Welcome to Online Advertising Answers! Let’s dive into three of the most interesting questions I’ve been asked on Quora.
This month I examine how charities can get more money directly from Google than they would earn from ads, why calculating Facebook engagement rate is so hard, and if CPM is earned by websites (it’s not).
Let’s get started...
A: “Hi Hope,
Yes, a charity website can be used to run ads, but it might not always be the best idea.
Most charities are eligible for a Google Ad Grant, which is where Google gives charities $10,000 per month which they can use for Google Ads (previously called Google AdWords). This grant comes with stipulations however, one of which is that you can only run ads relevant to your charities mission, and have no AdSense or affiliate ads on your site at all.
Considering you would expect to earn around $10 per 1,000 page views on your website from AdSense, you would need to have a website which gets around 1,000,000 page views per month minimum in order to earn more from advertising than you get from the Google Ad Grant. Very few charities get this much web traffic.
On top of this, you can (and should) use your ad grant to advertise appeals, and to get donations which means you can turn the free money from Google into real funds for your charity. This is as well as the fundraisers, volunteers, campaigners, and even potential end-users of your charity that the ad grant can pay to help you find.
The bottom line is that creating a $10,000 per month marketing budget for a charity is a big deal. So if you are eligible for a Google Ad Grant, I would highly recommend going for that instead of putting ads on your site.
Note: There are a fair few conditions you need to hit to keep your Ad Grant, so below is a helpful infographic outlining them.
I hope this helps,
A: “This can indeed be super frustrating, as people do answer this question in so many ways (as the other answers you’ve received show), and that is actually Facebook’s fault.
Facebook uses a slightly different Engagement Rate to everyone else. They provide the same information as everyone else on their “Insights” page for posts – Engagements and Reach, however, if you use these figures to do the normal Engagement Rate calculation (Engagements divided by Reach) you get a different answer to what they show you.
This is because the Engagement Rate on Facebook for a post is calculated as the number of Engaged Users (not engagements) divided by the total reach of that post. Multiply the whole thing by 100 to turn it into a percentage.
Calculating Facebook Engagement Rate
If you want to calculate your Facebook Engagement Rate, you can use this free calculator to work out how many engaged users you need to hit a specific engagement rate: Facebook Engagement Rate Calculator
Engagements on Facebook include reactions, shares, comments, and some clicks on links, videos and images.
Engaged Users on Facebook only counts one engagement per user. So if one person comments 10 times, clicks a link and reacts, that is 12 engagements, but only 1 Engaged User.
Total Reach means the total number of people who had that post come up in their feed.
Where do I find my Engaged Users?
It can be very confusing as on Facebook if you click a post to get stats for it, it shows you the number of engagements NOT the number of engaged users.
To find your engaged users, you can do the following:
- Go to your Insights page
- Click ‘Export Data’ in the top right of the page
- Choose ‘Post Data’ from the pop-up
- Choose the date range of the posts you’re interested in (Note: choose dates that cover the post, not the engagements. The data you will get is for the lifetime of the post)
- Click ‘Export Data’ in the bottom right of the pop-up
- In the spreadsheet that gets downloaded, look for the columns titled ‘Lifetime Post Total Reach’ and ‘Lifetime Engaged Users’, and use the data from in there to work out your Facebook Engagement Rate.
- There is a way to set up a report so you can find this information out more easily if you need to pull it regularly. It’s a bit complicated, but there is a step by step guide how to do it here.
Facebook Engagement Rate Equation
Here’s the Facebook Engagement Rate formula:
Please note: Engagement rate is calculated differently on different platforms. Facebook uses Engaged Users, but almost all other platforms (like Twitter for example) just use total engagements.
The difference means that Facebook is measuring if lots of people like a post, whereas Twitter (for example) is seeing whether a post gets people really excited.
If you want to calculate the ‘normal’ Engagement Rate that everyone else uses, you can use this Engagement Rate Calculator.
I hope this helps.”
A: “Hi Muda,
CPM stands for Cost Per Thousand and is the amount paid by an advertiser for 1,000 impressions. It’s not actually the amount earned by a website owner however, as a lot happens between an advertiser booking an ad campaign, and a website running an ad.
Note: CPM is often casually used to refer to RPM for reasons I’ll get into below.
The CPM Equation
CPM is calculated using the following formula:
CPM = (Amount Spent ÷ Impressions) x 1000
You can use this exact same formula to work out your RPM (just changing Spent to Received) which is why the term CPM is used in place of RPM most of the time.
The RPM Equation
RPM is calculated using the following formula:
RPM = (Amount Earned ÷ Impressions) x 1000
As you can see, it is essentially the exact same formula as used to work out CPM (just changing cost into revenue). Again, this is why the term CPM is used in place of RPM most of the time.
A Quick Word About Impressions
Just to quickly clarify, CPM and RPM stand for cost per thousand (M is the Roman numeral for one thousand), but neither specify 1,000 *what*. This is because the implication is that they are talking about 1,000 impressions, and there are lots of different types of impressions.
An impression itself simply means something loading one time. So an ad impression in an ad loading one time, and a page impression is a webpage loading one time. When someone uses the word impressions they usually mean ad impressions, but it’s always best to clarify.
The Difference Between CPM and RPM
When an advertiser buys advertising space, they generally don’t buy it directly from the website. This *can* happen, but most of the time an advertiser will be buying their ad space through an ad agency, and a website will be selling their ad space through an ad network.
On top of that, there are several technical issues which other companies need to be brought in to solve – such as tracking and hosting the ads.
All of these other parties need to get paid, which is why the process looks something like this:
- An Advertiser pays an Ad Agency to run ads. The amount the advertiser pays per 1,000 impressions is called the CPM price.
- The Ad Agency will keep ad serving costs (the amount they are being paid to manage the ads), and will also likely hire a Third Party Ad Server to store the ads on their server and track the ads – who will also receive some fees.
- The Ad Agency then books ads onto an Ad Network which manages where ads are shown, and who will split the amount being paid with the websites the campaign is running on. The Ad Network will use an Ad Server to make delivering ads more efficient, and the Ad Server will also get paid some fees.
Note: The amount the Ad Network charges the Ad Agency per 1,000 impressions is also called a CPM (although it will be lower than the original CPM due to what the agency has already paid, and how low a price the Ad Agency can negotiate).
- The Website will get paid on a regular basis by the Ad Network, who in turn get paid by the Ad Agency. The amount that the website gets paid per 1,000 impressions at the end is called the RPM. It is generally a payout which combines all the money the website has earned through the Ad Network from multiple ad campaigns, rather than split on a campaign by campaign basis.
It should be noted that while the ad agency may also design the ads or do other work around an ad campaign. However, the money spent on this work is not part of the original CPM price – the CPM only covers the cost of actually running the ads.
Who Gets The Most Money From Online Advertising?
There is no standard answer to this but probably for an individual campaign, it’s the Ad Network who makes the most. The split in revenue goes something like:
- The Ad Agency will receive 10%–20% of total spend for management costs + a flat fee. Different agencies structure this in different ways but this is about standard.
- The Ad Servers hired by both the Ad Agency and Ad Network will make a pretty negligible amount from each deal – probably less than 1 penny CPM.
- The Ad Network usually has a deal which means they receive between 30%–60% of the revenue from the Ad Agency (60% is a lot more common than 30% though – only big, famous sites get revenue splits that are favourable to them).
The Ad Network receives the majority split because they are doing the majority of the work around the ad campaigns. They make sure the ads actually technically work, *and* perform well, *and* have to juggle the needs of multiple websites and ad agencies at once.
Also, Ad Networks often offer a 10–15% discount to agencies who book multiple times from them, which come out of the ad networks ‘cut’.
- Websites at the end of the chain will receive between 30%-60% of the original money spent on the ads (with 30% being much more common than 60%). This can seem unfair as the website is providing the place to advertise and audience to advertise to. However, without all the other links in the chain there may not be any advertising revenue to start with (yes a website can run its own ad campaigns, but it’s a lot of work and a lot of risk to take on).
I hope this helps,
I hope this all helps,