1 Introduction - 2 Ad Rank - 3 Quality Score - 4 Advert Price
5 eCPM - 6 eCPM explained - 7 Statistics - 8 Position Weight
9 PW Simulator - 10 Smartpricing - 11 SP Simulator - 12 Adsense Simulator
So far in this online course we have looked at:
- how Google decide the order of ads in your hypothetical 5-ad tower, using Ad Rank
- how they determine the advert price
- how the income for you is calculated
- the care needed when analysing Adsense statistics.
Now, we'll start looking towards using the Adsense Simulator, and in particular to the main variable you will use to experiment with different page layouts: "Position Weight".
The types of calculations we do in the Adsense Simulator are slightly different to the way Adsense actually calculates your earnings.
To produce your reports, Google count clicks and the values of those clicks, and then add them up. However, to simulate the performance of your page, and predict the eCPM and earnings you will get, we will apply an eCPM formula to each ad slot, then add it up for the tower. The formula we use is:
Ad Slot eCPM = Cost Per Click x Click Through Rate x 1000 / 100
(We multiply by 1000 because we want to measure per thousand impressions; we divide by 100 to convert the click through rate from a percentage to a decimal number)
Using the tower example from the start of this course, this would give us a predicted eCPM for the tower as follows:
Advertiser CPC CTR eCPM Kim $0.34 x 3.00 % x 10 = $10.20 Sarah $0.76 x 1.00 % x 10 = $7.50 Brian $0.51 x 1.00 % x 10 = $5.00 Joe $0.13 x 2.00 % x 10 = $2.60 Amber $0.01 x 1.00 % x 10 = $0.10 Total eCPM $25.40
Your share (assuming 70%): $17.78
However, this table is too simplistic because, depending on the design of the page:
- ads at the top of the tower tend to be clicked more often
- ads at the bottom tend to be clicked less
The calculation in the table, above, is therefore very inaccurate because it assumes that all the ad slots are clicked equally. The differences between the Click Through Rates of different ad positions can be very significant, and are strongly influenced by your page design.
We solve this problem by using a new variable called "Position Weight", which is a number between 0 and 2 and has a typical value of "1". You assign Position Weights to each ad slot to adjust the predicted Click Through Rate, to give a more accurate prediction of income, like this:
Advertiser CPC CTR PW eCPM Kim $0.34 x 3.00 % x 1.5 x 10 = $15.30 Sarah $0.76 x 1.00 % x 1.25 x 10 = $9.38 Brian $0.51 x 1.00 % x 1.0 x 10 = $5.00 Joe $0.13 x 2.00 % x 0.75 x 10 = $1.95 Amber $0.01 x 1.00 % x 0.5 x 10 = $0.05 Total eCPM $25.40
Your share (assuming 70%): $17.78
You can play around with the figures, to assess the impact of different Position Weights on the tower, in the spreadsheet on the next page...