Online Advertising Answers: July 2020 - The Online Advertising Guide

This is Online Advertising Answers – three interesting answers to three interesting Digital Marketing questions. And where do these questions come from? Good question – they come from Quora, so if you want to ask me something, go visit my profile and send a request.

This month’s questions are:

Why is PPC more popular than other online advertising models?
Why do advertisers allow viewers to skip ads before they are over?
How much can you make per day from having Google AdSense on your website?

Without further ado…

Q: “Why is PPC more popular than other online advertising models?“

A: “Hi Shan,

Pay-Per-Click advertising is more popular than other online advertising models basically because it’s understandable by everyone and easy to implement.

Advertisers usually want to pay for results, and a click is a result (even if it’s not the end goal). This makes it seem more worthwhile than paying on a CPM (cost per thousand impressions) basis.

Website owners/ad networks (like all vendors of everything), want to sell their inventory for the most they possibly can. CPM would be ideal for them, but it’s easier to sell CPC/PPC campaigns (as there is more demand). PPC campaigns also have the added advantage of giving website owners a chance to differentiate themselves from the competition by providing a higher CTR.

[Learn more: CPC Definition (Cost Per Click)]

Why not CPA campaigns?

Cost Per Download or Pay-Per-Purchase campaigns (and CPA campaigns in general) would be more advantageous for everyone, however, they rely on a higher level of technical expertise on all sides.

Advertisers need to have a defined conversion to be able to run a CPA campaign. This is much less common than you would think. Advertisers also need to be able to attribute that conversion back to the advertiser for it to be worthwhile, and attribution is a hugely complicated issue.

For Website Publishers, a CPA campaign can be a risk as they are essentially running an ad with no promise of compensation.

On top of that, due to the problems of attribution, a website publisher will often get different results to advertisers. This means the website can work hard to optimise a CPA campaign (which is very hard compared to CPC campaigns), then see a certain set of results and expect to be paid that amount.

However the advertiser will likely be advertising in many places, and so will only pay for conversions it is certain were caused by that website – an amount which is almost always lower than the number of conversions the advertiser sees.

This means that CPA campaigns have disappointment and conflict baked-in.

[Learn more: CPA Definition (Cost Per Acquisition)]

This is a huge shame, because if both sides have good technical skills (and a good relationship) then CPA campaigns can be the best for both advertiser and website. It is one of the few times where both sides have the exact same goal – get as many conversions as possible!

Which is actually the opposite of CPC campaigns…

PPC (or CPC) campaigns pit advertiser against website

Unfortunately, CPC advertising is one of the most adversarial types of advertising behind the scenes.

Advertisers want to pay as little for clicks as possible while getting the most possible out of them (eg the click leads to a sale or further action).

Websites / Ad Networks want to provide the full amount of clicks booked for the least cost to themselves. They don’t care if the clicks lead to conversions – that is not what the deal is. The problem with that is the big secret behind all of online advertising – the majority of clicks on the internet are undertaken by people who will click on anything for no reason at all.

Whether it is gambling, ads, online shopping, whatever, a small set of internet users just click everywhere without caring. Unfortunately, these clicks are mostly worthless – these people are seemingly just curious, not rich people buying everything they see advertised.

This means that an advertiser buys ads on a Pay-Per-Click basis and hopes they will get some sales/leads/downloads/conversions out of it. Whereas website publishers sell CPC ads and hope that they can push as many of the worst quality clicks onto those ads as possible.

This isn’t done consciously by a human, it’s just the result of algorithms trying to maximise profit for publishers. And again – the website isn’t doing anything wrong. They sold clicks and they are giving the advertiser clicks – they don’t know who is clicking only where/when a lot of clicks are occurring.

Is all CPC advertising bad?

No, obviously not otherwise it would have ceased to exist. Even though websites will have access to a lot of ‘bad’ clicks, they don’t have an unlimited supply – and they do have some ‘good’ clicks.

This means they will push bad clicks to the advertisers who pay the least, and the best to the ones who pay the most (on a sliding scale). Again, this usually isn’t because the website/ad network is trying to cheat anyone out of good clicks. Advertisers who pay more are also more likely to have more people working on their campaigns, and so will plan to put their ads in better places. Poorer advertisers will just have less work put into their campaigns so the results are unsurprisingly usually worse.

[Learn more: Should I Aim For A Lower CPC?]

(Of course, at the top end this trend reverses – advertisers with huge budgets will demand the lowest CPCs, and will still have the advantages of people who pay more per click. Savvy websites and ad networks, however, will still prioritise higher-paying CPC ads to maximise profits.)

This means that a lower CPC isn’t necessarily good, but it remains a goal of most people advertising on a Cost Per Click basis.

In Conclusion – the fight never ends

And this is why PPC advertising is so adversarial.

The advertiser tries to lower costs while still getting the most ‘good’ clicks they can. Many programs will automatically optimise towards this equilibrium, and good ad buyers will spot trends and buy ads in places that get good ‘clicks’ anyway.

Website owners will always try and fulfil their contracts in the way that maximises their profit.

This means that ads are constantly being moved by website algorithms to the worst places it can get away with, and in response advertisers’ algorithms try to spot these bad places and stop ads showing there.

I hope this helps,

Justin

Do video ads still work even if they are skipped?

While having your ad skipped might not sound like a great deal, according to research by Magna Global there are still a lot of positive effects on people for advertisers, even when they skip an ad. These include

5% increase in purchase intent
3% increase in feeling that a brand is relevant to them
1% increase in feeling they would pay more for a brand
22% increase in “aided brand recall” (when someone says “have you heard of this brand”, you’re around a fifth more likely to say yes)

While of course none of these positive effects are nearly as strong as they are for people don’t skip ads, keep in mind that these are the *free* side effects of running video ads.

Do a lot of people skip video ads?

Most people do skip video ads, yes. Every study on the matter seems to disagree, but it looks like between 65% and 90% of people skip video ads.

However, looking across studies for TV ads, it looks like the results actually skew slightly higher (68%- 90%). This makes online video ads a good option (especially as they are sooooo much cheaper than TV ads).

While there are some people who skip (or block) every ad possible, the rest of us will occasionally watch a video ad. According to the same Magna Global study – if you like the brand, you want to buy the product, or the ad is somewhat relevant to you then you are much less likely to skip it (even if you normally skip video ads).

Surprise, surprise – these are the same reasons why people pay attention to any advertising! So letting people choose whether or not they want to see an ad isn’t really losing people who would pay attention to that ad anyway. Instead, it means you are only paying for people who might care about your ad.

This soft ‘opt-in’ method of letting people choose their ads seems to work too – according to Business Insider when someone doesn’t skip an ad their attention levels are 84% higher than when watching TV ads.

But I want people to watch my whole ad!

Most people/businesses spend a lot of time and effort to create videos, so understandably they want people to watch the whole thing. In most cases though – that is actually not what they really want.

What they actually want is for people who see their ads to click on them, go to their site, and do the action that the ad intended to encourage. And of course, the people who skip these ads were probably not going to do that anyway so losing them early on (and not paying for them) isn’t a negative thing.

In the rare cases where people actually do want a whole video to be watched, then you can either choose the appropriate type of advertising (eg run unskippable ads, or pay on a CPV model).

If you have to run skippable ads for whatever reason though, you should measure it not by complete views, but by view-through rate . This means the percentage of people who started watching your video ad and then watched the whole thing.

This is because VTR will tell you how engaging your video is. If too many people see the start of your ad and skip it, then you probably need to re-edit the start. In this way, skippable ads can be used as a feedback loop to help you understand the quality of your video.

You can calculate VTR using this formula:

Click to enlarge

VTR=Completed Views ÷ Total Impressions (multiplied by 100 to make it a percentage)

[You can quickly work out your VTR with this helpful calculator]

I hope this helps,

Justin“

[This originally appeared on Quora]

Q: “How much can you make per day from having Google AdSense on your website?“

A: “Hi Stuart,

There isn’t strictly speaking a limit to the amount of revenue you could earn from Google AdSense. This means that I’m going to have to start by answering this question sarcastically with the appropriate music video (I think it’s the law at this point).

If your website gets infinite page views, then you would earn infinite money!

Ok, but in reality how much can you make from AdSense?

The overall average amount that websites earn from page views on AdSense is about $10 RPM – meaning you get $10 (USD) for every 1,000 page views. This is the overall average of everyone everywhere though – it differs vastly for different websites depending on what country their users are from, what industry their site is about, the quality of the website, etc.

Around a quarter of sites earn over $15 RPM, and around a third earn under $5 RPM. The median earned is about $10 RPM though.

Click to enlarge

[If you want to work our your site’s AdSense earning potential, use this calculator]

What is the absolute maximum you could earn from AdSense per day?

The most popular website in the world is Google.com which (according to internetlivestats.com) has about 3.5 billion searches per day. If they were running AdSense on there, at an average of $10 RPM then they would make about $35 million dollars per day. If they were in the upper bracket of page RPMs they would earn about $52.5 million dollars per day.

[In case you were wondering: Google.com actually brings in over $100 million per day from Google Ads]

If you want to take it to an even further extreme, by doing some dubious maths I estimate that there are about 5.74 billion page views per day in total across the internet. So if your website took over the whole of the internet, you could expect it to earn $57.4 million per day if it was an average site, or around $86 million if it were a top tier site (which you would assume it would be).

[The dubious maths to work out page views: there are 3.5 billion searches per day on Google, and Google makes up 90% of the of search engine market. Only about 45% of searches result in a click to a non-Google site. In general, Search (paid+organic) makes up about 61% of site visits, and 2 is the unofficial average for pages/session. Put all this together, and voila! If you have a better estimate, tell me]

**How much should you earn maximum from AdSense per day?**

As you can see from Google.com itself, AdSense is great for smaller sites but bigger sites can usually earn a lot more elsewhere. This means that there is an optimum point where you should switch to another ad network.

I personally recommend using AdSense until you get to about 50,000 page views per month. This is because many ad networks won’t accept site with less than 50k page views per month (because it’s not worth their time). I recommend starting by looking at media.net or Monumetric first, as both are pretty solid. Give them three months to see if they earn you more than AdSense was and if not then move on to the next one until you find out what works for you.

Anyway, back to the matter at hand…

To get 50k page views per month means your site would need to have around 1,700 page views per day. This in turn (using the average of $10 RPM) means that you would be earning $17 per day from AdSense (or about $25 if you are in the upper tier of earners).

In conclusion

If your website was the most popular website in the world you could earn up to $52.5 million per day from Google AdSense. If your website was so popular that it took over the whole internet, it could earn about $86 million per day from AdSense! In both cases though, you would be a fool to stick with AdSense when your site was that big.

For a regular website, you probably should move away from Google AdSense to another ad network when you hit between $17-$25 per day because AdSense is really just for small websites.“