Calculating ad revenue seems like it would be an easy task, however, like many industries, the “experts” have made things clear as mud. In this article, we’ll look at the most common metrics and terms for determining how much you’re earning from ads, and which model is most beneficial for website publishers and bloggers.
Calculating Ad Revenue Based on Impressions
Ad revenue earned on an impression basis means that revenue is calculated by how many times the ads load on your website, and each ad load is by definition an impression. Basically, an impression will occur any time a user opens your website and one of your ads loads. There are two standard ways to calculate impression-based revenue rates, CPM and RPM. Additionally, some ad networks may calculate impression based on sessions or other metrics, this is often to obfuscate earnings as it’s not industry standard.
What Is CPM Rate?
CPM stands for cost per mille. Mille is Latin for “thousand”. CPM refers to the cost per 1,000 impressions. This essentially means that advertisers pay a certain amount of money to display their ads 1,000 times. This is the most common and straight forward way to calculate ad revenue.
What Is RPM Rate?
RPM stands for revenue per mille. It refers to revenue per 1,000 page views. While CPM calculates the rate/price per ad unit, RPM aggregates all ads on a page and calculating a rate. So, for example, if you had 4 ads on a page, your RPM would be higher than if you had just 2 ads.
RPM is calculated like so: (Estimated earnings / Number of page views) x 1000
Session RPM Rate
Session RPM refers to revenue per mille. This rate represents how much you earn per session or per visitor. This metric is not commonly used and typically only used by some ad networks to give an inflated view of earnings as a session RPM will always appear higher since you have fewer sessions than page views or impressions.
The formula for a session RPM rate is: (Total Revenue / Sessions) x 1000.
Calculating Ad Revenue from Clicks and Conversions
Some ad networks, typically lower tier ones, will calculate and pay website publishers based on ad clicks or even acquisitions.
So, what is CPC and CPA?
What is CPC?
CPC means cost per click. This metric shows how many times users have clicked on an ad, which determines how much a publisher earns.
For example, let’s say that your ad gets 2 clicks, with one costing $0.50 and the other $0.30, this equals $0.80.
You’d divide $0.80 by 2 (your total number of clicks). That means your average CPC would be $0.40.
What is CPA?
CPA stands for cost per acquisition. This metric calculates how much an advertiser pays when a user completes a desired action, such as a purchase, download, or free trial.
This means that as a publisher, you’ll only get paid if a user completes a certain action. So, to distinguish CPA from other metrics, you’ll be generating revenue based on conversions, not the number of clicks or impressions. Affiliate networks typically use CPA to pay publishers.
Impressions vs. Clicks vs. Conversions: Which Is Better?
When it comes to calculating your ad revenue, you have a variety of metrics to choose from, which often will depend on the ad network you use.
So, which one is best for your website? If you want to maximize your income, it’s best to choose a network that calculates revenue based on impressions. That’s because you won’t have to depend on a user to take an action like a click to earn money.
Gourmet Ads is the fastest-growing, global, premium food ad network that allows publishers to earn revenue. By joining our network, you’ll gain access to thousands of food and lifestyle advertisers. As a result, you’ll be serving relevant ads that your site visitors are more likely to engage with. Our network delivers premium ad content and pays ad revenue based on impressions. That way, you won’t be dependent on your visitors to take a specific action.
Gourmet Ads makes advertising easy for you by providing clear reporting and impression-based ad payments.
Interested in joining our network? View our publisher eligibility criteria, or apply now.