How To Make Money With Ads: The Ad Revenue Model

May 9, 2014

As soon as people create their first website, they are faced with the question of how to make money from that website. Even when people who do not yet have a website think about how to make money online, the monetization strategy they usually come up with is to make money online with the ad revenue model. Making money with ads is probably the simplest way to make money with a website or a mobile app. But it isn’t always the best. In this article I’ll explain when it makes sense to make money with ads, and when it isn’t the best idea.

What To Expect From The Ad Revenue Model

Ad revenue is measured in CPM. CPM stands for cost per thousand page views or impressions. CMP can vary from $0.25 for some websites to $100 for other websites. Most websites fall into the $5-10 CPM range. Factors that influence the CPM for your website are the scale and type of traffic that comes to your site. If the traffic is a very sought after demographic, then advertisers will compete to advertise on your site, and that will drive the CPM prices higher. If your site is about cat pictures, which is something that almost everyone likes, your website visitor demographic isn’t clear. That causes the CPM to be on the low side because the advertisers have no idea what kind of demographics they are reaching.

For our example, let’s say that your site makes a respectable $10 CPM. Even in this relatively good scenario, you make only $10 per a thousand page views. To generate enough income for even a small salary for one person, your site would need to generate about $100 per day or more. That means that you would need to generate 10,000 page views on your site each day. That is possible, but quite difficult. By the time your site grows to generate 10,000 page impressions per day, it will be a very popular site. And it will be very disappointing if such an established site can only make $100 per day. Surely such a site should be able to earn more money. We will cover how to do that later in this article. For now let’s go over how to make money with ads using Google AdSense.

How To Make Money With AdSense Ads

There are two options for making money with ads. You can either begin to look for your own advertisers by reaching out to individuals or companies, and starting conversations with them about possibly advertising on your site. Or you can use Google AdSense which is the industry standard for getting ads on your site. Almost all small and medium website website owners use AdSense for their advertising income. You can sign up for AdSense here, and once you are approved you can get ads to place on your site and you can begin making money with ads as early as today. Once your site becomes very large, you can sell large ad inventory to big companies or agencies. But most sites never get to that point.

Are Mobile Ads Effective At Making Money?

With the rise of mobile apps, there has also been a rise in mobile ad companies that you can use to publish ads on your mobile apps. In my business apps I don’t use such ads, but many other apps do use ad serving companies to help them publish ads on their mobile apps. There isn’t a clear winner among the companies that serve mobile ads on app like there is on the web with AdSense which is the single clear winner in the online ads space. All mobile ad companies promise you high CPMs and skew the math of calculating impressions and revenue in their favor. I have not tried them all, but the ones I did try in the past have grossly underperformed in comparison to what they promise to developers. For most app developers, mobile ads that they publish on their apps are far less lucrative than the ads that they publish on their websites with AdSense.

In addition to mobile app ads not making much money, users also hate them more than online ads. Mobile app ads feel more intrusive than website ads. And whereas a disgruntled user has very little say on a website, that same disgruntled user can leave a bad review on a mobile app. So app developers should think long and hard about whether they want to publish ads on their apps.

As you can see, I am not positive about the prospects of mobile ads on mobile apps. It can work for some apps which do not have another option for generating revenue, but I would urge all app developers to think about what their monetization strategy will be before they even begin to create their app. In my opinion, the ad revenue model should be a last resort option for most apps.

Are There Better Monetization Options?

As I mentioned earlier, in many cases, ads should be a last resort monetization strategy. Additional ways to generate revenue are from selling your own products, reselling affiliate products, providing a regular service for which you can charge a subscription. In fact, here is an article about how to generate recurring revenue with subscriptions.

If you are curious about generating extra revenue with affiliate marketing, we have a course and coaching on this topic. Here is our affiliate marketing course and here is the page where you can learn how you can hire an affiliate marketing coach to help you generate affiliate income.

Video About Making Money With Ads

Further Business Resources

If you are planning your revenue model, you may be in the business planning phase. Take a look at a business plan course I created. The course goes over each section of a business plan and explains what to write in each section, and how to think through each section of a business plan. Here are more details about the business plan course and here is the business plan course on Udemy where you can take a look at the curriculum and purchase the course.

Additionally, if you are starting a business, I wrote a book on starting a business by going from business ideas to an actual business. Here is more information about the business starting book and here is the business book on Amazon.

Additionally, here is the iPhone business plan app and the Android business plan app which can help you write your business plan, and fill out the executive summary template right inside the app.

Author: Alex Genadinik