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Moloco Commerce Media GrowthU
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To maximize ad revenue growth, it’s not enough to merely increase advertiser demand. You also need to grow your supply of ad impressions and placements to efficiently utilize budgets, turning dollars into campaign outcomes – and high-margin revenues for your bottom line.
The total ad revenue for any retailer’s website or app is a function of both demand (total available advertiser budgets) and supply (total available clicks to buy). For instance, a seller might have over $1 million in budget to spend, but if your supply is limited or not optimized, only a fraction of that budget will be activated. Unlike ad pricing products like cost per time (CPT), where 100% of the revenue is booked on Day 1, cost per click (CPC) models typically capture only 30-70% of ad budgets – making supply-side optimization even more critical.
Driving supply growth is key to unlocking more ad revenue. Retailers have three main levers to boost this equation: the overall number of impressions, click-through rates (CTRs), and average cost-per-clicks (CPCs). Let's explore each in more detail.
The most direct way to increase overall impressions is to increase the number of ad placements across your site. The more visible the ad placement, the higher impressions will be. Many retailers and marketplaces start with banner ads and sponsored product listings in search and category pages, but there are other formats available across other page types (as detailed in our guide on choosing ad inventory).
An important note: as an ad platform matures, it becomes more challenging to increase impressions through inventory expansion, due to finite digital real estate across any website or app. That's why mature ad platforms are now exploring creative ways to drive more ad impressions through offsite and even in-store ads.
Fill rate refers to how well ad slots are filled with relevant advertised items. When retailers optimize for ad relevance, fill rate can become a constraint as there might be fewer relevant items to match a user’s query or browsing context.
The most effective way to boost fill rate is to increase the number of items advertised on your platform. This requires motivating more sellers to become advertisers (including long-tail sellers), then encouraging them to include more items in campaigns, driving greater product diversity and higher fill rates.
Some site owners might try to boost fill rates by relaxing filters when rendering ad results. However, this decision should be made carefully. Such a technical improvement comes with the risk of showing irrelevant products, which negatively affects your user experience. Consider conducting an A/B test to assess the impact.
You simply can’t generate Ad Revenue if there aren’t enough Shoppers or Browsers looking at your website or app in the first place. Growing your overall traffic (and thus ad impressions) requires a more holistic approach that includes marketing and user acquisition. It can take several months before seeing a recognizable uplift in activity. However, these efforts compound in value over time, and can drive significant long-term benefits for your ad platform.
Improving CTR unlocks more value from existing ad impressions. Higher CTRs mean more engagement from shoppers and more spend from advertisers. Advanced machine learning (ML) algorithms can significantly improve CTR by serving more relevant ads to users based on real-time behaviour, preferences, and intent signals. As sellers increase their advertised item count, ML models have more content to work with – creating even stronger relevance over time.
For example, a leading retailer in Korea used Moloco's ML technology to increase CTR by 21.5% – effectively extracting more performance from existing supply and opening more revenue potential
As your ad product performance improves – thanks to higher CTRs and better targeting – the auction becomes more competitive, naturally raising CPCs. If you have a self-serve ads portal, this activation can scale within days, adding hundreds or even thousands of advertisers into the auction and pushing up average win CPCs.
Another way to boost CPCs is to increase the exclusivity or scarcity of your site inventory – two factors that advertisers are willing to pay more for. Retailers and marketplaces can choose to introduce premium ad placements with higher CPC floors. This might include featured product listings atop Search results, or sponsored brand placements on Category landing pages. These selective spots command higher CPCs, driving up your overall average.
To defend and grow your average CPCs, it’s critical to educate advertisers on the value of your platform. Provide clear metrics around return on ad spend (ROAS) and case studies to demonstrate the effectiveness of higher CPCs. Give advertisers the tools and insights to optimize their campaigns towards better return on ad spend (ROAS), even at higher CPCs, and this positive math can quickly lead to uncapped budget growth.
Scaling your onsite retail media business starts with unlocking supply: more inventory, higher relevance, and more value per impression. By focusing on increasing impressions, improving click-through rates, and optimizing cost-per-click, you can significantly grow your ad revenue, as illustrated here:
Remember, the key to success lies in a holistic approach:
The digital advertising landscape is ever-changing, so stay agile, keep testing new approaches, and always be ready to adapt to new trends and technologies.
Build and grow your advertising business with Moloco Commerce Media
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