What does 'Monetize' mean

To monetize is to convert an asset or object into money or legal tender. Basically, it's the process of turning a non-revenue generating item into cash. The term "monetize" has different meanings depending on the context. Governments monetize debt to keep interest rates on borrowed money low and to avoid a financial crisis, while businesses monetize products and services to generate profit.


Monetization goes hand-in-hand with capitalism — and is just about as old. The process of monetizing is very important to a business or other entity's growth as it is key to its strategic planning. 

Types of Monetization

The U.S. Federal Reserve monetizes the nation's debt by buying notes, bills and bonds – collectively known as Treasuries – issued by the U.S. Treasury. The Fed issues the government credit, which the government uses like money for its operations without actually having to print any excess money. This type of monetization puts the government's debt on the Fed's books and puts money back into the system. Although considered a less desirable option, governments can also buy their own debt by printing money out of thin air, which increases the money supply but causes inflation.

Web publishing and e-commerce activities have made monetization a well-known concept among average Americans. Website owners monetize their websites by making spaces available to advertisers, thereby earning income from various types of content published on their sites. More sophisticated forms of web monetization involve creating sales funnels from subscriber lists and producing e-books from previously published content.

Government Debt Monetization Example

For simplicity, say the government needs $50,000 for a social program. It raises $45,000 through taxation but still needs $5,000. The government can either borrow the money, print the money, increase taxes or reduce spending. The government decides to borrow the money from the public by issuing $5,000 in bonds and offering bond buyers favorable interest rates. The government now has the money it needs – $45,000 raised from taxes and $5,000 raised from the bond issuance – for its social program.

Monetization in Commerce

When people browse websites and click on advertiser links, website owners — which may be individuals or large media companies — earn a small amount of money. Website owners may also be paid for the number of times site visitors see advertisements without engaging with them, depending on the nature of arrangements with advertisers. If a website attracts enough visitors, the money paid by advertisers can add up to substantial earnings. If a particular website has proven traffic stats, companies may pay more to place advertisements on the site's home page or certain pages that attract large numbers of visitors. Selling apps and subscriptions, and producing multimedia content such as videos and podcasts, are additional ways businesses monetize content.

  1. Banner Advertising

    Banner advertising refers to the use of a rectangular graphic ...
  2. Government Security

    A government security is a bond (or debt obligation) issued by ...
  3. Comparative Advertising

    A marketing strategy in which a company shows how its product ...
  4. Flighting

    An advertising scheduling strategy in which a business alternates ...
  5. Cash Equivalents

    Cash equivalents are investment securities that are convertible ...
  6. Advertising Federation Of America ...

    A regional advertising group based on the U.S. East Coast that ...
Related Articles
  1. Insights

    Debt Monetization: A Nearsighted Government Policy?

    We look at whether this financial practice benefits a government in the long term.
  2. Insights

    Valuing And Investing In Internet Companies

    How do we pick the right names to invest in from this highly lucrative sector?
  3. Investing

    Twitter 2Q Outlook: Will They Ever Figure It Out?

    Twitter is expected to post dismal 2Q earnings as it struggles to monetize its massive social-media platform.
  4. Financial Advisor

    How to Sell Life Insurance Online

    Life insurance brokers can increase sales by marketing online. However, no website or digital marketing strategy can be good enough to replace sales ability.
  5. Small Business

    Trends And Growth In The Digital Advertising Industry

    The rapidly expanding digital advertising industry is leading a shift towards content and demanding forced innovation.
  6. Investing

    Facebook’s Instant Articles Isn’t Resonating With Publishers (FB)

    Facebook's Instant Articles feature, which serves up compatible content in nearly real time, is no longer resonating with publishers.
  7. Insights

    5 Ways to Create Residual Income

    Here are 5 ways through which you can create residual streams of income.
  8. Small Business

    Digital Advertising Is The Future, But Why? (ZNGA, GOOG)

    Digital advertising has outgrown the internet.
  9. Investing

    Explaining Government Bonds

    A government bond is a debt security a government issues.
  10. Financial Advisor

    How to Nail Your Advisory Firm's Website

    Your website can be your most powerful tool for generating leads and establishing credibility and expertise. Here are tips on how to maintain it.
  1. What metrics are commonly used to evaluate companies in the internet sector?

    Discover the best metrics to evaluate Internet companies. Internet companies are unique in that their costs are low but potential ... Read Answer >>
  2. What are some different kinds of expansionary policy?

    Learn the most popular types of expansionary policy used by the federal government and the Federal Reserve to increase the ... Read Answer >>
  3. How do debt issues affect governments' abilities to run fiscal deficits?

    Read about whether or not debt issues affect the federal government's ability to run fiscal deficits, and find out what those ... Read Answer >>
  4. What are the key differences between marketing and advertising?

    Understanding the role advertising plays in the marketing mix will help business owners define their promotional strategies ... Read Answer >>
Hot Definitions
  1. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  2. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  3. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  4. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  5. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
  6. Restricted Stock Unit - RSU

    A restricted stock unit is a compensation issued by an employer to an employee in the form of company stock.
Trading Center