Welcome to the April edition of Online Advertising Answers, my monthly rummage in my digital mailbag for your most interesting questions.
This month I’m looking at common misconceptions – do ads *only* earn money from clicks, does using AdSense mean you can’t visit your own site anymore, and what is the difference between Page RPM and Impression RPM anyway?
I hope these answers help,
Justin
[Want to ask a question? Head on over to my profile on Quora and ask away or email me at justin@theonlineadvertisingguide.com]
This month’s questions are:
- What is the difference between page RPM and impression RPM?
- How do ads generate revenue, I feel no one buys from pop up ads?
- Can I see my site after adding AdSense or will it cause invalid impressions?
[Click these links to skip down to the question]
Q: “What is the difference between page RPM and impression RPM? “
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A: “RPM stands for “Revenue Per Thousand” (M is the roman numeral for 1,000).
Page RPM is how much you earn from 1,000 page views. Impression RPM is the amount you earn from 1,000 ad impressions.
The difference between the two comes from the fact that there are usually several ads on each page. This means that each page view can be thought of as earning the revenue from several ads all at once.
So when you are calculating Page RPM you add up all the revenue from all the ads on a page. This makes Page RPM (generally) higher than Impression RPM, as it’s the combination of several Impression RPMs stuck together!
Out of Impression RPM and Page RPM, you should definitely focus on Page RPM.
The Page RPM Equation
Page RPM = (Revenue ÷ Page Views) x1,000
[If you need to work out your Page RPM, then use this calculator]
Impression RPM is the same, but instead of Page Views, you use impressions.
Page RPM vs Impression RPM Example
Say you have a webpage with three ad slots on it. The page works perfectly, and every time it loads, you get three ad impressions.
After 1,000 page views you have 3,000 ad impressions, as each of the 3 ad slots have loaded 1,000 times each (1,000 + 1,000 + 1,000 = 3,000).
Imagine that in this time, each ad slot has earned $10. That would mean that in total the webpage has now earned $30 as it earned $10 from each ad slot.
If we turn this into RPMs we can see:
Total Revenue: $30
Total Page Views: 1,000
Total Ad Impressions: 3,000
Using the above calculator:
Page RPM: ($30 ÷ 1,000) x 1,000 = $30
Impression RPM: ($30 ÷ 3,000) x 1,000 = $10
The Page Impression is 3x higher because there are three ad slots for each page view.
Why Page RPM is better than Impression RPM
Page RPM tells you how well AdSense is performing for you. It tells you how much money you make from your page views – and increasing page views should be one of your primary goals as a site owner. It is a directly useful metric.
Page RPM is also helpful as you can compare the Page RPM from AdSense to other ad networks to see if you should switch.
On the other hand, Impression RPM tells you how well AdSense are doing at running an ad business for sites like yours… which is really out of your control. How much they get from ad impressions for sites like yours is to do with how well they are running their business, not how well you are running your website.
The point of using an ad network like AdSense in the first place is to outsource your advertising and not have to worry about such things. You let them sell ads on your site and they pay you. Page RPM is a metric you can use to work out your potential earnings.
Impression RPM is just a rough benchmark that takes into account too many things (including how AdSense is performing as a company) to have any real meaning. There are some things you can do to improve your Impression RPM, but overall it’s really up to them.
Your relationship is with AdSense. They should be judged by how well they perform for you. If they don’t perform well then you should leave them for another ad network.
On top of this, Impressions can be counted in a huge variety of ways, whereas page views is pretty standard. This means that the definition of Impression RPM is often completely different between ad networks making this metric much less useful than Page RPM.
Impression RPM Doesn’t Take Problems Into Account
There is another huge flaw in Impression RPM as a metric that should be noted – which is that it doesn’t take ad delivery problems into account (while Page RPM does).
In case you didn’t know – not all ad slots are filled by Google AdSense. They have a high ‘fill rate’ compared to other ad networks but even so, they only send ads to your site about 95% of the time. This is for many reasons that we don’t need to go into here.
When they don’t fill an ad slot, that ad impression doesn’t get counted by AdSense. This in turn means that the missed revenue is basically ignored from Impression RPM. No ad impression and no revenue makes no difference when you’re counting revenue from impressions after all!
However, this lost revenue is still counted in Page RPM. A page view will still be counted whether or not an ad impression loads, and so this missed revenue will make your overall Page RPM lower.
It will also make your Impression RPM seem higher than it really should. Take a look at the below:
On a page with only one ad on it, the number of Ad Impressions is lower than the number of Page Views. The total Revenue however is (of course) identical as this is all coming from the same page.
As the number of impressions is lower than the number of page views, the Impression RPM splits the revenue between a lower number. This makes the Impression RPM higher than the Page RPM!
Just think about this for a moment – for failing to deliver 6% of ads, the Impression RPM looks better. I don’t think I’m out on a limb here when I say that failure shouldn’t result in improved stats.
To put it another way – Impression RPM is kinda stupid.
Things change all the time in online advertising, with new technical problems, new laws and regulations, and new ad blockers coming up.
Google AdSense works to overcome these problems, and Page RPM takes into account how well they are doing. It’s how much they are paying for page views regardless of everything. If they do badly one month then Page RPM will go down, but Impression RPM will not (as those impressions won’t be counted).
You always need to keep in mind that your relationship is with AdSense. You can (and should) cut them some slack for fluctuations in performance – but ultimately they should be judged by their performance for your site only.
Ignore the metric that tells you if they are doing well, and focus on the metric that tells you if they are doing well for you.
In Conclusion
Impression RPM is Google AdSense’s way of making sure that they are sending each ad to the best possible place.
However, it is not a useful way for you to measure your advertising success. You cannot control Google’s AdSense algorithms, nor which advertisers are using their ad network. It is out of your control. Getting too caught up in your Impression RPM is a distraction.
Page RPM on the other hand measures what you, as a site owner, should be interested in anyway. You should be working on making the best possible site, and growing your page views – and Page RPM directly helps you to see how much money your success will get you.
Page RPM is also a standardised metric that is easy to calculate for yourself, and so can help you judge Google AdSense directly against other ad networks (which Impression RPM often can’t).”
[This originally appeared on Quora]
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Q: “How do ads generate revenue, I feel no one buys from pop up ads?”
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A: “Hi Daniel,
Ads generate revenue in lots of ways, depending on what the advertiser is looking for. Some ads need to be clicked on to make money, and sometimes that click needs to be followed by a sale (or other action – like a newsletter sign up) for the website to get paid.
Some ads only need to be seen to make money. Video ads are often charged on a cost per view basis for example. Also, ads that are trying to make a sale will often pay out if someone sees an ad then goes to the website and buys (even if the person who saw the ad didn’t actually click on it).
Some ads only need to be loaded by a webpage to make money. Ads that pay on a CPM basis won’t necessarily ever be seen by anyone, but each time the ad is loaded the website they are on will get a fraction of a penny. This is getting increasingly rare but still happens.
If you want to know roughly how much money a website can make from online advertising, you can use this handy calculator: How Much Money Can I Make?
Why it feels like no-one is buying from ads
It may feel like no-one is buying from ads, because most people only very rarely do. About 2% of internet users account for about 90% of clicks, so unless you know one of those people, you won’t know anyone who regularly clicks on ads.
However, the other 98% of people online do generally click on ads sometimes, and there are enough people online which means that ads are generating tons of clicks and sales. If they weren’t, then online ads would disappear as digital marketers (like all marketers) are concerned mainly with their ROI.
Pop Up Ads
Pop-up ads are very rare these days because they don’t work very well for most people. A Pop-up is an ad that opens a browser window or tab, and that new window or tab becomes the thing you are looking at on the screen.
About 10 years ago, pop-ups were mostly replaced by pop-under ads – which still open new windows or tabs, but have them run in the background. These ads were meant to be less annoying and intrusive, however, they were still too annoying and intrusive for most people, so they have mostly disappeared too.
HOWEVER, both pop-ups and pop-unders are still used by websites and advertisers which don’t really care about their users. This includes all sorts of adult and illegal download websites, and the advertisers are often gambling companies (or other adult websites). These advertisers pay minuscule amounts for this advertising, and the websites take that money because they can’t get legitimate advertisers anyway. These advertisers continue to use pops, as that 2% of people who will click on anything, will also go to every part of the internet, and are big gamblers typically so these ads are well suited to these sites.
So while you may have experienced pop-up or pop-under ads at some point, for the most part, people don’t see them much at all anymore.
Modern Pop-up ads: Overlays or Floaters
The ‘newest’ iteration of pop up ads are called overlays (or floaters in the USA). These ads have also been around for about 10 years, and they create an image or video ad which appears within the webpage you are looking at but floating on top of it.
This ad type is extremely successful but is also extremely annoying, and Google has started cracking down on any website where ads obscure content in any meaningful way.
However, you will likely still see this ad type very often in two places:
1 – On mobile. The small ads which appear at the bottom of the page floating on top of content are a good example of this type of ad. They persist because they do comparatively well, and without website owners needing to redesign theirs for mobile ads.
2 – On blogs. There is a type of overlay that appears when you look like you are going to leave a site (it activates when you move your mouse upwards towards the close button tab). This type of overlay often appears on sites with a newsletter, and the overlay will implore you to sign up to get more of this “great content”. These types of overlay are also exceptionally successful and reportedly increase subscribe rates by over 300% typically.
I hope this helps,
Justin“
[This originally appeared on Quora]
Q: “Can I see my site after adding AdSense or will it cause invalid impressions? “
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A: “Hi Rubayet,
Of course, you can visit your own website after you’ve joined AdSense! There are a million reasons why you need to check on your own site, and joining an ad network should not stop that.
I would go further and say that when you run ads on your site, you really should check on your own site more often than usual. The ads which run on your site are your responsibility, even if they are coming from AdSense.
If you see a bad ad then you need to do something to get it off your site, and you can only do that if you actually look at your site now and then. AdSense doesn’t let a lot of bad ads through but there are enough that you need to be on top of it.
Just Don’t Click
The golden rule is that you should not click on ads on your own website. Clicks from a site owner are against AdSense’s rules and will get your account banned.
However, impressions generated by you shouldn’t be a problem. They might be registered as invalid impressions by AdSense – but even so, that’s not a problem, more of a minor irritation.
You shouldn’t be paid for the impressions you generate on your own site, and AdSense calling them invalid impressions makes that happen. It’s not a big deal.
Don’t Generate Lots of Extra Impressions for No Reason
Some advertisers do pay for impressions, which is why AdSense checks for invalid impressions in the first place. While you should freely use your website to make sure it is working fine etc, that doesn’t mean you should press refresh thousands of times for no reason.
If you do generate too many impressions, then I’m sure Google AdSense will notice and you’ll get in trouble. But you have to remember that when advertisers pay for impressions, they are paying on a CPM basis – so for 1,000 ad impressions at a time.
Therefore you would need to be generating thousands of ad impressions for it to be a real issue. Just don’t do that and you’ll be fine.
I hope this helps,
Justin“
[This originally appeared on Quora]
See you next month,
Justin