If you’ve carefully built your website and developed a large audience, displaying ads can be a highly effective way to monetize your site. Ad revenue, which is the income you’ll receive from advertisers when you display ads to your target audience, can be a recurring and potentially lucrative source of income. With an effective strategy and a growing audience, you can leverage ad revenue to not only generate the funds needed to sustain your website, but to generate profits that you can enjoy, too.
There are countless examples of websites that successfully generate income with ad revenue. Top publishers like CNN, USA Today, and Forbes prominently display ads on their websites. LifeHacker leverages its blog and news format to display a wide variety of ads that are likely to appeal to its audience. Even smaller websites, like niche bloggers, can monetize their sites with ads to generate income that covers operational and growth costs.
The success of such sites contributes to the rapidly growing online advertising industry. In 2020, the U.S. online advertising industry generated $139.8 billion, according to Statista. By 2023, that industry had grown to $225 billion. In addition to website advertising, ad opportunities are emerging on platforms like podcasts and digital video. These new opportunities contribute to the industry’s significant growth and give you new ways to grow and monetize your website and its related platforms.
How do the Ads Work?
When you own a website, you can sell ad space to companies looking to reach your audience. You might decide to sell ad space yourself, which requires pitching your services to companies, collecting payments, manually posting and maintaining the ads, and sending out and tracking regular invoices. That’s a lot of extra work, which is why it’s much more common for website owners to sell ad space through an ad placement service, like Google AdSense.
When you work with a service like Google AdSense, you’ll have access to numerous coding options that simplify and mostly automate the process of integrating ads within your website. You can install and adjust banners, sidebars, pop-ups, and other ads, which gives you some control of how your site looks once the ads are displayed. Typically, you won’t be able to choose the specific businesses or ads that appear on your site, but ad placement services use algorithms and data to try to target the ads so that they will appeal to your audience.
Most online ads are sold under one of two popular pricing models. With the cost per click (CPC) model, you will receive payment only when your users click on the ad. Let’s say that you receive $0.10 per click. With the CPC model, if 1,000 people click on the ad, you would receive $100. Even if 5,000 people saw the ad, you’re only paid for the number of people who click on it.
You can also sell ads with the cost per mille (CPM) model, in which you’re paid for every 1,000 impressions the ad makes on your audience. If you have a $1 CPM agreement, then you’ll receive $1 for every 1,000 people who view the ad, regardless of whether they click on it.
Who Collects Ad Revenue?
As the website owner, you’ll collect the ad revenue. Most ad placement services automate the payment collection process and use direct deposit to send payments monthly. Your earnings will usually need to meet a minimum threshold before you’ll receive a payment — for example, Google AdSense will only send out payments once you’ve earned $100 or more.
Sources of Ad Revenue
As a website owner, you can choose from several potential sources of ad revenue.
Business Owners
You can contact business owners directly and pitch them on buying ad space on your site. You’ll need to be prepared with metrics, such as website traffic and audience demographics. It’s also important to carefully curate businesses that would be a good fit for your audience and the type of content you write.
Working with business owners directly can be labor-intensive, since you’ll need to handle everything from ad price and terms negotiation to uploading and maintaining the ads. However, when you work directly with business owners, your website keeps all of the ad revenue, rather than paying out a percentage to a third-party ad placement service.
Google AdSense
Google AdSense is one of the largest and most popular ad placement services. Google AdSense simplifies the process of selling ad space: Once you sign up for this free service, you can embed the AdSense code into your website and choose where and how ads appear. The service uses AI to enhance ad display and maximize ad quality and relevance, plus you also have the option to block any ads that you don’t want appearing on your site. Since AdSense doesn’t have any minimum traffic requirements for websites, it can be a solid choice if you’re building up your site traffic and are just getting started with ad revenue. AdSense revenue is based on the number of pageviews your site receives.
Mediavine
Mediavine is an ad management platform that specializes in working with bloggers in any lifestyle niche. The platform’s ad technology prioritizes your site speed and SEO to help maintain an optimal user experience. You can access all of your data on the Mediavine dashboard, and Mediavine also features a video player that lets you monetize your videos, too. Ads are placed automatically for an optimal user experience. To sign up for Mediavine, your website needs to be in good standing with Google AdSense, and you must have 50,000 sessions in the previous 30 days.
How to Calculate Ad Revenue
To maximize your website’s performance and your income, you’ll need to keep detailed records of your ad revenue. Many ad placement platforms will provide data and metrics for you, but when you understand how to perform these calculations yourself, you can better understand what each platform’s data means.
You can calculate ad revenue in several different ways. If you’re paid based on a CPM model, you can calculate your revenue in a few simple steps:
- Multiply the number of pageviews by your CPM rate.
- Divide the result by 1,000.
For example, if your website receives 100,000 pageviews per month and a CPM rate of $10, then you would multiply 100,000 x $10. Then, divide the result (1,000,000) by 1,000. Your monthly ad revenue would be $1,000. Since CPM rates will depend on the type of ad, advertiser, and ad platform, this calculation is best used as a rough figure to give you an approximate idea of your earnings.
Calculating your click-through rate (CTR) also provides you with important information on how well your website and ads are performing. Your CTR indicates how many of your website visitors actually click on the ads. If you’re paid by a CPC model, this rate also indicates how many of your website visitors take action that will earn you ad revenue.
To calculate your CTR:
- Divide the number of clicks on your ads over a certain period, such as one month, by the number of impressions over the same time period.
- Multiply that figure by 100. The resulting number is your CTR percentage.
If your ads received 1,000 clicks but made 25,000 impressions, divide the clicks (1,000) by the impressions (25,000). The resulting figure is 0.04. Multiply it by 100, and your CTR percentage is 4%.
The higher your CTR, the better, but CTRs vary significantly by industry. According to Databox, the median CTR for Google Ads across all companies is 3.89%. However, for travel and leisure, that median CTR is 8.24%, while apparel and footwear have a median CTR of 1.98%. Familiarize yourself with the average CTR for your industry, and then monitor your CTR to see how your ads are performing and where there’s room to improve.
How Much Ad Revenue Can a Site Collect?
The amount of ad revenue that a site can collect depends on many factors:
- Website traffic volume: If more visitors access your site, your website will usually have more ad impressions and click-throughs, which results in higher revenue.
- User experience: A site that creates a good user experience will encourage visitors to use the site for longer, potentially leading to increased ad revenue. In comparison, if ads overwhelm your site, or if pop-up ads make it difficult for users to navigate your site, that poor experience can negatively impact ad revenue.
- Site load time: A site that loads slowly may cause users to drop off, reducing engagement and ad revenue.
- Content quality: If you create high-quality content that delivers value to readers, your website can attract more visitors and potentially increase ad revenue.
- Ad design and placement: The type and design of the ads on your site can impact how visitors engage with them. Placement matters, too, so you may want to experiment with different ad placements to see how they perform.
- Visitor location: Businesses often try to target users in certain geographic areas. If your audience primarily comes from an in-demand location, you can earn higher revenue.
With so many factors to consider, there’s no one way to precisely determine how much ad revenue your site can collect, but you can get an estimate. Google AdSense’s calculator uses your website industry category, your traffic region, and your estimated monthly page views to calculate potential yearly earnings.
What are the Benefits of Collecting Ad Revenue?
Collecting ad revenue offers many benefits, and it can be a helpful way to monetize your website.
Simple to Implement
Thanks to ad placement services, it’s easy to get started earning ad revenue. Ad services offer various ad placement options, so ads can fit naturally into your site without negatively impacting the user experience. From there, ad placement services take care of just about everything else, including selecting the ads that are the best fit for your website content and audience, and issuing payments.
Easy to Increase Revenue
Since ad revenue is closely linked to your website traffic, growing your website base can also increase your ad revenue, so your growth strategy is simple. To effectively grow your site, you’ll need to focus on creating quality, engaging content that offers value to your audience. Doing so can help not only attract new visitors, but can also encourage your existing audience to continue to visit your site. Producing quality content can also help you to monetize your site in other ways, such as by encouraging visitors to sign up for your e-newsletter.
Diversified Revenue
Collecting ad revenue is a simple way to create an additional revenue stream. You may earn enough through ad revenue to cover your website expenses, like hosting costs, helping to sustain your site long-term. At a larger scale, ad revenue can bring in significant profits, helping to fund your website’s expansion and growth costs.
You can earn ad revenue in addition to other monetization strategies, like hosting sponsored posts or offering exclusive content to subscribers. This extra income stream allows you to maximize your earnings and diversify your income for more stable profits.
Deeper Audience Understanding
Selling ads on your website can even deepen your understanding of your audience. By reviewing which ads receive the highest engagement, you can identify products or services and messaging that your audience engages with. You can use that information to further tailor your content and messaging to your audience.
What are the Disadvantages of Seeking Ad Revenue?
While there are many benefits to monetizing your website with ads, there are some potential disadvantages to ad revenue, too.
Limited Control on Your Website Content
When you work with an ad placement service, you have limited control of which ads appear on your site. Some services, like Google AdSense, give you the ability to block certain ads, but for the most part, you can’t pick and choose the ads that are displayed.
Varying Income
Ad revenue income is inconsistent and can significantly fluctuate based on your website traffic, the services and products being promoted, and even the ad’s placement and design. You only have control of a few of these factors, so you can’t necessarily stabilize your ad revenue. Instead, diversifying your income streams can help create a buffer against fluctuating ad revenue.
Ad Requirements
Your website will need to meet specific requirements to sell ad space. Some ad placement programs require a minimum amount of monthly traffic. Plus, some businesses have their own requirements for the sites that they want to advertise on — they may want to see that your site includes or avoids certain terms, for example. Meeting ad requirements may feel restrictive if it starts to infringe on your plans for your site’s content.
Impacts to Your Website Reputation
Your site’s reputation could potentially be damaged if the ads displayed aren’t a good match for your audience. For example, politically themed ads can generate a strong response from your audience, and your visitors might interpret the ads as representing your site’s political slant. Certain ads might drive some of your viewers away.
Potential Impact to the User Experience
Too many ads, or ads that are difficult to navigate, can negatively impact the user experience. For example, if users encounter pop-up ads that are constantly interrupting their ability to read your site’s content, they’re likely to leave your site sooner.
How to Increase Ad Revenue
Prioritize the User Experience
It’s difficult to overstate the importance of your website’s user experience — 88% of online consumers are less likely to return to a website after they have a bad experience, according to Toptal. In addition, user judgements on a website’s credibility are 75% based on the website’s overall aesthetics.
Since user experience is so important to your site’s success and audience growth, be sure to prioritize that experience over ad content. Ensure that your site loads quickly, even when ads are enabled, and incorporate ads so that they complement your site’s design, rather than detract from it. Make sure that users can easily navigate your site even with the ads in place.
Focus on Delivering Quality Content
To grow your site and expand your audience, create a plan to publish quality content, and then make sure that you follow that plan. Your content plan should include details on not only the type of content and topics that you want to focus on, but also on when you will publish content.
There is no one specific formula for determining how often to publish content. Instead, you’ll need to consider the type and length of the content you publish, your website’s age and audience, and how much content you can create each week. Try to determine a schedule and stick to it, whether that’s publishing one new piece a week or one every day. Stay informed about Google’s algorithm updates to ensure that you’re following SEO best practices to maximize how well your content ranks.
Test Ads
Carefully monitor and test ads to see how you can improve their performance. Experiment with different ad types, like in-content links or banner ads, to see if your audience engages better with one type compared to another. You can also test having different numbers of ads to see what allows for an excellent user experience while still generating ad revenue.
Find the Right Ad Management Service
The ad management service you use can also impact your earnings. Each service has its own rates, policies, technology, and base of advertisers, so one service might be a better fit for your website than another. If you’re not sure that your current ad management service is right, try a different service and see how it affects your ad revenue.
Frequently Asked Questions (FAQs)
What is ad-based revenue?
Ad-based revenue is a revenue model in which your company sells advertising space to other brands to generate income. For example, if you run a website about home repair, you could sell ads to businesses looking to connect with your audience, such as businesses offering home repair and remodeling services or supplies.
How much ad revenue is there per 1,000 views?
The ad revenue you receive per 1,000 views depends on many factors, including the industry your site specializes in and the type of content you provide, where your website users are located, how you set up your ads, and the ad platform you use.
Who pays ad revenue?
Advertisers pay the ad revenue, and website owners earn revenue for displaying ads on their site. If you’re working with an ad provider like Google AdSense, you’ll receive payment through Google AdSense, but the advertiser is the one who has actually paid for your services.
