Thursday, 7 December 2006

AdSense Nonsense: Clearing Up Some Common Misconceptions

I regularly read posts in the official AdSense Help forum that highlight some common confusions and misunderstanding among AdSense newbies. So here we're going to put the record straight.

CPM Ads
There are two common misunderstandings regard AdSense's CPM ads - not to mention the fact that some people don't even realize that there are CPM ads!

First, that you can choose whether to display CPM ads or not. Second, the belief that you will earn from AdSense ad impressions no matter what. I'll address these misunderstandings in turn.

Choosing CPM Ads
You don't get to choose whether you get pay-per-click (PPC) or pay-per-impression (CPM) ads. By default, you only get PPC ads and you will only get CPM ads if an AdWords advertiser hand picks your site to advertise on (in AdWords terminology, a "site-targeted campaign"). This is extremley unlikely in most cases, so the vast majority of AdSense advertisers never get CPM ads on their web site.

Payment for Impressions
AdSense is primarily, at least at the moment, a pay-per-click program. Thus, as stated above, by default you will only get PPC ads. Therefore, unless someone clicks on your ads, you will not receive a cent no matter how many thousands of impressions you may have.

There are also two common sources of these confusions, the eCPM statistic and image ads.

eCPM
The confusion about payment per impression often arises because AdSense reports a statistic that it refers to as "eCPM." eCPM is your effective CPM income, i.e. you effective income per 1000 impressions which is merely a rough approximation as to how much you will earn from PPC advertising on your site, based on performance and impressions to date.

For example, if you've had 500 impressions and you've earned $10, your eCPM would be $20. If you'd had 10,000 impressions and earned $10, your eCPM would be $1. The formula is:

(earnings/impressions) * 1000
Thus, using the first scenario above, if AdSense is reporting an eCPM of $20, all that means is "if your PPC ads continue to perform at the same rate as they have in the past, for every 1000 impressions you will earn roughly $20."

Image Ads
Many people, including myself initially, get thrown when they see image ads on their site because they think they must therefore be CPM ads. However, just because an ad is an image it doesn't mean it's a CPM ad, there are also PPC image ads. In AdWords, you can create CPC (cost-per-click) image ads as well as text ads. So, if you see an image ad on your site, the chances are that it is still a PPC ad, not a CPM ad.

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1 comment:

Charlemagne Stavanger said...

Good info, I innitially thought eCPM was Earning/CPM based on reason you given.

I think a CPM ad is running on my blog forum. Somedays I have earnings with no clicks, but I'm only getting like 10 cents/1000 impression. O well, better than nothing.