What Is Website Monetization?

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:

1. How much traffic a site generates (i.e., how many visitors come to the site); and
2. How much revenue is earned from each visitor to the site.

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.)

How Is Monetization Measured?

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.

How Much Do Websites Make?

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 $1 CPM = $1,000 monthly revenue 

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:

1. Value of Audience: Different advertisers have very different ideas of quality; one company's target market may be wholly unattractive to someone else. Generally, the wealthier an audience, the more attractive.
2. Presence of Relevant Monetization Sources: Basically, you will be able to more effectively monetize if your website operates in a niche where there are multiple companies / advertisers willing to spend to reach your audience. If no one is looking to reach your audience, it doesn't matter how qualified they are.
3. Monetization Efficiency: This essentially refers to how well you take advantage of the opportunities available to you, and how well you get the most possible revenue out of your audience.

Ways To Monetize

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)

1. Display Advertising: Most websites out there utilize display advertising to generate part of their revenues; this stream includes the banner ads that you see dozens of times each day.
2. Affiliate Marketing: Many sites operate under an affiliate model, whereby they attempt to send referrals to a partner merchant. If the referral ultimately generates revenue for the merchant, the affiliate gets a cut of the check. (Check out MissyWard.com for some great insights into affiliate marketing.)
3. Lead Generation: In certain niches, sites can generate qualified leads for third parties who are willing to pay on a per lead basis for information on individuals whom they believe may ultimately become paying customers.
4. eCommerce: Online stores are another moneymaker for many websites; selling goods or services online is a way to generate revenue from your traffic. Many websites operate exclusively as ecommerce sites, while others may incorporate an e-store into a content-heavy site.
5. Subscriptions / Premium: Some sites make their money primarily by selling access to their content. This can be a tough niche to break into--many major publishers have been moving away from it in recent years--but if the nut is properly cracked there can be a big pay day. Don Nicholas has a good post on profitable subscription website models if you're interested in this option.

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.

Bottom Line

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!)