Digital Ad Revenue

Apr 26, 2022

Written by Brittany Prats

Edited by Allison Herrera⁣

We literally always say  you have to go digital. The time is now. No more excuses. But, hey, if you don’t want to take our word for it, that’s fine. Before you close any doors, though, check out this evidence proving it’s time to go digital!

Did you know that Digital Ad Revenue had the largest increase last year since 2006?! That’s a 35% increase in Digital Ad Revenue in one year, but we can’t say we’re super surprised by this. Coming off of a pandemic that lasted well over a year, it was almost impossible for a brand to not turn to digital marketing. Everyone was constantly online, which quite honestly resulted in digital marketing really as businesses only option in terms of advertising.

Just to further put this number into perspective, an increase in Digital Ad Revenue of 35% equals just about $189 BILLION. Previously, from 2020 to 2021, the growth rate of Digital Ad Revenue was only 12%. There are millions of reasons that this may have been the case, but let’s break down the main one.

There was an enormous increase in the amount of businesses, which in turn means more of a need for marketing and advertising. In fact, a record of 5.4 million new business applications were filed. Because of the immense amount of new businesses, the only way that they could really promote their new business or find new customers was by going digital, whether that be through social media, video, or even audio.

Online shopping is another contributor to this spike in Digital Ad Revenue. People practically accomplished all of their shopping online last year as well, which makes a significant difference in Digital Ad Revenue. Online shopping is a big portion of our everyday lives, and it’s clearly not going anywhere anytime soon. In fact, online shopping is constantly developing as digital outlets continue growing. Think about it. Twenty years ago, we would wait for the mailman/mailwoman to deliver the latest store catalogs. Ten years ago, we moved online, where we would “window shop” on online websites and could even order products. Five years ago, we would browse social media and message stores comments, questions or concerns about products. But today, we can now order products through digital apps, such as Instagram, with a few simple clicks after being hooked from algorithms and Digital Advertising.

Now, your next question is probably how do you calculate ad revenue? Well, there’s no one-size-fits all calculation for ad revenue, since difference platforms/outlets can charge advertisers based on a few different metrics, including:

  • Cost-per-thousand-impressions
  • Cost-per-click
  • Cost-per-acquisition

Cost-per-thousand-impressions or cost-per-mille (CPM) measures how much you earn each time an ad earns 1,000 views.

  • Formula: Total impressions / 1,000 X CPM = Revenue
  • For example, if you charge advertisers a $10 CPM and you have 200,000 monthly website visitors, you might expect to earn $2,000 per month if each of those visitors view an ad once
  • Here’s how that works: 200,000 impressions / 1,000 X $10 CPM = $2,000

Cost-per-click (CPC) measures how much you earn each time someone clicks on an ad.

  • Formula: Total clicks X CPC = Revenue
  • For example, you charge a $0.5 CPC. If 200,000 people see your ad but 10,000 people click on it, you earn $5,000
  • Here’s how that works: 10,000 clicks X $0.5 CPC = $5,000

Cost-per-acquisition (CPA) measures how much you earn each time someone converts after viewing your ad. This conversion is similar to CPC, but it typically comes in the form of an email sign-up, app download, or purchase.

  • Formula: Total acquisitions X CPA = Revenue
  • For example, if you charge a $2 CPA and 1,000 of your readers convert, you earn $2,000
  • Here’s how that works: 1,000 conversions X $2 = $2,000

Now that you understand how these numbers are calculated, you can see how Digital Ad Revenue has skyrocketed; however, just because ad revenue has increased, that doesn’t mean it will do that for every brand. You have to practice effective advertising in order for your means to make a difference. With digital advertising quickly evolving everyday, it can get incredibly hard to keep up with all of the new trends, channels, and options you have.

So why do it alone?! If you want real results based on specifically you and your goals, then hire someone who actually specializes in digital marketing. Oh wait, that sounds familiar, huh? Hire Uptown Girl Media, where we believe everyone deserves a piece of the pie…and we’re willing to get you there however we have to!