What is ad monetisation?
Ad monetisation means earning revenue by showing ads on your website, in your app or in your video content. You are the publisher: you provide the space where ads appear, called your ad inventory. Advertisers pay to show their ads to your visitors or users. Between the two sit the systems that bring them together and decide which ad is shown.
How it works
Advertising networks
An advertising network collects ads from many advertisers and distributes them to many publishers. You add the network’s code to your site or its software development kit (SDK) to your app, and the network delivers suitable ads and pays you a share of the revenue.
This is the simplest way to start: you do not need to find advertisers yourself, and a single integration gives you access to many of them.
Programmatic advertising
In programmatic advertising, ad space is bought and sold automatically, often through real-time bidding: when a page loads, advertisers bid for the impression within a fraction of a second, and the highest bid wins. Ad exchanges and supply-side platforms handle this for publishers.
Direct deals
You sell ad space directly to an advertiser at an agreed price, for example a fixed banner for a month. This needs more work but gives you full control and often higher prices.
Mediation
Apps often use mediation: a layer that requests ads from several networks and shows the one that pays best. Websites achieve something similar with header bidding.
Ad formats
- Text ads – short headline, description and link. Unobtrusive and quick to load.
- Display ads (banners) – images or animations in standard sizes.
- Native ads – ads that match the look and feel of the surrounding content.
- Video ads – played before, during or after video content, or in their own player.
- Interstitials – full-screen ads at natural breaks, mainly in apps.
- Rewarded ads – users choose to watch an ad in exchange for a reward, mainly in apps and games.
Pricing models
- CPC (cost per click) – the advertiser pays when a user clicks the ad.
- CPM (cost per mille) – the advertiser pays per 1,000 impressions.
- CPA (cost per action) – the advertiser pays when a user completes an action, such as a purchase.
For publishers, two derived numbers are useful for comparing results:
- eCPM (effective CPM) – what you earned per 1,000 impressions, whatever the pricing model. It makes CPC and CPM campaigns comparable.
- RPM (revenue per mille) – what you earned per 1,000 page views. It shows how well a whole page earns, across all its ad units.
In-app advertising and in-app purchases
In apps, ads are often combined with in-app purchases. A common freemium approach: free users see ads, and a one-off purchase or subscription removes them. Ads earn money from the many users who never pay, while purchases earn from the few who use the app most. Read more in app monetisation.
Improving ad revenue
- Placement. Ads near the content people are reading are seen more often than ads at the edges of the page. Test positions, one at a time.
- Viewability. Advertisers pay more for ads that are actually seen. Ads far below the visible area rarely are.
- Ad density. More ad units do not always mean more revenue. Overcrowded pages lower the value of each ad and drive users away.
- Relevance. Ads that match your content are clicked more often.
- Page speed. Load ad scripts asynchronously so they do not block your content.
- ads.txt and app-ads.txt. These files list the companies authorised to sell your inventory. Many buyers avoid inventory without them.
- Consent. In the EU and the UK, personalised ads need users’ consent. Without it, networks can usually only show non-personalised ads.
Common mistakes
- Clicking your own ads. Networks detect invalid clicks and may close your account and withhold payments.
- Placing ads where they are clicked by accident. Ads next to buttons or navigation produce invalid clicks and frustrated users.
- Ignoring the user experience. Pop-ups, auto-playing sound and ads that cover content lead users to leave or block ads.
- Not comparing networks. Different networks pay differently for the same traffic; compare eCPM and RPM.
- Measuring only revenue. Keep an eye on time on site, page views per visit and returning visitors as well.
Frequently asked questions
- What is the difference between CPC and CPM?
- With CPC you earn when someone clicks an ad; with CPM you earn per 1,000 impressions, whether anyone clicks or not.
- What is eCPM?
- Effective CPM: your earnings per 1,000 impressions, calculated across all pricing models. It lets you compare networks and placements on a common basis.
- How many ads should I show on a page?
- As many as you can without hurting the user experience or page speed. Test adding or removing units and watch both revenue and engagement.
- Do I need ads.txt?
- It is strongly recommended. Many advertisers and networks only buy inventory that is listed in an ads.txt file (app-ads.txt for apps).