How Adsense Revenue Actually Works?
Adsense has both CPC and CPM-based revenue model. Now let me explain the terminology that we use on Adsense first;
- CPC – Cost Per Click – Varies anywhere between $0.02 to $1 (Max. it can go up to $100 as well but in very rare cases.)
- CPM – Cost per 1000 Impressions.
- RPM – Revenue per 1000 Impressions.
- CTR – Click Through Rate – Clicks per 100 impressions. Varies anywhere between 1% to 10% based on your niche and ad placement.
- The other terms like Pageviews, Impressions and Earnings; which I guess are pretty much straight forward.
CTR = (Number of ad clicks * 100) / Number of page views
If my blog has 10,000 pageviews per month and 800 AdSense ad clicks, then my CTR is 0.8%.
CTR = (800 * 100) / 10000 = 0.8%
Most of the ads on Google Adsense are Cost Per Click based. That means you get paid whenever a visitor clicks on your ads(You are not allowed to click on your own Ads, it might lead to a permanent BAN). There are very few ads that are CPM based that means you get paid even though a visitor doesn’t click and just view the ad, but these ad formats are very less, and most of the advertisers avoid these ad formats.
How much money can you actually make from Adsense?
It depends on a lot of factors and out of all these the primary factors are CPC and CTR. CPC varies from niche to niche and also depends on the geographic location of your audience. If you are getting traffic from Tier-1 countries like US, UK, Canada, Australia, etc, then your CPC is likely to be high. But if in case you are receiving traffic from Tier 2 and Tier 3 countries CPC would be low.
CPC also depends on the keywords that you are targeting. If you are targeting keywords related to Gadgets, Health, etc., the CPC tends to be high because there is a lot of competition among advertisers in those sectors. So, if you are in a less competitive niche like the entertainment or education, that too in India then obviously your CPC will be very less.
So, lets suppose you have good CPC, and that doesn’t end there. You need a good CTR as well; that means you want more people to click on your ads. This depends on a lot of factors like Ad Placement, Source of Traffic, Web Page Loading time and a lot many other factors.
It all depends on these two factors. Combing these two a simple term is used to understand how well our ads are performing and its called RPM.
Page RPM = (Estimated earnings / Number of page views) * 1000
Estimated Earnings = CPC * Total Number of Clicks
= CPC * CTR*100
Ops, don’t panic. Am not teaching you any formula, and you don’t need any. You just have to look at the RPM.
Lets suppose like your RPM is $2 then you must be making around $2/1000 pageviews.
Then if you are receiving about 10,000 page views you should be able to make $20.
So, if your RPM is $5, then you would make $50 for every 10,000 page views.
If in case your blog is receiving an average of 10,000 pageviews per day which means 3,00,000 pageviews per month at an RPM of $3, the calculation goes as follows;
Total Revenue = RPM * Pageviews/1000 = 5*300 = 1500.
You should able to make about $1500 per month.
