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Adsense explained for everyone: understand your revenue statistics

Updated on May 13, 2013
Example of indicators
Example of indicators

After my question at hubpages I have been doing some research on the meaning of the Adsense reports. When we enter at our Adsense page, assuming we have an account, we see our home tab with an overview were we can see some concepts that if we haven't researched or read about, we won't acknowledge.

To start analyzing the AdSense reports and maximizing our revenue as most of the hubs claim first we should learn what these concepts mean.
We can see that the most repeated indicators in the reports are:

  • CTR (Click Through Rate)
  • RPM (Revenue Per thousand iMpressions)
  • CPC (Cost Per Click)

First of all we should distinguish that these indicators or concepts are merely statistical and are calculated with the revenue in our accounts, we must realize that the reports calculate averages on the results, so when we see the report by day the data of each column is averaged by each day.

The purpose of this hub is understand the basic concepts and make as many people as possible conscious of some of the problems of the Adsense reports, as we may see some of them are inaccurate in its calculations and can lead to confusion.

bid types in Adsense report
bid types in Adsense report

Bid types

If we look at the report by Bid types there are only two ways of earning money, those are the only parameters that generate revenue. Adsense serves us an ad it does an auction which bid is more appropriate for us, as they state, and the result is one of this bidding types. We should see them in detail:

CPC Bids

This is the standard bid and Adsense will serve mostly this type of bid. The revenue on these ads depends on the user clicking on it. The format of the ad can vary on text links, images or even animated ads in Flash.


CPM Bids

Those bids led me to confusion when I was looking at my reports, so I asked the question that led me to doing some research.

Those bids depend only on being served to the visitor of our page, but it’s done by a factor of thousand, so we must divide the number of visitors that saw the ad by 1000 and multiply it for the revenue, 100 visitors * $1,15 / 1000 =$0,115.

But as I have stated before this is not the default type on the ads served, in my case this only means less than 1% of the total ads served, I don’t know yet if we can increase this number but in many visited sites it could be interesting to do.

Example of invalid click averaged in reports
Example of invalid click averaged in reports

Statistics in reports

Let’s go with the statistics:

CTR (Click Through Rate)

AdSense CTR (Click Through Rate) is the number of the ad clicks divided by the number of page views.
CTR = (Number of ad clicks * 100) / Number of page views
If my blog has 10,000 page views in a month and 50 AdSense ad clicks then my CTR is 0,05%.
CTR = (50 * 100) / 10000 = 0,05%
Higher CTR means that more AdSense ads have been clicked, so in the end means more earnings. So every AdSense publisher wants a higher CTR.
Also we must be cautious because some invalid clicks, as you may know if you read the Adsense terms, can be counted for the CTR, so as you can see some of these stats can be inaccurate.

RPM (Revenue Per thousand iMpressions)

RPM is the average revenue per thousand impressions (RPM), it is calculated by dividing your estimated earnings by the number of page views you received, then multiplying by 1000.
Page RPM = (Estimated earnings / Number of page views) * 1000
This is good indicator to estimate your earning in future, for example if your RPM is $1,12 then you can predict if you will have 15,000 page views your earnings will probably be around $16,8 (15 * $1,12).
You should not mistake it with the bid type, because this is just a statistic of the average revenue by ads served.

CPC (Cost Per Click)

The cost-per-click (CPC) is the average amount we earn each time a user clicks on his ad. As you may suppose, CPC is calculated by dividing the estimated earnings by the number of clicks received.
For example if your CPC is $0.26 then you need around 285 click to earn $100. As with CTR you should be careful with invalid links as it will be counted in this statistic.

Conclusions

If you want to maximize the monetization of your site you should understand the concepts explained in this hub so you can analyze how should improve your blog to optimize every ad showed at your website. If there's anything not clear enough don't be afraid to ask in the comments section.

Thanks for reading!

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    • john000 profile image

      John R Wilsdon 5 years ago from Superior, Arizona

      A good clear explanation of the Adsense ratios. Thank you.

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