Google Adsense is a very popular program for earning money online. Google Adsense generate revenue on either a per-click or per-impression basis.
In this article, I will be describing some of the key terms of Google Analytics. They are Clickthrough rate (CTR), Cost-per-click (CPC), Cost-per-thousand (CPM), and Revenue per thousand impressions (RPM). Before understanding these terms, we need to know about the following basic terms:
Clicks: The number of times an ad was clicked on in the given reporting period.
Impression: An impression means a user view of a particular item on your site. It can be either viewing a page, an ad unit, or an individual ad. Therefore, impression can be further classified into 3 types – Page views, Page impression and Ad impression.
Page view: A page view is reported every time a user views a page displaying Google ads. Only one page views is counted at a time regardless of the number of ads displayed on that particular page. For example, if a page displays 3 ad units and it is visited twice then two page views is counted.
Page impression: A page impression is generated every time a user views a page displaying Google ads. A page might contain more than one Google ads. Ad units impressions are calculated separately.
Note: For Google Adsense, Page View and Page Impression seems to be similar.
Ad impression: An ad impression is reported whenever an individual ad is displayed on your website. For example, if a page contain 3 ad units and if it is viewed 5 times, then you have 5 page impressions and 15 (5*3) ad unit impressions.
Query: A query is a request made each time to Google’s system to display an ad unit.
Now, let’s get on the detail about CTR, CPC, CPM and RPM.
Clickthrough rate (CTR)
The clickthrough rate (CTR) is the number of ad clicks divided by the number of impressions, page views, or queries you received. CTR determines how often the visitors click your ads.
CTR = ( Clicks / # of impressions, views, or queries) * 100%
Let us suppose:
Clicks = 5, Page Views = 500
CTR = ( Clicks / Page Views ) * 100%
CTR = ( 5 / 500 ) * 100%
CTR = 1%
Note that the Clicks is divided by either page impressions, page views, or queries. Therefore, CTR can be further classified into three types: Ad CTR, Page CTR, and Query CTR.
Ad CTR = ( Clicks / # of page impressions ) * 100%
Page CTR = ( Clicks / # of page views ) * 100%
Query CTR = ( Clicks / # of queries ) * 100%
The cost-per-click (CPC) is the amount you earn each time a user clicks on your ad. In other words, CPC is the cost that Google pays you for a click of ad placed on your website. The CPC for any ad is determined by the advertiser. CPC is keywords specific. Different keywords have different CPC value. Google Adwords Tool can be used to search for keywords and their price value.
Cost-per-thousand (CPM ads)
CPM stands for Cost Per Thousand impressions ( M = Thousand in Roman numeral).
Advertisers running CPM ads set their desired price per 1000 ads served and pay each time their ad appears.
As a publisher, you’ll earn revenue each time a CPM ad is served to your page and viewed by a user.
CPM ads compete against cost per click (CPC) ads in Google ad auction, and among these two, the ad which is expected to earn more revenue for the publisher is displayed.
Revenue per thousand impressions (RPM) / Effective CPM (eCPM)
Note: Before it was called eCPM. Now, it is called RPM.
RPM is a reporting feature and this does not represent the actual amount paid to a publisher. RPM doesn’t represent how much a publisher earned. Adsense RPM of a page (or an ad unit) is the estimated earnings of a publisher for every 1000 impressions received.
For example, if a publisher earned $50 from 2,500 page impressions, then
RPM = ( Estimated Earnings / Page Impressions ) * 1000
RPM = ( 50 / 2500 ) * 1000
RPM = $20
Note that the Estimated Earnings is divided by either page impressions, page views, or queries. Therefore, RPM can be further classified into three types: Ad RPM, Page RPM, and Query RPM.
Ad RPM = (Estimated earnings / Ad impressions) * 1000
Page RPM = (Estimated earnings / Number of page views) * 1000
Query RPM = (Estimated earnings / Number of queries) * 1000
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