Monetization

Definition of Monetization

The process of generating revenue from customers, users, or visitors.

Monetization in Depth

Monetization is a very general term that refers to the process of generating revenue. Though it can apply to all types of transactions and businesses, the focus of this site is monetization of web traffic (i.e., the visitors to a web site).

Perhaps the best place to start understanding web monetization is with examples of sites that are not monetized. While most websites are part of a business or even a non-profit organization that has some revenue targets, there are plenty of sites made for a purpose besides earning money. Specifically, many web sites by government offices operate only to provide information and don’t seek to make any money. Here are a few examples:

Compare these to most sites that you’ll visit attempt to make money from their visitors in one way or another, whether it be selling a product or showing an ad.

Common Monetization Methods

There are a number of different ways to monetize web traffic, and many sites use a combination of different approaches in order to maximize revenue. The most common ways to monetize web traffic include:

  • Showing display ads
  • Selling memberships
  • Affiliate marketing
  • Capturing and selling leads
  • Selling products
  • Collecting donations

“Indirect” Monetization

For most web-based businesses, monetization does not occur as a direct transfer of money from a customer / visitor to the publisher. Instead, most web monetization strategies involve a third party (i.e., in addition to the publisher and the visitor to the site). For example, advertisers pay to have their messaging shown to visitors of a site.

Monetization Metrics

There are a couple of common metrics that are used to measure and express how effectively a site is being monetized. These include:

  • Revenue per Thousand Impressions (RPM): The amount of revenue earned for every 1,000 pageviews on a site. (See the RPM entry for more detail)
  • ARPU: Average revenue per user. The amount of income earned for each unique visitor to a site.

These two metrics will be very highly correlated; an increase in one typically means that the other will also rise (and vice versa).

If you run a website that is generating some amount of revenue, there are two primary ways to make more money:

  1. Grow traffic
  2. Improve monetization of current traffic

Many site owners tend to spend a lot of time, energy, and money on the first bullet above, specifically on SEO-related strategies. However, there are often relatively easy ways to improve monetization efforts. These can include:

  • Selling ads directly
  • Increasing visibility of and engagement with display ads
  • Finding and serving targeted affiliate marketing campaigns
  • Increasing signup rates of paid membership products
  • Activating additional revenue streams, such as email, co-registration, and video

See Also

Related terms include: Above the Fold, Ad Network, Co-registration.