The business of starting websites and monetizing them in different forms has grown exponentially in recent years. The ways how websites make money from ads have also become more sophisticated.
With programmatic advertising, digital ad companies and networks are able to conduct online auctions and get advertisers to bid for ad placements in real-time. This has made it easier for website owners and publishers to make money from ads without having to negotiate prices with individual advertisers.
So how do websites make money from ads?
In this article, we will be discussing five models that explain how websites make money from ads.
How Do Websites Make Money from Ads?
These include:
- The Ad Network Model
- The Direct Ad Sales Model
- The Sponsorship Model
- The Freemium Model
- The Sponsored Content Model
Let’s look closely at each of these.
#1. The Ad Network Model
In the ad network model, websites make money from ads by signing up with an advertising network. Once they are a part of the network, they will display the ads on their website from advertisers who have also signed up with the ad network.
The website gets paid based on the number of impressions of an ad (RPM – Revenue per thousand impressions) or based on a user clicking on the ad (CPC – Cost per click).
The ad network will then take a cut of the revenue generated (usually 20-25%) from the ads and give the rest to the website. This model is beneficial for website owners as they don’t have to spend time looking for advertisers or negotiating prices. It works well for advertisers too as the ad network will programmatically place ads on the websites best suited for a particular ad.
The ad network model is the most common model used by website owners to make money from ads. It is also the easiest way to get started with monetizing a website. One of the most popular ad networks that website owners can sign up with is Google AdSense. Other popular ad networks include Ezoic, Mediavine and AdThrive.
#2. The Direct Ad Sales Model
In the direct ad sales model, website owners sell advertising space on their websites. They usually work with one advertiser at a time and negotiate the price, ad placement, and other details of the campaign.
The website owner is in complete control of the ad sales process and gets to keep all of the revenue generated. This model works best for website owners who have high traffic and can command premium prices for ad placements.
Direct ad sales can be time-consuming, so website owners usually only pursue this model if they have a sales team or are willing to put in the extra effort to sell ad space themselves.
With the direct ad sales model, website owners have the potential to make a lot more money from ads than with the ad network model. However, it can be more work to find and negotiate with advertisers.
#3. The Sponsorship Model
In the sponsorship model, a website owner finds one or more sponsors who are willing to pay them a fixed amount of money in exchange for displaying their ads on the website.
The website owner is usually free to choose which sponsors to work with and how much to charge them. This model can work well for websites with niche audiences that are attractive to certain advertisers.
#4. The Freemium Model
The freemium model involves providing a basic version of a website or product for free and then charging users for access to premium features.
This model can work well for websites that offer content or products that people are willing to pay for. For example, many news websites use the freemium model. They provide basic articles for free but charge users who want to read more than a certain number of articles per month. In this case, the free news articles are ad-supported while the paid ones are ad-free.
The freemium model can also work well for websites that offer products or services that have a free trial period. During the free trial period, the service can display ads and when the user starts paying, the ads are taken off.
#5. The Sponsored Content Model
The sponsored content model is an indirect way for websites to make money from ads. In this model, a website owner agrees to write an article or create a piece of content that promotes a product or service in exchange for payment.
This type of arrangement is also sometimes called native advertising. The sponsored content looks similar to the website’s normal content but it is clearly marked as being sponsored.
The sponsored content model can work well for websites that have a lot of traffic and are able to charge high prices for sponsorships. It is also a less intrusive way for website owners to make money from ads as the sponsored content does not interrupt the user’s experience like do traditional banner ads.
Conclusion
Website monetization has grown exponentially over the last few years and has undergone a sea change in terms of the technologies and precision with which ads can be displayed. And so it is legitimate to wonder – how do websites make money from ads these days?
In this article, we reviewed 5 different models with which websites make money with ads – The Ad Network Model, The Direct Ad Sales Model, The Sponsorship Model, The Freemium Model and The Sponsored Content Model.
If you are considering starting a website and monetizing it with ads, rest assured that there are several monetization options available to you. And so the question you will need to answer is not how do websites make money from ads, but rather which model makes the most sense for your website and your business.