What Is Advertising Revenue?

According to WPP’s Mid-year 2025 Forecast, global advertising revenue is projected to reach $1.08 trillion, with digital channels accounting for approximately 73.2% of total spending. 

Yet the concept of what advertising revenue is still puzzles many. Understanding how it works (and how much businesses actually make from ads) can feel overwhelming if you’re planning to launch a website, blog, or app. 

This article will break down what advertising revenue is, how it’s calculated, why it’s central to the modern digital economy, and what to expect in the future.  

Let’s dive in! 

What is Advertising Revenue? 

Advertising revenue (often shortened to “ad revenue”) is the income a publisher or media owner earns by selling access to its audience to advertisers.  

In practice, this means that websites, apps, streaming services, newsletters, podcasts, TV/radio networks, social platforms, and retail media channels receive payment to display or deliver ads to their users.  

Ad revenue is the counterpart to ad spend. Advertisers (brands and agencies) spend their budget to reach people; publishers receive that money as revenue for making those ad placements possible. This is how ads make money for media owners: they exchange attention and distribution (their audience) for payment from advertisers. 

Any income from selling advertising inventory and placements across various formats (display, video, audio, native, search/shopping, and sponsored placements) and channels (web, in-app, CTV/OTT, email, podcasts, DOOH, etc.) is considered ad revenue.  

Revenue is typically recognized when the ad is delivered (e.g., an impression is served), as specified in the contract or platform terms. 

Ad revenue matters because it underwrites a large share of the free content and services people use every day. For publishers and creators, it’s a core business model; for advertisers, it’s a way to reach defined audiences at scale. 

How Ads Make Money: Understanding How Ad Revenue Works 

Before exploring how ads generate revenue, it’s essential to understand who participates in the ad revenue ecosystem and the roles they play. Once you know the key players, the flow of money and value becomes much clearer. So, there are 3 main sides: 

The Buying Side 

• Advertisers – Businesses, brands, or agencies that pay to show ads and reach specific audiences. 
• Ad Exchanges – Digital marketplaces where advertisers bid in real time to display their ads in front of the most relevant users. 
• Demand-Side Platforms (DSPs) – Automated tools that allow advertisers to manage, optimize, and purchase ad placements efficiently across multiple channels. 

The Selling Side 

• Publishers – Websites, apps, video platforms, or social media pages that provide space for ads to appear. 
• Supply-Side Platforms (SSPs) – Technologies that help publishers sell their ad inventory to the highest bidder through multiple ad exchanges. Examples of SSP and ad management solutions include platforms like Sevio Ad Manager. 

The Middle Layer 

• Ad Networks – Companies that connect advertisers with publishers, ensuring that ads are matched with suitable content and audiences. 

Now that you know the main actors, here’s how the process typically unfolds: advertisers purchase ad space through ad networks, exchanges, or direct deals with publishers. SSPs help publishers connect to these buyers and secure the most competitive bids for their available ad slots. 

Once a deal is made, the publisher’s platform (website, app, or video feed) displays the ads to its users. As users view or interact with those ads (through impressions, clicks, or conversions), advertisers measure engagement and effectiveness. Based on these results, revenue is then calculated and distributed to publishers. 

In simple terms, this is how ads generate revenue: advertisers pay to access an audience, and publishers earn money by delivering that access. The more relevant and effective the ad placements, the greater the value exchanged between both sides of the ecosystem. For a practical example, read the section below. 

Advertising Revenue Formula and How to Calculate It 

Note that there isn’t a single universal formula, as ad revenue depends on the advertising model used (such as CPM, CPC, or CPA) and the platform’s performance metrics. 

Here’s how to calculate ad revenue using the most common models: 

• CPM (Cost per Mille): Ad Revenue = (Total Impressions × CPM) ÷ 1000 

Used when advertisers pay for every thousand impressions (views). For example, if a campaign has 500,000 impressions at a $2 CPM, the ad revenue equals $1,000. 

• CPC (Cost per Click): Ad Revenue = Total Clicks × CPC 

Common in search and display advertising. If an ad receives 2,000 clicks at $0.50 each, it generates $1,000 in ad revenue. 

• CPA (Cost per Action): Ad Revenue = Total Conversions × CPA 

This model focuses on specific actions, such as sign-ups, purchases, or downloads. If 300 conversions occur at $5 each, the total advertising revenue equals $1,500. 

In practice, many platforms (including Sevio Ad Manager, Google Ads, and Meta Ads) use a hybrid model, combining these approaches to balance impressions, clicks, and conversions. The exact calculation depends on advertiser goals, campaign type, and traffic quality. 

To understand how much ads make, publishers often monitor key performance metrics such as: 

• eCPM (effective Cost per Mille) – Indicates average earnings per 1,000 impressions across all ad formats. 
• Fill rate – Measures how much of a publisher’s available ad inventory actually gets filled with paid ads. 
• RPM (Revenue per Mille) – Common for website owners; it shows how much revenue a page generates per 1,000 views. 

For those interested in deeper insights into ad revenue optimization, we’ve covered practical strategies in a separate article dedicated to improving performance and ad earnings. 

For a practical example of how much ads make, let’s consider a website that records 250,000 monthly page views with an average of 1.5 ad units per page, resulting in approximately 382,500 ad impressions. 

If the site earns an average CPM of $5, the monthly advertising revenue is calculated as: 

382,500 impressions ÷ 1,000 × $5 = $1,912.50 

This means the website earns approximately $1,912 per month from CPM-based ads alone. 

To measure efficiency, we calculate eRPM (effective revenue per thousand pageviews): 

eRPM = (Total Revenue ÷ Total Pageviews) × 1,000 = ($1,912.50 ÷ 250,000) × 1,000 = $7.65 

This indicates that the site generates approximately $7.65 for every 1,000 page views through display ads. 

Actual results may vary depending on traffic quality, ad placement, and viewability; however, this example illustrates how CPM-based advertising revenue is calculated in practice. 

Who Benefits from Advertising Revenue? 

Advertising revenue impacts almost every corner of the digital economy. Here’s a closer look at who earns ad revenue and how ads make money for different players: 

1. Media Companies & Publishers – Traditional and digital publishers (from newspapers and TV networks to websites and streaming platforms) rely heavily on ad revenue to sustain their operations and create content. Website advertising revenue remains one of the most accessible income streams for online publishers, especially those offering free content. 
2. Social Media Platforms & Search Engines – Companies like Google, Meta, TikTok, and X (Twitter) generate billions in advertising revenue by selling access to their massive user bases. In 2024, search and social platforms accounted for over 60% of global digital ad revenue, according to WPP Media’s market data. 
3. Content Creators & Influencers – Creators on YouTube, podcasts, or blogs earn ad revenue through monetization programs, brand sponsorships, and affiliate links. For large publishers, tools like Sevio Ad Manager simplify the process of managing ad placements and measuring results in a single, unified dashboard. 
4. Businesses & Brands – Advertisers benefit indirectly: they pay for exposure but gain sales, brand awareness, and audience insights in return. In other words, advertising revenue circulates through the ecosystem (what advertisers spend becomes publisher income, powering the entire digital media economy). 
5. Consumers – Although they don’t receive ad revenue directly, users benefit by accessing free or low-cost digital services, apps, and media experiences supported by advertising. 

Challenges in Advertising Revenue Generation

Despite its lucrative nature, advertising revenue is not without challenges:  

1. Ad Blockers & Privacy Regulations – The rise of ad-blocking tools and stricter data privacy laws limits targeting capabilities and ad visibility. According to Backlinko, around 31.5% of internet users worldwide use an ad blocker. This means that nearly 912 million users are actively avoiding digital ads. 
2. Market Competition – With numerous platforms competing for advertisers’ budgets, standing out and maintaining ad revenue streams can be a significant challenge. Recent data from eMarketer shows that five companies, including Google, Meta, and Amazon, will control nearly 70% of the U.S. digital ad market, leaving limited room for smaller publishers. 
3. Changing Consumer Behavior – Users are increasingly preferring ad-free experiences, driving the growth of subscription-based and premium content models.  
4. Economic Fluctuations – Advertising budgets are often among the first to be cut during economic downturns, which can impact revenue streams.  
5. Algorithm & Policy Changes – Platforms like Google and Meta frequently update their ad policies and algorithms, impacting revenue strategies. 

How Advertising Revenue Is Regulated Worldwide 

There is no single law that governs advertising revenue directly; however, several global regulations influence how the digital advertising ecosystem functions and how money flows between advertisers, publishers, and platforms. These frameworks focus on privacy, transparency, and fair competition, all of which determine how revenue is generated, shared, and optimized. 

1. General Data Protection Regulation (GDPR) – Europe 

The GDPR, implemented in 2018, remains the most influential privacy regulation worldwide. It requires clear user consent before personal data is collected or used for targeted advertising. For ad-based businesses, GDPR limits how data can be monetized and increases compliance costs. Penalties for violations can reach up to 4% of annual global turnover, which directly impacts profit margins and ad operations across Europe. 

2. California Consumer Privacy Act (CCPA) – United States 

The CCPA, which has been in effect since 2020, grants users the right to know how their data is collected and used. Advertisers must now disclose data practices and offer simple opt-out options. This regulation has accelerated the shift from third-party data toward first-party and contextual targeting. Non-compliance can result in fines of up to $7,500 per violation and long-term damage to the company’s reputation among consumers. 

3. Digital Markets Act (DMA) – European Union 

The DMA, which takes effect in 2023, targets dominant “gatekeeper” platforms, including Google, Meta, and Amazon. It seeks to prevent market abuse and increase fairness in the digital advertising supply chain. By opening data and access to smaller platforms, the DMA could gradually redistribute ad revenue and improve competition, especially for independent publishers. 

4. Children’s Online Privacy Protection Act (COPPA) – United States 

COPPA regulates the collection of personal data from children under 13 years old. It restricts behavioral targeting in content for minors, encouraging a shift to contextual ads. This reduces potential ad revenue from children’s media but protects companies from compliance risks and strengthens trust in family-oriented content. 

5. Personal Data Protection Law (PDPL) – China 

China’s PDPL, effective since 2021, is similar to the GDPR but includes stricter data-localization rules. Companies must process and store user data within the country, and cross-border data transfers require official approval. This increases operating costs and limits international ad campaigns, affecting how global programmatic revenue is tracked and reported. 

6. Digital Personal Data Protection Act (DPDP) – India 

India’s DPDP Act, enacted in 2023, outlines the guidelines for companies to collect, store, and process personal data. It introduces user rights for access, correction, and deletion, while requiring transparent data use. For advertisers, it reinforces the global trend toward privacy-first advertising and forces investment in secure, compliant data infrastructure. 

The Future of Advertising Revenue

The global advertising industry entered 2025 with renewed strength. As already mentioned at the beginning of the article, WPP Media’s mid-year forecast estimates total ad revenue at $1.08 trillion, reflecting a 6% annual increase and confirming the market’s second consecutive year above the trillion-dollar mark. While growth has slowed slightly compared with 2024, this moderation signals maturity rather than stagnation.   

Similarly, WARC’s Global Ad Spend Outlook projects total spending to reach $1.17 trillion, representing 7.4% year-over-year growth, supported by steady digital investment that now accounts for about 73% of total global budgets. 

This dominance of digital advertising reflects an entire shift in how value circulates within the media ecosystem. Traditional channels continue to contract, while data-driven environments such as programmatic, social, and retail media keep expanding.  

Retail media alone is forecasted by Dentsu to grow by 13.9% in 2025, capturing nearly one-fifth of global ad budgets. Meanwhile, Connected TV (CTV) continues to transform video monetization, with PwC’s Global Entertainment and Media Outlook (2025–2029) projecting $51 billion in CTV ad revenue by the end of the year.  

However, Pixalate’s 2025 report reveals that around 18% of open-programmatic CTV inventory is still affected by invalid traffic (IVT), reinforcing the need for transparency, verification, and better traffic quality management. 

Beyond format changes, 2025 has brought a deeper evolution in how campaigns are executed and measured. IAB’s 2025 Digital Advertising Outlook shows that projected U.S. ad spend growth was revised from 7.3% to about 5.7%, reflecting tighter budgets and more selective investment. 

Even so, the overall market remains digital-first, with linear TV ad spending expected to decline by 14% as advertisers continue shifting toward performance-driven platforms.  

The delay of Google’s third-party cookie deprecation offered temporary relief. Still, it also underscored the need to develop first-party data strategies, contextual targeting models, and privacy-compliant monetization frameworks. 

As Tiberiu Stingaciu, Head of Business Development at Sevio & Coinzilla, observed in his 2025 analysis of ad tech trends: 

“Privacy rules got stricter, new state laws in the U.S., and tighter EU regulations mean we’re not just checking boxes anymore; we’re redesigning how value is exchanged. Third-party cookies are still here (for now), but it’s less about when they go away and more about what you’ve done to prepare. First-party IDs became the standard, SSPs and DSPs are overlapping, and AI started doing actual work.” 

His perspective sums up the broader mood of the year: advertising revenue growth is no longer about scale but about sophistication. Automation, privacy, and platform convergence have become the core principles defining the industry’s stability and future potential. 

Looking ahead, we can expect several major developments to shape the next era of advertising revenue: 

• AI-Driven Forecasting and Dynamic Pricing – Artificial intelligence will advance beyond creative automation to manage predictive yield, bid optimization, and dynamic pricing.  
• Privacy as a Strategic Advantage – As data regulation expands worldwide, privacy will evolve from a compliance requirement to a source of competitive differentiation. Companies that design monetization systems around user trust and transparent consent will achieve more sustainable growth. 
• The Expansion of IoT-Based Advertising – As connected ecosystems grow, new inventory types will emerge. From smart vehicles and voice assistants to in-home screens, the Internet of Things will create measurable and context-aware ad opportunities. 
• Rebalancing Market Power and Transparency – Ongoing antitrust actions and policy reforms, such as the EU’s recent ruling against Google, signal a broader push for accountability. These changes could open the door for independent publishers, SSPs, and ad networks to claim a larger share of global advertising revenue. 
• Strategic Ad Revenue Optimization – Optimization will mature from an operational function into a long-term strategy that integrates performance, sustainability, and user experience. More innovative automation tools will allow publishers to align monetization goals with audience retention and content quality. 

FAQ 

Final Thoughts  

So, understanding what advertising revenue is and how it works is essential for anyone building a digital business in 2025 and beyond. With global advertising revenue already exceeding $1 trillion, the industry continues to evolve toward smarter automation, data transparency, and privacy-first monetization. 

Whether you manage a website, app, or media platform, success depends on understanding how ad revenue is created, measured, and regulated.  

Those who adapt to these changes will be best positioned to grow sustainably in a digital economy where data, trust, and relevance define long-term value.