If you’re in the online content business whether it be a website publication, video or mobile app, you’ve probably already had a taste of programmatic monetization. Digital advertising has a lot to offer, however, things can get quite daunting the more you get into the finer details of the industry. So, in this piece, we’ll be deciphering acronyms and buzzwords like CPM, impressions, ad requests, etc. to help you understand the basics of ad monetization so that you can take the next step in making money through web publishing.
To help make this easier to understand, let’s use an example, let’s say you’ve released a website called XYZ, that is dedicated to gaming news and entertainment. You’ve posted articles on new game releases, studio announcements, and exclusive interviews and as a result, you have found yourself with a following of 10,000 dedicated readers per day.
In your early days you’ve most likely signed up for an AdSense account, which is simple to use, but now you want to take things to the next level. So what do you do? Well, you need to speak with an Advertising Network. These are companies dedicated to connecting publishers with advertisers and facilitating the purchasing of ad inventory on a massive scale. Most mainstream platforms in this business operate on a CPM basis (as opposed to AdSense’s CPC model).
What is CPM?
CPM is an acronym for Cost Per Mille, also known as Cost Per Thousand. It is a metric commonly used by ad networks and agencies to value the revenue rate per thousand ad impressions (an impression being an ad that has been displayed).
So let’s say you’re speaking with an ad network that offers you $2CPM for a leaderboard placement (728×90 sized ad unit) on the top of your homepage. This means after every thousand ads displayed, they will pay you the value of $2. In other words, one impression is valued at 0.002 cents ( $2/1000 = 0.002 ).
How much is a good CPM?
Well, it depends. It depends on the quality and type of content you produce, the quality of your readers (your traffic), what country these readers are from and what your ad provider can deliver. With XYZ, the readers are most likely those interested in gaming. So a gaming brand may value XYZ more than a company that sells curtains for example. The best thing to do is to have many conversations with different Ad Networks to find one that fits you best, or even better run multiple alongside and put them in competition.
What is an Impression?
An Impression is an ad that has been displayed on your webpage. If someone visits the XYZ website and sees the leaderboard ad, then this is considered one ad impression.
What is an Ad Request?
An Ad Request is essentially when your website requests an ad to be displayed from the server. So, using the example with the leaderboard on the homepage, if 10,000 visitors were to visit this page in a day, then the ad unit will send an ad impression to the ad provider 10,000 times. Meaning your website has 10,000 ad requests on that day. If you were to create another ad unit on the same homepage, say an MPU (300×250 sized ad) then the number of ad requests would be 20,000. 10,000 from the leaderboard and 10,000 from the MPU.
What is a Fill Rate?
Now just because an ad was requested, it doesn’t necessarily mean that an ad will appear. There can be many reasons as to why an ad is not filled. It could be that the ad provider does not have the budget to display an ad every time. It could be that the brand is only targeting a specific country or that they are targeting a specific demographic. Fill Rate is the percentage of how many of your ad requests have received an ad impression.
I.e The XYZ homepage made 20,000 ad requests. If 10,000 ad impressions have been displayed then the Fill Rate is 50% (10,000 impressions / 20,000 ad requests).
So those are some basic fundamentals of ad monetization. Hopefully, now you should be ready to start having conversations with different ad networks and be able to choose a provider that would be best to make you money.