Here at CodeFuel, we prepared this guide to help you understand what is ad revenue and how to optimize it.
What is Digital Ad Revenue
Advertising revenue refers to the income that people and businesses earn by displaying paid advertisements on their digital properties, like websites, social media channels, and applications along with their online content. Companies are increasingly investing in digital ads and the trend is not decreasing.
Studies forecast digital ad spending will reach $242.80 billion by 2024.
Image source: emarketer.com
The shift to online shopping of 2020 is here to stay. Consumers still spend time in online activities, so digital advertising is still going strong.
How Digital Advertising Works
Digital ads work by using advertising tools that research, track, analyze and improve online ad campaigns. Digital advertising involves more than placing ads on social media and websites. It involves personalization and targeting your audience through relevant ads.
Types of digital advertising
As every company and audience is unique, there are different strategies for digital advertising. Each company should choose the strategy that works best for its audience and goals. Let’s explore the most popular types of digital advertising.
Pay per click is an advertising model where the advertiser pays the publisher for every click their ad receives on their page. PPC marketing is one of the most popular advertising strategies since giants like Google and Facebook started to use it. In fact, PPC is effective, according to research, 33% of people click on a paid search ad because it answers their search query. Moreover, compared to a user coming from organic links, consumers that arrive at an online retailer via a paid ad are more likely to purchase. PPC pricing can be quite volatile for advertisers because they have to compete and bid on keywords and ad placements with other advertisers. Usually, since ad placements are scarce, the system chooses the highest bidder.
For publishers, working with a monetization platform may ensure you get the best advertisers for your site. The platform handles the bidding and serves the ads that are most relevant for your users, therefore increasing clicks and conversions for advertisers.
SEO is still one of the most effective marketing strategies and with good reason. To be able to consume ads from your site, your audience needs to find you easily when they are searching for a query.
SEO allows you to show your users that yours is the result they are looking for. With billions of searches conducted every day online, you need to ensure your site appears in their search results. And by results we mean the first page of the SERP (search engine results page). If your business isn’t on page 1, it is almost you don’t exist.
How do companies get to the first page? SEO makes it possible. If your site has authority, builds trust, and good user experience, you have good chances.
You may have heard the phrase: “ Content is King”. Why is this so? Because visitors come to a website looking for an answer, information, evidence, or social proof. That’s why storytelling works, and content marketing forms the base of SEO and other strategies.
Put it simply, if your content is not good, you’re not going to retain visitors, and your ad revenue will suffer.
The most popular form of content marketing are articles and blog posts ( like this one!). Articles and blogs have many benefits for publishers and website owners:
- give valuable information to your potential customers.
- tackle objections.
- answer frequent questions visitors may have about the products or services your target audience looks for in your site.
In addition, blogs and articles are the best-ranked digital pieces in search engines. Why? Because most of the time, searchers are looking for an answer to a query and a blog can present it to them with ease.
Good blogs can bring a steady stream of organic visitors that will use your site as a reference for their questions. Only takes a skilled writer and several cups of coffee to create content your audience will bookmark for future reference.
An influencer is a person that has a large base of followers on social media. They can be on one or several social media platforms. Influencers are usually celebrities first, and then get their fans to follow them on social media. One of the top celebrity influencers is the footballer Neymar Jr., with over 140 million followers, has got several sponsorships and advertising deals with brands like Puma and Diesel.
However, there has been a trend of people becoming famous because of being influencers on a particular social media platform.
The famous chef Nusret is one of the non-celebrities famous influencers on Instagram, for instance. And his fame has skyrocketed since publishing his famous videos preparing meat and adding salt to food.
Why are influencers so important? Because when they tell their followers how good is a product, they are more likely to buy.
Video ads are getting more and more traction every year. Videos are not only on YouTube now, since social media platforms like Facebook and Instagram, have opened their channels to video ads and user-generated video content.
Adding video ads to your website is a great way to improve engagement and keep users on site. Video advertising taps onto the viewers’ emotions, that’s why ads that tell stories get more views. Matthew Luhn, a former storyteller for Pixar, told Forbes in an interview that “great stories make great ads”.
Viral marketing has a bad rap but it works. Usually, viral marketing takes the form of funny videos, the funnier, controversial the videos, the faster they get shared and spread.
Take for example this video by Blendtec. The campaign combined shock and humor to promote their blenders, blending objects like iPad and iPhones. The video campaign went viral really quickly. At the time of this article, the iPad video only had over 19 million views on YouTube.
4 Ways to Increase the Ad Revenue from Your Website
When it comes to getting revenue from your site, there are common ways, like e-commerce, advertising, or affiliate marketing. In this section, we’ll be focused on 4 ways you can increase the revenue from advertising for your website.
#1. Sell Advertising Space
This is the most common way to make money from advertising. You sell the advertising space directly to advertisers. Manage the layout so the website is not cluttered by too many ads. Bear in mind this method works better for recognized and high traffic sites.
#2. PPC Advertising
As mentioned above, Pay-per-click is another advertising method that is very popular. With PPC ads, you get paid every time a user clicks on an ad on your site. You can use Google AdSense or another ad network, like CodeFuel. Since you don’t have to deal directly with advertisers, PPC is a great choice for website owners.
#3. CPM Advertising
CPM is similar to PPC advertising in that it pays based on an action on the ad. However, CPM pays per impression or view of an ad. To get paid, you’ll need at least 1000 views of an ad.
#4. Affiliate Marketing
By using this method, you make money from the website through advertising and promoting products sponsored on the site. Working with affiliate marketing is similar somehow to e-commerce but the products are promoted on your site on behalf of advertisers. You get paid by sales or traffic generated from it for the merchant.
How to Increase the Ad Revenue from Your App or Extension
Most applications in the App Store or Google Play Store are free, so monetizing an application can be tricky. In app advertising is one way to generate revenue from your app, or you can leverage search functionality within your app or extension to drive revenues.
In-app advertising implies displaying advertisements inside your mobile app. When a person uses the app, ads are displayed at defined times or triggered by determining interaction.
Search monetization enables you to introduce search functionality within your app/extension, and enrich the search results for users with relevant sponsored results and ads. Working with CodeFuel to implement search monetization, you get access to one of the largest networks of avertisers. This is thanks to the partnership CodeFuel has with Microsoft Advertising and other leading search providers.
If you want to know more about other ways you can monetize your app, look at our App Monetization Guide 2021.
Tips to Increase Your Ad Revenue Through Smart Advertising
The right advertising can help you establish your position as a publisher and bring you a steady source of revenue. Too many publishers get excited with the idea of displaying ads and then get frustrated when the results are not what they expected. Here are some tips to optimize your advertising strategy.
User intent targeting
Ad networks usually offer several targeting options for your ads. Some networks will give you qualifiers you can use to filter who you want to show the ads to. For instance, location or search interests. Others offer re-targeting customers that visited your site previously or showed interest in the products. Other networks offer more complete profiling and targeting. When choosing an ad network, it is important to choose one that offers you the most complete targeting options.
The more option you have, the better the ads will target the user and the more effective it will be. That’s why at CodeFuel we have focused on displaying ads based on user intent.
A/B testing is essential to creating a good advertising strategy that gets results. Advertisers should test two versions of the same ad with a single, small, quantifiable difference. Advertisers then measure which of both versions perform better. Publishers can also test which ads are performing better on their websites and refine their ad strategy.
Use native ads
Ad blockers can be an issue for many brands everywhere. Blockers supposedly intend to avoid ads interrupting and annoying users. You can solve this problem by opting for native ads. Since they integrate with the content, they don’t disrupt the user experience. Instead, they enhance it. Focusing on native ads will result in more clicks for your ads ad more conversions.
How to Get Paid for Ad Revenue
There are several ad networks that can help you get paid for ad revenue. The revenue you can get from the ads varies according to the platform. You should choose the ad network that offers you the most variety of ads and caters to your specific audience. There are three basic types of ad networks:
General: Handle all types of advertisers. Examples of this category include Google and Facebook. The advantage of these networks is their reach. However, they can be too general.
Promotional and monetization platforms: While they are not networks per se, these tools offer you access to multiple ad networks and marketing resources. These networks allow the advertiser to conduct campaigns in multiple ad networks, maximizing the exposure. CodeFuel, for instance, is a monetization platform that helps publishers and app developers monetize their digital properties.
Specialized networks: These niche networks specialize in a specific industry or product, for example, SaaS companies. Because they are specific, their inventory tends to be more user-targeted and converting.
Want to learn more about what ad network is best for you? Check our Ultimate List of the Best Ad Networks for Publishers for 2021.
How to Calculate Ad Revenue
Calculating ad revenue depends on what’s the pricing model you choose.
For instance, if you choose to charge by Cost per Mille (CPM):
- Find your total earnings.
- Divide it by the number of impressions to your website or app in the period you choose.
- Multiply the result by 1000. This will determine the CPM you are receiving.
Received CPM = Total earnings x 1000
Number of impressions
How can a publisher calculate revenue?
Even better for a publisher is to calculate eCPM (Effective Cost per Mille). This metric measures the revenue generated by ads on a website.
How do you calculate eCPM?
- Find the ad revenue per banner or advertising campaign.
- Divide it by a thousand ad impressions.
eCPM = ad revenue per banner/ 1000 ad impressions
This metric shows publishers how much they are from a display ad if the ad is profitable or not.
Create Your Digital Advertising Strategy in 4 Steps
Now that you know the basics of digital advertising it is time to create your digital advertising strategy.
Step #1: Define Your Target Audience
The first step and the most critical for a successful online advertising strategy is to define your target audience. According to your audience is the type of ads you are going to publish on your website. Without an audience in mind, how do you know which kind of advertisers you need to attract?
Who are the users of your site? Look at the demographics, age, income, interests. On which social media platforms do they hang out?. Once you have your ideal persona you’ll know how to refine your site or app to cater to them.
Step #2: Choose Your Monetization Platform
How do you monetize your website will depend on the size and reach of it and also on your audience. Monetization platforms serve the ads on your site so you don’t have to.
You can choose to work with large organizations or with more specialized solutions, according to the requirements of your audience and site.
Step #3: Mix your Ads
If you can, mix the type of ads you publish on your site. A healthy mix of banners, displays, and text can engage users without being boring. Also, take a look at the esthetic of the ads you present on your site, how they blend with your content.
The more they blend and the less they look like ads, the better for the customer experience and clicks.
Step #4: Monitor and Analyze Results
Test, refine, and repeat. Monitor the metrics, calculate the revenue, and compare different strategies and campaigns with A/B split testing. Then refine the strategy to improve the results.
Digital Advertising Trends 2021
Last year, in 2020, the ad revenue of Google surpassed $146 billion. This includes the revenue from Google Ads. In fact, advertising is the majority of the company’s revenue, though most of it through search advertising.
While Google accounts for more than 90% of all desktop search traffic, there is a significant market for other providers, especially Bing.
With that in mind, digital advertising marketing is booming and expected to grow even more in the following years. Here we present the top 3 trends that could drive the growth of digital advertising.
Featured snippets become more important
Snippets, those short pieces of text that appear on position zero of the page results —that means, on the top, before other results—, will become even more important next year. Search engines will prioritize content that can be included in a snippet. That contains useful information in a tight format and answers a query.
Why does it matter for advertising? Because digital marketing companies will probably use those snippets as a short form of advertisement.
Promoting customer engagement through interactive content and ads
Interactive ads, such as gamified ads are gaining traction in the last year. Polls, giveaways, and contests drive customer engagement with a brand.
Why does it matter for advertising? The more interesting and engaging an ad is for the user, the better the chances it will convert.
We already dedicated a section above about influencer marketing. The appearance of non-celebrity influencers is probably the strongest trend that will continue this year.
More companies are pairing with influencers to drive attention to their brands, and engage an audience of followers. When done right, influencer marketing provides potential customers with the social proof they need to convert.
Why does it matter for advertising? Influencers reach the target audience directly, building trust. The ripple effect of brand recognition improves other marketing and advertising efforts.
Live Streaming sponsoring
Live streaming was one of the trends that accelerated during the pandemic. According to a survey by GlobalWebIndex at the end of 2020, 32% of YouTube users watched a live-streamed video in the previous month. This popularity opens an array of sponsorship opportunities for companies. Combined with influencer marketing, sponsoring live streams can complete a brand exposure effort.
That’s a Wrap!
Generating ad revenue for your website or application sometimes seems challenging. However, pairing with a monetization platform can give a headstart for publishers and app developers looking to monetize through search and advertising.
CodeFuel helps publishers and developers monetize their digital properties by improving the user experience. The platform engages publisher users so they can explore relevant ads related to their queries and intent. You can learn more about how CodeFuel can help by contacting us.