Overview

Definitions

Revenue

Ad revenue/advertising revenue is a specific type of revenue that is generated through advertising activities. It refers to the income earned by a company by displaying advertisements to its audience or users. Ad revenue is typically derived from advertisers who pay to have their advertisements shown to the target audience. This can include various forms of advertising, such as display ads, video ads, or in-app ads.

As a metric, ad revenue is used to measure the financial performance and success of a business, particularly in the context of generating income from advertising activities. This metric provides insights into the effectiveness of revenue-generating strategies, and its ability to attract advertisers.

In some cases, in order to properly evaluate the effectiveness of revenue-generating strategies, looking only into revenue may not be 100% accurate. Revenue typically is strongly connected with traffic fluctuations. For example, if you add a new placement to the web page, and coincidently at the same time your site suffers from a traffic loss unrelated to the new placement implementation (like seasonality, vacation period, holidays, outage), then you may see a drop in revenue, however, your new placement will bring you still an added value. In such cases, we recommend looking at the total revenue in combination with other metrics like Page RPM, CPM, and fill rate.

Page Views

Page Views are the number of times users view a web page with at least one auction. Pageviews are an important metric for website owners as they provide insights into the overall traffic and user engagement on a website.

Counting page views differs from counting sessions because a user can visit multiple pages within one session. And it’s also different from counting users because the same user could view many pages. In fact, if the same user opens two different pages or even refreshes the same page, two page views will be counted.

User Sessions

A user session refers to the period of time during which a user interacts with a website, application, or online platform without any prolonged inactivity. It starts when a user accesses the website or application and ends when there is a significant period of inactivity, such as when the user closes the application or remains idle for a predetermined amount of time.

Google defines a session as “a group of user interactions with your website that take place within a given time frame. For example, a single session can contain multiple page views, events, social interactions, and ecommerce transactions”. A session lasts until there are 30 minutes of inactivity.

Here’s how a session works: when a user enters a website, a session activates. If within 30 minutes the user doesn’t do anything, the session expires, otherwise every time the user interacts with some website element, session tracking adds 30 minutes to the expiration time of the current session.

Unlike Google Analytics user sessions, user sessions are only counted if at least one ad is shown.

Impressions

Impressions are equivalent to Served Impressions. The standard for calculating an impression is measured when the advertisement or link is fetched and loaded on a web page. The metric associated with accounting for served impressions is easy to calculate, as the data is highly trackable by the server— did it load, or did it not.

The difficulty of accounting for impression value using this method is that it does not include the actual display of the ad, or define the impact of the impression on the viewer. The analysis does not incorporate whether the ad was in a viewable location or actually seen by the consumer, it merely registers that the ad was fetched and the load was initiated.

Served impressions may include a page that the viewer closed before the ad completed loading, or perhaps the viewer scrolled past the ad before it fully loaded. Other impressions that are included in the views, yet have no marketing value, could be a page with ad-blocking software enabled, a page opened by a robot (proxy server, crawler, spider, or fraudulent click bot), a website with mobile incompatibilities, or broken plug-ins that prevent the ad from being displayed.

Unfilled Impressions

Unfilled impressions or blank impressions happen when no demand partner is interested in the impressions and send a no-bid response, due to geo, size, viewability, floor prices, or similar. In that case, the placement is either shown blank or backfilled with house ads.

Auctions

An auction is an attempt to sell an impression and get a paid ad in return. During the auction, ad calls (bid requests) are sent to Ad-Networks through various channels, and the bidder that provides the highest bid wins the auction and is able to show a creative in the ad space. The process is typically executed within milliseconds to ensure a seamless user experience.

It maximizes revenue for publishers and increases competition among ad buyers. It allows publishers to access a larger pool of demand sources, driving up ad revenue and providing more control over their inventory.

If no Ad-Network is interested in participating in the competition, the auction results in an unfilled impression. An auction can bundle ad calls of multiple placements.

Placement Page Views

The number of page views when a placement was loaded. In contrast to page views, which count each page view where at least one placement is shown, this counts the page views where a placement is shown. This metric can be used to see how many page views an ad was used.

The Placement Page View counter is typically smaller than the Page View counter. An exception to this rule is when grouping placements by metadata, for example by position, in this case, the sum of the individual placements might be bigger than the Page View counter.

Page RPM

Page RPM, or Revenue Per Mille, is a key metric used in online advertising to measure how much revenue a publisher earns for every thousand (mille is Latin for thousand) page views on their website or platform.

Page RPM is a valuable metric for website publishers and content creators because it provides insights into the efficiency and effectiveness of their advertising strategies. A higher Page RPM indicates that you are earning more revenue for each pageview, which can be a sign of better-targeted ads, higher-quality content, or improved ad placements. Conversely, a lower Page RPM may suggest that there's room for optimization in your ad strategy or content quality.

The industry acronym RPM is often used as Page RPM, but inconsistently, as it might be used to describe other metrics like Session RPM.

Page RPM aggregates all ads on the page and calculates a rate. For example, If you have 4 ads on a page your Page RPM will be higher than if you just have 2. Page RPM doesn’t represent how much you have actually earned; rather, it’s calculated by dividing your estimated earnings by the number of page views, then multiplying by 1000.

Page RPM = (Revenue / Page Views) * 1000

Session RPM

Session RPM, like Page RPM, is a metric used in online advertising and web analytics to measure how much revenue a website or online platform generates for every thousand sessions it receives. A session, in this context, refers to a single user's visit to a website within a defined time period.

Publishers should pay attention to Session RPM because it provides a comprehensive view of how their site is performing. Session RPM looks into critical factors impacting site monetization like ad viewability, fill rate, refresh rate, ad density, page speed, etc.

Differently from the others, it shows exclusively the effects of the monetization and user experience strategy, limiting the influence of other external factors. Additionally, it offers a broad vision of the publisher earnings, beyond the economic value of the single ad units.

It’s also important to measure Session RPM separately for the Desktop and Mobile versions of the site, as layouts and interaction patterns tend to be very different depending on the device used.

Session RPM = (Revenue / User Sessions) * 1000

Placement RPM

Placement RPM is a metric that measures the aggregated revenue generated by each placement individually. It normalizes the revenue by Placement Page Views, i.e. pages where a placement is used, helping to compare the value of placements to each other, independent of how often they are used.

Placement RPM = (Placement Revenue / Placement Page Views) * 1000

CPM

CPM is an acronym for Cost Per Mille (mille means “thousand” in Latin) and is the ad unit rate per 1000 ad impressions. It is the price advertisers pay to have their ads shown 1,000 times. Advertisers often use CPM to compare the cost-effectiveness of different ad campaigns or advertising platforms. Publishers and content creators use CPM to understand the revenue potential of their ad inventory and to set ad rates for advertisers looking to display their ads on their websites or apps. However, high CPMs do not always correspond to overall success for the publisher. For example, a brand that pays a high CPM but only fills 50% of the available inventory may result in fewer earnings than another brand that pays lower CPMs but has a higher Fill Rate.

CPM = (Revenue / Impressions) * 1000

Fill Rate

Fill rate represents the percentage of ad requests that are successfully filled with relevant advertisements and displayed to users compared to the total number of ad requests made.

The ad fill rate is one of the simplest ways to tell whether or not an ad request has succeeded. A high fill rate, such as 80% or above, indicates that a significant portion of ad requests are being filled with relevant ads, which is generally considered positive. It means that the publisher or website owner is effectively utilizing their ad inventory and maximizing revenue potential.

Conversely, a low fill rate, such as 50% or below, suggests that a significant portion of ad requests are not being filled with ads. This could be due to various reasons, including:

1. Limited demand from advertisers for the website's audience or content.

2. Ineffective ad placement or targeting strategies.

3. Technical issues that prevent ad serving.

A low fill rate can result in missed revenue opportunities for publishers, so it's essential for publishers to monitor and optimize the ad setup to improve the fill rate and, consequently, overall ad revenue.

It’s also worth mentioning that the fill rate has an inverse relationship with the floor price - high floor prices can lead to lower fill rates, as fewer advertisers meet the price, while low floor prices might yield higher fill rates. The key is striking a balance to optimize both ad revenue and fill rate. 

Fill Rate (%) = (Impressions / (Impressions + Unfilled Impressions)) * 100

which is equivalent to

Fill Rate (%) = (Filled Ad Impressions / Auctions) * 100

Placement Coverage

Placement coverage represents the ratio between Total Page Views and Placement Page Views. It is a simple way to tell how often a placement is used across the website. Some placements will only be used on specific pages, due to special targeting, or size mapping, and therefore revenue will be limited by only those pages showing them.

The coverage will give you information on how often the placement is used and how much influence it typically has on the overall revenue. This metric can help to optimize highly valuable placements to increase their usage and result in higher revenue.

Placement Coverage (%) = (Placement Page Views / Page Views) * 100

For a group of placements, like all placements on the same position, the coverage is the average coverage of the individual placements.

Group Placement Coverage (%) = avg(Placement Coverage) = sum(Placement Coverage) / count(Placement Coverage)