You’re ready to start earning ad revenue from your website, but you must crunch the numbers first. You might know how to monetize a website and the strategies behind selling ad space, you’re just not sure about how to calculate how much you can earn from ads on your website.
You’re wondering: How much ad revenue can my website generate? How much web traffic do I need to make money from ads on my website? Which website ad metrics should I be tracking?
All publishers that want to make a living — or at least a strong side-hustle — from their websites, must answer these questions.
This guide helps you in that quest.
Advertising Term Definitions
Understanding key advertising terms is the first step to figuring out how much you can make from website ads. These terms guide you through the process of charging for ads, analyzing audience behaviors, and tracking website ad revenue.
Let’s take a look.
CTR – Clickthrough Rate
Clickthrough rate (CTR) is the ratio of clicks on an ad to the number of people who’ve seen the ad. If 100,000 people saw an ad and 10,000 people clicked on it, the CTR is 10%. A high CTR indicates that your ad is effective; people are engaging with it and clicking through to the advertiser’s website or landing page. From there, they can interact with the advertiser’s content, browse their products, and potentially make a purchase.
According to Smart Insights, CTR for traditional display ads is 0.05%.
Native advertising display ads, however, see a CTR 8.8x higher than traditional display ads. This is because native ads fit seamlessly into the surrounding website content, providing a more engaging and intuitive experience for the viewer.
Take this example of recommended content provided by Taboola on Weather.com. It reaches people right when they’re done reading an article and ready to consume something new.
Display ads, on the other hand, interrupt the user experience, take up part — or the whole — of the website and distract the consumer from the content they’re trying to enjoy.
A full-page ad appears on Forbes, for example, before the visitor gets a chance to navigate the site or read the article they selected.
Display ads are also vulnerable to ad blockers. Over 25% of U.S. internet users enable ad blockers to avoid seeing intrusive ads while they navigate the web.
Native advertising is the solution to this growing ad fatigue, it gives consumers more of what they want: personalized content that meets their interests and behaviors.
As seen in the chart below, native advertising CTR varies by industry, with pet, food & drink, and family & parenting ads seeing higher CTR than sports, health & fitness, and technology ads.
If your CTR is low, one of the most effective ways to increase CTR is through audience segmentation and personalization. That’s why Taboola, a leading discovery platform and frontrunner in the native advertising industry, empowers publishers to control their ad experience through precise targeting and keyword filters.
They can then assure advertising partners that they deliver their ads in relevant, brand-safe environments.
CPC – Cost-Per-Click
Cost-per-click (CPC) is the amount of money an advertiser spends each time a consumer clicks on their ad. This is a common metric that publishers use to sell ad space and earn money from website ads.
Ads purchased through an ad network are generally placed programmatically; advertisers either enter an overall amount they’re willing to spend or bid for competition in an ad placement.
According to WordStream, the average CPC for ads on Google’s display network is $0.58. So, if an advertiser generates 100 clicks from an ad at $0.58 per click, they spend $58. And the publisher — in this case, Google — earns that amount in revenue.
It’s crucial for publishers to understand how much websites make from ads. With industry benchmarks to guide them, they can more effectively sell ad space to advertisers, gauge ad performance, and optimize campaigns going forward.
They can also use this information to choose the most engaging and lucrative ad formats, so they can continue to deliver relevant content for visitors to enjoy and maximize their revenues at the same time.