Analytics
2. Go to the left sidebar and press Audience, then Overview.
To calculate your potential ad revenue choose one month as a period, in this example we choose July 1- 31, 2020. Then according to the formula look at the users, number of sessions per user, and pages/sessions.
According to the picture below, there are 188734 users per month. Each of these users has returned to the page 1.23 times per each session and visited 2.08 pages on average.
Let’s imagine that on your website there are displayed 5 ads. The price represents CPM metric, which illustrates the ad revenue generated by you as a publisher from 1000 ad impressions of banners.
You can see this number (CPM) in your Google Adsense Account or if you use a monetization platform– reporting system. Let’s say in this case, your CPM is 0.50EUR
Your potential ad revenue is 1207EUR
How to calculate ad revenue by using Similar Web data?
If you use Google Chrome extension– Similar Web, the metrics you should use for the formula are:
-monthly visits, which is equal to your users or audience
-pages per visit, which is your users’ engagement and loyalty
We took the same website, and according to the picture below monthly visits differ a bit from Google Analytics data. It’s because Similar Web data calculate the average number of monthly visits for more than one month.
There are 407 900 users per month. Each of these users has visited 2.15 pages per visit. Let’s say the CPM is 0.50EUR and there are 5 ads on the website.
Your potential ad revenue, in this case, would be 2192EUR
(407 900 x 2.15 x 5 x 0.50)/1000=2192EUR
Proven strategies: How can a publisher’s success formula help to grow both– website traffic and revenue?
As we mentioned earlier, each of the formula’s metrics represent different strategies on how you can increase your website’s ad revenue.
To understand how powerful this formula is, let’s look at an example.
Strategy to grow your ad revenue
Let’s imagine that your website is quite fresh and new. It’s visited by 30 000 visitors (users) per month, who, on average, visited the site 1.3 times and viewed 1.5 pages. There are 5 ads per page on average, and the CPM is 0.40EUR.
To calculate such website’s ad revenue, let’s put the numbers into the formula:
(30 000 x 1.3 x 1.5 x 5 x 0.40)/1000=117EUR
Since this website is quite new, 117EUR is a good amount of money. In fact, this is a little bit over a minimum of 100EUR that Setupad pays out.
Let’s now agree that efforts were made to increase the number of users, their loyalty, and the engagement by 30% in total. Also, 1 ad placement was added, and the CPM after the optimization Setupad provided, increased to 0.50EUR.
The revenue increased from 117EUR to 385,57EUR, which is more than 300%! The whole growth was created just by growing the key metrics of the revenue potential.
How can this be achieved?
5 proven strategies to grow your website metrics
- How to increase the number of users visiting a website?
- Improve SEO, both internal and external
- Improve content distribution strategy by using more social channels
- Use the right amount and well visible social icons
- Get featured in Google News/Discovery
- How to improve user loyalty?
- Offer them to sign-up for a newsletter and send it periodically with proper content
- Offer the push notifications for users
- Let users leave comments and actively participate
- Provide extra value for loyal users, for example, downloadables, a pdf book, etc.
- How to increase user engagement?
- Offer related/recommended articles both– inside of the article and at the bottom of it
- Improve the recirculation strategy by making a header menu sticky for mobile users
- Use more interactive media, such as video content
- Increase the overall performance of your website
- Don’t be afraid to test and display ads on different ad placements. However, don’t clutter your website with too many ads. It could harm not only the first three key metrics of the formula but also reduce the eCPM.
- Growing the CPM is a complex approach that Setupad does. The rule of thumb is to keep viewability as good as possible while not overcrowding the website with too many ads. This allows advertisers to realize the true value of your ad inventory, and the CPM starts to grow
Make sure that you know and understand your target audience. Keep doing your best and create quality content, thus increasing the number of returning visitors.
We want to emphasize that CPM and ad placements are not the most important things you should consider when calculating ad revenue.
Another point you should remember is that if you increase one or more variables, your ad revenue will be higher.
Since Setupad can add more ads on your site, your CPM will get higher and your ad revenue as well. Increase your ad revenue with us by signing up!