If you have a website or an application, you’ll surely want to monetize it. Using digital ads is the most common way to monetize a website. But, does monetizing through ads really work? Here at CodeFuel, we prepared this guide to help you understand what ad revenue is and how to optimize it.
What’s 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 2023 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.
How do Advertisers Make Money?
Ad networks work under programmatic advertising technology. In programmatic advertising, ad spaces are offered in real-time auctions. Advertisers bid for individual impressions instead of buying blocks of ad space.
The programmatic advertising system allows advertisers to make more revenue. Advertisers can set the criteria for the ad spaces in their ads will be displayed, including type of content, size, and type of ad. Buyers can reach their target audience more accurately than with traditional advertising.
Types of Digital Advertising Revenue Models
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.
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.
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.
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.
The famous chef Nusret, (@saltbae) is one non- celebrity famous influencer 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.
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.
How to 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 they use to 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 its 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 banner ads, displays, video and text can engage users without boredom. Also, take a look at the esthetic of the ads you present on your site and 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. Look for native ads, that integrate seamlessly with your content and have a better click-through rate.
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.
How to Get Paid For Generating Ad Revenue
Several ad networks can help you get paid for your always-increasing ad revenue. Some of the most popular are Google AdSense, Bing, and Amazon for Publishers. 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. Here are some basic types of ad networks:
- Premium Ad Networks: These networks focus on inventory from high-quality publishers.
- Inventory-specific Ad Networks: These networks specialize in a specific inventory, like mobile or video. They help app developers, for example, to increase their revenue.
- Vertical Ad Networks: These networks work with certain topics, like health, fashion or tech. If your website is set on a specific niche, you can increase ad revenue by targeting a specific audience.
- Affiliate Marketing Networks: Affiliate advertising networks link affiliate marketers with brands that want to promote their products and services through dedicated programs. These networks provide a way to earn ad revenue for influencers and website owners who want to promote other businesses’ products without carrying inventory.
Some networks handle all types of advertisers, in a generalist approach. Examples of this category include Google ADX, Google AdSense, or social media platforms like Facebook. These networks usually have a massive reach. However, they may lack on targeting.
Another alternative for publishers to increase their ad revenue is by using a monetization platform: While they are not networks per se, these tools offer you access to multiple ad networks and marketing resources. These networks allow the publisher to connect with multiple ad networks, maximizing the exposure. CodeFuel, for instance, is a complete ad network and monetization platform that helps publishers and app developers monetize their digital properties.
Want to learn more about what ad network is best for you? Check our Ultimate List of the Best Ad Networks for Publishers for 2023.
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 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 a publisher can calculate his ad revenue?
Even better for a publisher is to calculate eCPM (Effective Cost per Mille). This metric measures the ad 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.
How to Increase the Ad Revenue from Your App or Extension
In-app ads is one of the most common ways of generating revenue from your app,
because most applications in the App Store or Google Play Store are free, publishers should find another way to make money from their app.
In-app advertising implies displaying advertisements inside your mobile app. Ads are displayed at defined times or triggered by determined interactions when a person uses the app.
App developers and extensions can increase ad revenue by mixing different ad types, such as banner ads, videos, displays, or interstitials. While banner ads are common for desktop, there are too small to be seen properly in a mobile app, so there are not a good choice to bring ad revenue. Here are some examples of ad types that help improve the app monetization:
- Interstitial ads are triggered by the user utilization of the app, and are often served at the end of a section or stage on the application. They don’t disturb the user experience, which increases their CTR.
- Native ads: these apps blend seamlessly into the app at the point the user barely distinguish them from the content. They also translate into high CTRs, which in turn results in higher ad revenue.
- Video ads: video mobile ads are very popular right now. Just think about the ads that pop between Spotify songs. Place them where does not interrupt the usability of the app for maximum profitability.
- Affiliate: Placing other application’ adverts on your app can help you bring more revenue, by getting paid commission every time a user clicks on it.
If you want to know more about other ways you can monetize your app, look at our App Monetization Guide 2023.
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.
Invest in better user intent targeting
Ad networks usually offer several targeting options for your ads. Some networks will give you qualifiers to filter who you want to show the ads to. For instance, location or search interests. Others offer re-targeting customers who visited your site or showed interest in the products.
For example, let’s see how Facebook targeting works:
Targeting starts by creating an audience. Facebook (Meta) features enable you to create and define your ad’s target audience by interest, gender, or location. The system uses machine learning, so once the ad runs, it can learn who interacts with it and narrow the audience.
Go to your Dashboard and choose to create an audience. Then choose the location, age, gender, and interests.
Who can be your target audience? You can create a custom audience by targeting users that visited your website, used your app, or are on your customers’ list.
Facebook also allows the creation of Lookalike Audiences. That means translating your audience settings to look for new audiences that resemble the first.
What types of ads are available on Facebook? It will depend on the campaign’s objective. For example, if the objective of your campaign is awareness, here are the available ad types:
You can see the other available ads per objective in the Facebook documentation.
Facebook offers targeting according to certain criteria, like location, age, gender, and interests. Other networks offer complete profiling and targeting. When choosing an ad network, choose the one that offers you the most complete targeting options.
The more options you have, the better the ads will target the user and the more effective they will be. That’s why at CodeFuel, we have focused on displaying ads based on user intent.
Do more split A/B testing
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 cause more clicks for your ads ad more conversions.
How Much Money Do Apps Make Per Ad?
The ad revenue for applications will depend on the industry and the type of ad. For instance, rewarded video ads pay in the U.S $0.02 per impression. Interstitial ads pay $0.16 for completion. Action games and gambling games tend to bring the most rewards per ad.
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 also a market for other browsers, 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 it matters 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 it matters 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 it matters 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. The general pay per ad is low and the requirements of traffic and content quality for sites and apps can be daunting. However, pairing with a monetization platform can give a headstart for publishers and app developers looking to monetize through advertising.
CodeFuel helps publishers and developers monetize their digital properties by improving the user experience. The platform engages users to publishers so they can find relevant ads that solve their queries. You can learn more about how CodeFuel can help by contacting us.
How much do interstitial ads pay?
Interstitial ads can bring more revenue to your app if implemented correctly—without interrupting the user experience. How much you earn will depend on the type of interstitial ads you use, for example, video or playable, and your target market. For Tier 1 markets, the eCPM rate ranges from $10 to $20. Other markets pay from $4 to $6.
Which bidding strategy should you use to increase revenue from your ad spend?
For advertisers, the best bidding option gives them the most return with the least ad spending, for example, by choosing a CTR strategy. If the network you use uses CPM, you can set a tCPM bidding strategy, where you set the average of how much you want to pay for a thousand impressions.
Your bidding strategy will also vary depending on your campaign goal, such as visibility or if you want to generate more clicks from mobile devices.
What are the Benefits and Disadvantages of earning Online Ad Revenue?
Incorporating ad revenue into your digital properties’ monetization has benefits and disadvantages:
- It is simple. Most networks have an easy sign-up process
- Increases your brand visibility, when you offer them quality content and relevant ads.
- Diversifies your online income sources
- Ad revenue can fluctuate with the website traffic
- The wrong ads may negatively affect the reputation of your site
- Many times, publishers don’t have a lot of control over the ads that show on their pages.