Adsense Math

The Dynamics of Web Traffic Monetization in the 21st Century Adsense has now become a standard for most websites to monetize traffic. Though, trying to understand the reports behind them can be neck wrecking.

How the Reports Work

The reports are based on impressions and clicks. Impressions get counted for every 1000 impressions and clicks are registered for every 10 clicks.

Page CTR

Page CTR stands for page click through rate. This is the ratio of clicks/impressions. The math for this is:
page CTR= (clicks/10)/(impressions/1000)
For E.g.: If you had 300 impressions and 10 clicks. Your page CTR would be 3.33%.

Page Ecpm

This decides the revenue generated for a day. It the effective cost per thousand impressions.
Earning's/(impressions/1000)
Ad Slot eCPM = Cost Per Click x Click Through Rate x 1000 / 100
For E.g.: If the earnings are $100 for 2000 impressions. The ecpm would be 100/2 or $50.
Ad Slot eCPM refers to the calculation of eCPM based on pay per click rates for ads. These rates vary for different placements and according to the advertiser's bids.

Channels

Channels are the different ad formats used for different needs. Skyscrapers, leaderboards, 480x60. Depending on your page user's and traffic, channels have to be selected.
For E.g.: If you decide to place Skyscraper ads on your home page and leaderboards & 480x60 on other pages, eCPM will vary for different channels. Depending on where they are placed. This is known as ad placement optimization. To get, maximim eCPM you must test your ads on different pages for user behaviour.

Conclusion:

To derive good earnings on your report, you have to optimize the settings of your ad placements. Channels help you to optimize your earnings according to user behaviour. Page CTR is the ratio of clicks per impressions. And, eCPM is the ratio of your earning's per 1000 impressions. Ads placed on pages deriving high number of impressions, but low click rates will not convert to earnings. And, ads placed on pages with high number of clicks and low number of impressions will also fail. A healthy combination of impressions and clicks will result in earnings, which can also be termed as the "Earnings Ratio".