Websites large and small benefit greatly from a good online sales report. It’s a high-yield tactic that requires little time and effort.
Even the smallest Web site will find useful insights from a simple report tracking sales performance.
A spreadsheet showing six key trends with help even if a site has nothing else but Google AdSense, Media.net or some other remnant provider.
A spreadsheet with these data points will trigger ideas about where to place ads on a site and how many to have on each page.
The report also shows whether site changes are helping or hutting ad performance, what steps to take with ad inventory and other approaches to building revenue.
The data points are:
- Total ad impressions
- Total clicks
- Clickthrough rate
- Revenue per click
- Revenue per thousand impressions
- Total revenue
1) Total Ad Impressions
Publishers often focus on total revenue and revenue per thousand impressions (RPM) while ignoring the total ad impressions. It’s a risky oversight.
Sites evolve over time because of changes in architecture, navigation, design, content focus, hosting companies, content management systems and other reasons.
They can lose ad positions as a result of the changes. One large network of sites did an audit of ad positions and found that many of the sites did not use every available position.
Adding the positions boosted the total ad impressions and led to an annual increase of $500,000 in revenue.
A focus on increasing total ad impressions is critical to increasing revenue.
2) Total Clicks
If a site increases total ad impressions by 20 percent, the total clicks should increase by 20 percent, right? Not necessarily.
If the ad impression increase came from new positions, a lower increase in clicks indicates poor positioning.
For sites that do direct sales, no growth in clicks is a warning sign that ads are not performing well. Clients will leave as a result.
3) Clickthrough Rate
Clickthrough rate divides total clicks by total impressions. The rate is an easier way to judge ad performance than tracking total clicks.
But both numbers are important for different reasons. Keeping the online sales report simple and quick to update requires total impressions and total clicks to show the rate. Otherwise, the analyst will have to calculate each clickthrough rate.
The rate can easily decline while the total ad impressions increase. Sites that put 10 ads on a page will likely have a much lower rate than sites with two or three ads.
4) Revenue Per Click
Many factors can increase or decrease revenue per click. For example, a site with a page that has high reader interest but low advertiser interest can drive down the average revenue per click.
The RPC number is a great indicator of content and marketing focus. Few publishers want a site that gets a tremendous amount of search engine visitors to a page that advertisers don’t want to touch.
Newspaper sites are a good example of the problem. They commonly have strong traffic to obituary pages, but those same pages attract almost no advertisers (not even funeral homes).
5) Revenue Per Thousand Impressions
This RPM ratio is total revenue divided by total ad impressions divided by 1,000. It is another data point that gives useful insights about revenue performance.
Revenue per click may go up over a year’s time while the clickthrough rate may go down. The RPM will go up or down depending on which of the other two numbers are the strongest.
It also gives a good view of the monetization of a website. A site that has a 50 percent growth in audience over a period of time should have a 50 percent growth in ad impressions. But if the RPM is going down, the site may be losing its edge in monetizing that audience.
6) Total Revenue
Of course, all profit-focused sites want an increase in revenue as an ultimate goal. In that sense, total revenue is the most important data point.
But in another sense, it is the least important. Total revenue is a result of tactics that drive the first five data points. Those first five are means to an end while total revenue is the end itself.
Sites that experience the biggest increase in total revenue are able to increase total ad impressions, total clicks and average revenue per click. They drive up the click rate, RPM and total revenue.
Using the Online Sales Report
Once the online sales report has several months of data, the spreadsheet can develop trends with the goal of improving each trend and brainstorming on how to build the numbers higher.
Breaking down the above statistics by ad position — such as 728 x 90 — will drive attention to the best performing and worst performing positions, and create attempts to understand the reasons behind both.
Larger Web sites can break down such a report further into performance by channel or section for further insight.
Making adjustments over time will lead to increases in ad impressions, click-through rates and revenue.
Larger Web operations with the support of a business office find it easier to get the report from a department that is in the habit of running numbers on a periodic basis. Smaller operations without that kind of support find it more difficult.
But an automated reminder on a desktop electronic calendar once a month will make reporting a habit. Once the habit starts to produce meaningful results, it’s a habit that won’t easily go away.