How to calculate mobile advertising revenue

Unless you’re a developer comparing earnings between mobile ad networks, you won't encounter many instances where you'll need to calculate the revenue you’ve been generating from ads. Fortunately all you have to do to find your earnings is eye the data using an ad analytic platform of your choosing. But for the sake of better understanding the mobile advertising landscape, we'll take a look at how ripples in various variables might affect your revenue.

F.Y.I. You'll have a better understanding about how fill rates, eCPMs, bid prices, inventory, and other metrics might affect not only your earnings, but also ad networks and even the mobile advertising industry as a whole.

How to calculate mobile ad revenue

We’ll start with the eCPM formula, which we’ll pick apart to calculate earnings. If you remember the eCPM equation, it looks something like this:

eCPM = earnings / impressions

To extract the mobile ad revenue formula from this, simply rearrange the equation by multiplying impressions and eCPMs: Revenue = eCPM x impressions

That's easy enough.

You can extract a more specific revenue equation by breaking down the equations for impressions and eCPMs. Impressions can be found by multiplying total ad requests by the fill rate. And multiplying the click-through rate, install rate, and bid price determines the eCPM. What you get from this is: Revenue = ad requests x fill rate x CTR x IR x bid x 1000

Note that CTR x IR calculates the revenue you might generate from a CPI advertiser. To calculate revenue from a CPC advertiser you would simply remove IR from the equation.

By breaking down the formula for revenue this way, you can clearly see why any increase or decline in each metric outlined in the revenue equation will influence the revenue you have been or could be earning.

For instance, if you know that bid prices tend to decline when advertisers tighten their ad budgets post-holiday season, you should now understand why eCPMs and ad earnings will decrease after the holidays. Or you might finally have a better idea for why developers that are revenue conscious will favor mobile ad networks that serve high fill rates.