How Online Ads Generate Revenue [Infographic]

Online advertising is all about clicks right? Someone clicks on an ad, and the website gets paid yeah? Well not always. How online ads generate revenue is a bit more complicated than that, but if you are a website owner you can be forgiven for thinking that, as the (slight) complexity of the matter is hidden from you.

If you have ads running on your website, you usually only get paid in one way – RPM. RPM stands for Revenue Per Thousand and is a convenient way for ad networks to summarise how much money you are getting paid in a way you can understand. Page RPM is how much money you have earned per 1,000 pages, and Impression RPM is how much you have earned per 1,000 ad impressions.



However, ad networks themselves do not get paid in this way. If you’ve ever run an online ad campaign yourself, you will know that you can choose to pay for a wide variety of different things such as clicks, leads, conversions etc. Ad networks generally don’t want to break down your payment report by each type of ad they run for two main reasons:

  • To fill all the ad space, some ads will have been run at very low rates. Not all ad impressions are worth the same – for example, once someone has viewed 50 pages, you can safely assume that the ad impressions they are being shown are unlikely to have any effect. By breaking down your revenue report you will likely see some very low paid CPA campaigns, and this might make you complain to your ad network that you don’t want to sell at prices below a certain level. While this may give you peace of mind it will actually earn you less money, as your worst impressions will now go unmonetised. It will also earn your ad network less money and generate more work for them. It’s a lose-lose situation.
  • Your convenience. It’s just much easier to understand a single figure when you are being paid. It also makes it easier to compare your revenue each month, regardless of the different number of page views you received.


How Online Ads Generate Revenue Infographic


Why do I need to know this?

So it’s not in ad networks best interests to tell you how each ad on your site was paid for. And it’s also not especially useful for you know how each ad was paid for. It is, however, useful for you to understand how ads are paid for in general. This is to help you understand that sometimes it’s about clicks, and sometimes it’s about views.

Knowing that there are these two sides to advertising will help you:

  • Cut through jargon thrown at you by ad networks
  • Not overly worry about ad clicks taking people away from your site
  • Understand where to place ads on your site to make them perform better (and earn you more money)

It’s not complicated, just look at the helpful infographic below, and you’ll get it right away I’m sure.



How Online Ads Generate Revenue – Infographic

How online ads generate revenue infographicClick to enlarge