If you own a website and are attempting (or succeeding) at making money off that website, you already know a thing or two about monetization. While the process of monetization can be challenging and complex, the concept is rather simple. Monetization simply refers to making money from a website. There are a wide range of ways to monetize a website (more on this below) and endless permutations of strategies that can be devised and implemented to make money from a website. But for many, the primary goal is straightforward: make as much money as possible.
So the concept of “monetizing your Web traffic” simply translates to “making money from your visitors.”
Monetization is a function of two simple variables:
This site won’t deal much with variable #1; there are countless sites dedicated to increasing traffic via SEO and other methods. We do, however, offer resources and insights that can help you make more money off of the existing traffic coming in the door already. (Sign up for our free newsletter to get monetization tips delivered to your inbox. Or, if you’d like to be on your way to becoming a Web monetization expert, you should join MonetizePros as a free member. Members receive access to our free Web monetization e-books, including the first two chapters of The Web Monetization Handbook.)
The concept of website monetization may be difficult to grasp, since no hard currency is exchanged when someone visits your site. But odds are that there are a number of companies who are interested in reaching your website’s audience–the visitors to your site. The most common source of monetization–the people who will be writing you checks–are third parties who are interested in communicating in some way with the folks who visit your website. That communication may take many forms; it could be as simple as showing them a banner ad or getting them to click on a link to their own site, or as complex as gathering specific personal information from them. (For additional information, check out this great presentation on how websites make money.)
Think of the website owner as a gatekeeper; he has the ability to connect advertisers and other companies with his audience (in various ways). Website owners will, of course, charge companies for this privilege. That’s monetization at its most basic.
Many website owners also monetize their traffic bases directly, accepting payment from their visitors in exchange for various products or services. Examples of this (which you encounter everywhere you look on the Web) include paying for a product to be shipped to you (e.g., a t-shirt) or access to a “premium” article or tool. (Check outthis good post on preparing to sell to your audience.)
As mentioned above, the amount of money you make from your website depends on 1) the volume of traffic and 2) average revenue derived from each visitor or pageview. Think of it as this formula:
Total Revenue = Pageviews x Revenue per Pageview
So the most meaningful way to measure how effectively you’re monetizing your traffic base is through Effective CPM, or eCPM. Put another way, this metric measures Total Monthly Revenue per 1,000 pageviews. So if your site has an eCPM of $3 and generates 1,000,000 monthly pageviews, you would have total monthly revenue of $3,000.
It follows that if you want to increase your bottom line revenue, there are two primary routes to do so: 1) increase your traffic or 2) increase your eCPM.
As in many areas of business, there is a wide range when it comes to the revenue of websites. Websites that serve a relatively unattractive demographic and are poorly monetized may have eCPMs of less than $1 (meaning they generate less than $1 in total revenue for every 1,000 pageviews on the site). Websites that attract highly sought after demographics and are monetized very well can see eCPMs well in excess of $100.
Obviously, this range of eCPMs can result in very different top line revenue for two hypothetical websites of comparable size:
1,000,000 monthly pageviews x $100 CPM = $100,000 monthly revenue
There are a number of factors that determine how much money you can potentially make from your website:
There are several different ways to go about monetizing a website, and different strategies will work more effectively for different types of sites. The general strategies for Web monetization are listed below (click on the image to the right to see a cool infographic from Web Search Social)
Daniel Scocco at DailyBlog Tips has an even more extensive list with 28 ways to monetize your traffic. Michael Dunlop at Income Diary also has some creative ideas for making money off a website.
Website monetization is far from an exact science; there’s no manual with the steps you need to take to maximize earnings from your site. (Hmmm, actually that sounds like a good idea for a future MonetizePros tool!) But in most cases, there is plenty that can be done in order to more efficiently monetize your traffic, including opening up new revenue streams and cultivating relationships that will allow you to make more from your existing sources of cash flow. The best advice any website owner can heed is to experiment regularly and think creatively; always be trying new things and maintain a willingness to think outside the box. (Wild ideas are OK!)