So, far we have already discussed What is Google AdSense? and How does it works?. Now its time to dig a litter deeper into understanding on what basis Google AdSense pays its publishers. But in order to understand how Google AdSense pays, you first have to understand certain terms related to Google AdSense, such as Estimated Earnings, Finalized Earnings, Page Views, Clicks, Page Click-Through-Rate (CTR), Cost-per-Click and Page Revenue-per-Mile (RPM). Now lets discuss about each term in detail.
Estimated Earnings: It is the estimated amount of money which you earn on a particular time frame (day, weeks or months). These are not your actual earnings but only an estimate. Your actual earnings are added to your account after every month. In some cases estimated earnings can be more than actual earnings.
Finalized Earnings: These are your actual earnings. Finalized earnings are credited to your account at the end of each month. Finalized earnings are sometimes less than estimated earnings. The lost money is what Google thinks came from invalid ad clicks. This is the amount that features on the payment check.
Clicks: It is the number of times an ad unit was clicked on a certain time frame (day, weeks or months).
Page view: As the name suggests, a page view is reported every time a reader
views a page displaying Google ads units. Only one page views is counted at a
time regardless of the number of ads displayed on that particular page.
For example, if a page displays 3 ad units and it is visited twice then
two page views is counted.
Page Click-Through-Rate (CTR): Page CTR is the number of clicks on ad unit divided by the
number of page views. CTR
determines how often the visitors click your ad units or in simple words out of total number of people who visit your page, how many of those visitors actually clicks on ad units. This formula says it all.
CTR = ( Clicks / page views) x 100%
For example, suppose on one fine day 1000 visitors visits a page showing AdSense ad units and out of those one thousand visitors 10 clicked on the ad units, therefore the page CTR will be:
CTR = ( Clicks / Page Views ) x 100%
CTR = ( 10 / 1000 ) x 100%
CTR = 1%
Note: Page CTR directly impacts your earnings. So, in order to earn some some money you have to make sure your page CTR remains healthy.
Cost-per-click (CPC): After Page CTR next comes cost-per-click (CPC). CPC is the amount of money you make each time a visitor
clicks on an ad unit. This amount is fixed by the publisher through Google AdWords Program so, you have no control over it. CPC is highly keywords specific in Google AdWords advertisers bid on certain keyword therefore different
keywords have different CPC. CPC also varies depending on different countries. If a visitor from a developed country clicks on an ad unit, you get more CPC as compared to a visitor from developing or under developed country.
Note: after page ctr, cpc is the next important thing as it directly affects your earnings. You have no control on cpc all you can do is target readers from developed countries and use cpc rich keywords on your online content. Since, cpc is set by Google Adwords so I recommend that you should do your keyword research using AdWords own keyword tool.
Page Revenue-per-Mile (RPM): Page RPM is the revenue earned per thousand impression this is Google's way of ranking your page and it is not the amount which you will get if 1000 visitors visits your page. It is a technical way of representing how much you earn for every 1000 page visits.
For example, suppose yesterday you earned $50 from 5000 page views, then your page rpm will be:
RPM = ( Estimated Earnings / Page Views ) x 1000
RPM = ( 50 / 5000 ) x 1000
RPM = $10
Note: sometimes Google also considers Page RPM while deciding upon CPC for ad units on your page.
Now, that you have understood what the above mentioned terms mean, its time now to see how Estimated Earnings are calculated. This formula explains it all.
Estimated Earnings = (Page CTR/100) x Page views x CPC
For example, suppose on one fine day your page received 5000 visitors out of which 50 clicked on ad units which carried a CPC of $1 then your estimated earnings for the day will be
EE = (1/100) x 5000 x $1
EE = $50
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