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24 Important programmatic advertising terms you need to know
Updated on August 11, 2023
Are you a publisher making money by running ads? Do you understand the top programmatic advertising terms in 2023? If not, then you are missing an important thing. As a responsible publisher, you must consistently search for industry-relevant AdTech terms and understand their relevance for your business. This blog explains the top 23 programmatic advertising terms that will help you scale your publishing business.
Table of Contents
Ad revenue is a term that represents the total income your app or website generates by showing ads on its ecosystem. This revenue can be from games, websites, and in-app ad revenue.
Google Ad Manager (GAM)
Google Ad Manager (GAM) is a powerful ad management platform that big publishers use for all-round monetization. Formerly known as DoubleClick for Publishers, Ad Manager provides publishers with integrated ad exchanges, third-party ad networks and Google AdX in its ecosystem. Thereby, it offers a comprehensive solution to digital publishers' needs.
Page views are the total number of times an ad is visible on a web page. This metric helps measure the performance of website ads. To track page views, Publishers can use Google Analytics and equivalent tools.
Ad impression is counted whenever an ad appears on the app or website ecosystem. This metric tracks and measures the effectiveness of ad campaigns and informs the publishers about how many viewers have seen the ad. Note that impressions occur whenever an ad loads on an app or webpage, regardless of whether it has clicked.
Ad clicks are counted whenever users open the ads publishers run on their app or website. Advertisers can track this action to measure the effectiveness of their ad campaigns and target specific audiences. Publishers get paid for ad clicks based on two main pricing models: pay-per-click (PPC) models or a cost-per-click (CPC) model, in which advertisers pay for the clicks.
Google AdMob is a programmatic tool that allows publishers to monetize their app traffic by showing ads on the app ecosystem, thereby AdMob earning revenue from impressions or clicks. With AdMob, publishers can run customized and targeted ad campaigns for iOS, Android, and other mobile ecosystems. Also, publishers can use the AdMob revenue calculator to calculate ad revenue potential.
Google AdSense is another Google-owned popular programmatic advertising tool that enables website owners to monetize their web traffic. AdSense is an intermediary between advertisers and publishers, helping promote, monetize, and calculate ad revenue. The platform uses unique algorithms to display relevant ads to the audience. Also, the website owner or publisher can choose what types of ads to display and where to place them on their website for higher exposure.
Google Ad Exchange (Google AdX)
Google Ad Exchange (formerly called DoubleClick Ad Exchange) is a digital advertising platform allowing advertisers to buy and sell ad space on websites and mobile apps. It helps publishers reach premium demand partners and high-paying advertisers through programmatic technology.
Revenue streams in ads refer to the various ad revenue sources by which a publisher can generate income through advertising. These can include revenue from sponsored ads, events, social media posts, and display ads on websites or mobile apps. Publishers can choose revenue streams depending on their business type and audience interest. As the next step, publishers can calculate ad revenue potential considering the various streams.
Ad Revenue Potential
The ad revenue potential is the estimated amount of money a publisher can earn by running ads on their app and website. The calculator estimates ad revenue based on Admob or AdSense details, traffic, daily active users, page views, etc. However, the potential ad revenue and actual revenue may differ depending on factors like a sudden rise in competition, reduction in demand, and low ad campaign performance.
Revenue models in the publishing business refer to how advertisers pay a certain amount to the publishers in return for targeted clicks, views, and installs. Following are the widely used revenue models include:
- Cost-per-click (CPC) model: Publishers are entitled to receive money based on the ad clicks.
- Cost-per-impression (CPM) model: Publishers are entitled to receive money based on how often their ad is displayed (or the impressions).
- Cost-per-action (CPA) model: Publishers are entitled to receive money whenever the user takes a specific action, such as newsletter subscription, app install, form submission, or similar.
- Subscription model: This model allows publishers to get a fixed fee for displaying the ads for a specific duration.
- Sponsorship model: Under this model, publishers receive money for sponsored events, programs, or any ad on the platform.
Contrary to the revenue model, the pricing model is for advertisers who pay a certain amount to the publishers in return for clicks, views, installs, and other engagement metrics. As a publisher, you should know the following pricing metrics to better negotiate on real-time bidding and make more revenue.
- Cost-per-impression (CPM): Advertisers are charged based on the number of times the ad is displayed, regardless of whether it got clicks.
- Cost-per-click (CPC): Advertisers are charged based on the number of times a user clicks on the ad.
- Cost-per-action (CPA): Advertisers are charged based on specific user actions, such as filling out a form or installing an app.
- Cost-per-acquisition (CPA): Advertisers are charged based on desired actions, such as signing up for a newsletter or installing an app.
- Cost-per-thousand (CPM): Advertisers are charged based on the number of impressions their ad receives.
- Commission-based charges: The publishers are accountable for paying for the sale under this pricing model.
Visitors in ads refer to the number of people who click on an advertisement and go to the advertiser's website. This is typically used to measure an ad campaign's effectiveness, as more visitors indicate more interest in the product or service.
Ad traffic refers to the number of people who click on or view an advertisement on a website, app, or other online platforms. Traffic can be measured through metrics such as impressions (the number of times an ad is displayed) and clicks. Ad traffic is important for publishers as they monetize this traffic by running ads on the app or website. Traffic is also helpful in optimizing ad placements and improving the overall user experience for those viewing the ads.
Digital Media Buying and Selling
Digital media buying and selling is the process of selling and buying ad space on the Google Advertising ecosystem. Talking about the process involves the creation of proposals, determining prices, and contract negotiation with advertisers. Both media buying and selling play a crucial role in the advertising industry, as they enable brands to reach their target audience and effectively promote their products or services.
Multichannel Ad Revenue
Multichannel ad revenue is publishers' revenue by running ads on multiple channels, including search, display, mobile, and video ads. With this strategy in place, publishing businesses can leverage the unique features of each channel and maximize their revenue. Regarding revenue estimation, publishers can use multi channel ad revenue to calculate revenue potential.
KPIs or key performance indicators are metrics that publishers use to measure the success of their ad publishing campaigns and later to calculate ad revenue. The common KPIs in Google Ads include conversion rate, CTRs, revenue per click (RPC), and conversions. Further, a publishing business can use these metrics to modify the campaigns for better performance.
Effective Cost Per Mille (eCPM)
eCPM, or effective cost per thousand impressions, is an estimated income that publishers are entitled to receive from advertisers. This metric represents publishers' potential to make revenue. Following is the formula to calculate ad revenue:
Cost Per Mille (CPM)
CPM, or cost per mile, is the amount advertisers are accountable to paying publishers for every 1000 impressions. Either way, advertisers pay the cost to display their ads before a thousand people. Since CPM is about impressions, publishers' income doesn't get affected even if the click is nil. Here's how to calculate CPM:
Daily Active Users (DAU)
DAU stands for Daily Active Users, which refers to the total number of unique users who engage daily with an app, its digital products, or service offerings. This metric is often used to determine the relevancy and usage of a product or service and can also be used to identify different trends and patterns in user behavior.
Cost Per Click (CPC)
CPC is the abbreviation for Cost Per Click. Advertisers use a metric to determine how much they need to pay publishers for each click. Besides the cost calculation, CPC is a metric to track your total expenditure on advertising campaigns, as you know the cost of each click. Here's how to calculate CPC:
Page RPM is the revenue a publisher makes per 1000 impressions by showing ads on a website or app. The RPM is calculated by dividing the total revenue earned from ads on a particular page by the number of page views and then multiplying that by 1,000.
For example, if a website earns $100 in ad revenue from 10,000 page views, its Page RPM would be $10 (100 / 10,000 x 1,000). Page RPM is an essential metric for publishers as it helps them understand the performance of their ad campaigns and determine how much they can earn from their website or blog.
Ad RPM is an abbreviation for two terms; ad revenue per mile and minute. Revenue per thousand impressions (Ad RPM) is a metric publishers use to measure the revenue an advertising campaign generates per thousand impressions. Advertisers need to calculate this amount and pay the same to the publishers. To calculate RPM, they divide the total ad revenue earned from a specific ad campaign by the number of received impressions, multiplying the outcome by 1000.
For example, if your ad campaign has $100 as ad revenue and receives 10,000 impressions, the ad RPM is calculated as below:
This calculation implies that the ad campaign earned $10 in revenue for every 1,000 impressions it received. A higher ad RPM indicates that the ad campaign was successful in generating revenue, while a low ad RPM suggests that the ad was ineffective in driving conversions.
Ad Revenue Per Minute
Ad revenue per minute is the revenue your app or website generates every minute from ads running on its ecosystem. To calculate RPM, take the annual revenue you make from ads and divide the amount by 525,600 (total minutes of a year).
Once you understand these important programmatic advertising terms, you can better manage your digital publishing business in 2023. Also, these terms enable performance analysis on campaigns and ad revenue calculation. If you feel stuck or need help identifying the feasibility of any of these terms, connect with our programmatic advertising experts to resolve your queries quickly.