How much Money can I earn with In Text ads on my Website? Part 2

The Potential In Text Ads Revenues – Impressions and eCPM

As I wrote on Part 1 of this post, this is the most frequent question I get from website publishers before they integrate in-text ads for the first time. If you still haven’t, please start reading this post from Part 1, where I discussed the effect of the measurement methods used when counting net impressions and calculating eCPM. Recapping the summary of Part 1, I suggested measuring your website revenues by the bottom line, in dollars, so not to be confused by flexible measurements of eCPM, and looking for an in-text ads solution that counts most of your traffic, including international visitors.

Clicks Matter Most

The highest effect on your website monetization with in text ads hides in the humble term – clicks. All revenues start with a click and this is what you get paid for – clicks on ads. In most cases, in-text ads are paid on pay-per-click basis, or PPC. Although there are other models, like pay-per-acquisition, in most cases they are less effective with in-text and will yield lower revenues. So, if the revenues come from clicks, to increase your revenues from ads on your site, you need to increase two parameters: first, the number of clicks; and second, the payment per click.

More Clicks and CTR

Statistically, a web page gets a certain number of clicks on in-text ads for every 100 page views. This ratio is called Click Through Rate (CTR) and it is highly important for your monetization. For example, if a page had 15 clicks after 500 relevant page views, this page had 3 clicks for every 100 pages, so the CTR was 3%. To get more clicks, you can increase the number of page views, that’s obvious, but you should also try increasing the CTR. This will leverage the increase in page views. I will write more about increasing CTR as part of improvement tips for the in text ads integration. For now, it was important to clarify what is CTR, because it’s part of the formula for estimating potential revenues.

If you know your in-text ads CTR, this figure will be useful for the revenues estimation. If not, take the CTR you have on banners and as a thumb rule, double it. If you have textual AdSense ads on your site, you can use their CTR for now and hope it will be higher with in-text ads, or simply add 50% to it (so if your AdSense CTR is 1%, use 1.5% for this estimation).

Higher PPC

The second parameter that matters when it comes to clicks is the payment per click (PPC). From the advertiser’s point of view, it’s actually the cost per click (hence the term CPC), and advertisers are paying very different sums for different clicks.

As you can imagine, when financing an online advertising campaign, an advertiser would pay more when the potential sale is higher. Therefore, the page’s content niche is crucial to the PPC, and while a page about financial instruments and investments attracts high costs campaigns that yield high PPC, a page about a celebrity issue with less focused target audience would normally fit only general campaigns with low PPC. And the difference can be huge. Payments per click range from fractions of a cent and up to several dollars.

And while the content niche highly influences the PPC on a wide range, the entire range is subject to another crucial factor – geography. The stronger the economy, the higher the potential of sales and the costs of advertising, and therefore the higher the PPC. While in the USA, the payment per click may vary between a few cents to a few dollars, depending on the content and a few other parameters, the same ads in India will yield PPC rates starting from a small fraction of a cent and up to a few cents only.

For estimating potential revenues we can put a few fixed numbers, but please bear in mind that these figures are generic and your actual numbers could be very different. So, for visitors from the USA, if you have content that targets the higher end of PPC, use 25 cents as an average, for the lower end use 7 cents, and if you’re not sure – put something in the middle or lower, like 12 cents (again, these are very simplistic assumptions for this model only; you can always hope and aim for much more). For visitors from strong economies outside the USA, multiply these PPC figures by 0.7 to get 30% less. For visitors from developing or smaller economies, and this includes big markets where the online advertising is not blossoming, multiply the USA PPC numbers by 0.1 to get 90% less (yes, sad but true; on the bright side – the CTR there is usually higher).

In Text Ads Revenue Estimation – The Formula

Finally, we’re getting to the actual formula. How much money can I earn from in text ads on my website? Here’s the formula. Take your net impressions, divide by 10 and then multiply by the CTR to get the expected number of clicks. Then, multiply the clicks by the PPC, and here you have it – the bottom line projected revenues. Want the eCPM? Divide the bottom line revenues by the number of impressions and then divide again by 1,000. Important: if your traffic has different geographic sources, like most websites, you need to do this calculation separately according to the source, and use the relative estimated PPC accordingly. This is also true if your website has different content categories and then you have to calculate using the relevant PPC as well.

Practical Example

Let’s illustrate this by an example. Your website www.ExampleSite.com gets 1,000,000 page views per month, but you know that some of these visitors leave very fast and some of the pages have video only and no text, so your fill rate is about 80% and the net impressions are therefore 800,000. Most of your traffic comes from the USA, about 60% of it. Then, 10% comes from Canada and Germany, and the rest 30% of the visitors come from India and Indonesia. Your content niche is very attractive for high cost advertisers – it’s all about financial instruments, so the PPC should be high. As for CTR, your Google AdSense ads yield about 1% click trough rate.

Now, we can start estimating figures for in-text revenues. The CTR should be about 50% higher, so we can assume 1.5% CTR. The PPC for visitors from the USA should be high, around 25 cents in average, for the visitors from Canada (CA) and Germany (DE) 30% less, so we can assume 17.5 cents, and for visitors from India (IN) and Indonesia (ID) we multiply by 0.1 to get 2.5 cents. Calculating should be done according to the geographic source. Calculating…

60% USA Traffic x 800,000/10 x 1.5% CTR x $0.25 PPC = $180 Monthly Revenues, $0.38 eCPM.

10% CA and DE Traffic x 800,000/10 x 1.5% CTR x $0.175 PPC = $21 Monthly Revenues, $0.26 eCPM.

30% IN and ID Traffic x 800,000/10 x 1.5% CTR x $0.025 PPC = $9 Monthly Revenues, $0.04 eCPM.

In total, the estimated revenues would be 180 + 21 + 9 = $210, with general eCPM of $0.26. If your provider would have counted only USA traffic, the eCPM would have been higher ($0.38), but your bottom line revenues were $180 only and you would have lost 14% of your revenues ($30) only to see a nicer eCPM.

Why calculate when you can try?

I hope that now you can do the math for your own site and estimate how much money you can earn with in-text ads. Word of cautious: this formula used generalization and assumptions and disregarded several parameters that can affect your revenues. It can be used for rough estimations, not much more. The best way to get an idea of how much you can earn is by simply trying… Ask an in-text ads provider to integrate their solution with no long term commitments, try it for a while and get an accurate figure. A full month would give you the best projection. I know this post got to be longer than I planned and a little complicated… if you have any questions, I would be happy to try answering.