Coming up with a price structure for advertising on your website is more of an art than a science. If you price your ad spots too high, nobody will want to advertise (or they won’t renew), and if you price it too low, you could leave a lot of money on the table. So the question becomes, “how much do I charge for advertising on my website?”
Here are the things I think you need to consider when coming up with your website’s pricing:
Prices other sites are charging
- Media buyers and advertisers want to determine how much a customer acquisition will cost them on your site vs. other websites. If your site gets 1,000 visits a month and charges $200/banner and another site gets 10,000 visits a month and charges $350 for the same banner and placement, you can probably guess where they will spend their money. Perhaps they will run a test with you if you’re lucky, but your pricing should be realistic.
Audience interaction with your website
- The more comments people post, the more engaged your readers tend to be with your website. If they are interacting with your site, you have a captive audience. Other examples of interaction are Twitter re-tweets and will soon be Facebook Likes once that rolls out further. If people recommend your site to others, advertisers will probably want to be there.
Traffic to your website and rankings (Compete/Alexa/Quantcast).
- Everyone uses different analytics sources it seems, but the metrics companies generally don’t lie. If you say your website gets 2,000 unique visits a day and you’re Alexa ranking is 85,000 and Compete is at 100,000, you are probably looking at funky traffic #s or perhaps your stat counter is counting bots. Advertisers don’t want to server advertisements (and pay for them) to bots. Bots don’t buy products 🙂
Comparable cost for a PPC campaign
- If advertisers are paying $2.00 a click on Adsense or other PPC campaign, and they can get more clicks (that are targeted) from your site with the same sales rate, they will probably want to advertise. Determine the going rate for an Adsense campaign on a site like yours and test how many clicks each banner spot typically gets (using internal banners or affiliate banners that track clicks) and price accordingly.
How targeted your site is
- You can charge a lot more for your website if you get considerable targeted traffic. If lots of people are coming to your site to learn something specific or to read about something specific, they all become potential targets for advertisers. If you have a very broad website, many advertisements won’t be relevant to the visitors, so advertisers will expect to pay less
Your time commitment
- From an advertiser’s perspective, this isn’t really important, but from a publisher’s perspective, it’s critical. Unless you are independently wealthy, you need to consider the amount of time you put into your website and be paid accordingly. As my business has grown, I couldn’t afford to spend the time and effort writing articles if I wasn’t making enough revenue. I love blogging and sharing, but it just wouldn’t make sense for this to be a detriment to my business growth. Time investment and revenue potential are two things that need to balance for your site to be a financial success.
Nice post – but the alexa ranking poingt is moot – everyone knows alexa is meaningless. A site i visit pretty often Viperchill.com – receives around 1,500 uniques per day – i have sites that receive “a lot” more traffic than that – but languish around 80k – it just depends on who your visitors are – tech/seo/domain related sites will have a higher alexa ranking than Financial/political sites. What i find matters to advertisers is “who” your audience is.
Nice post – but the alexa ranking point is moot – everyone knows alexa is meaningless. A site i visit pretty often Viperchill.com – receives around 1,500 uniques per day – i have sites that receive “a lot” more traffic than that – but languish around 80k – it just depends on who your visitors are – tech/seo/domain related sites will have a higher alexa ranking than Financial/political sites. What i find matters to advertisers is “who” your audience is.
Agreed about Alexa, but Compete is more of a mainstream audience so that’s why I thought it would be good to have both #s.
For instance, Lowell.com is ranked 344,202 in Alexa and 203,312 in Compete.
Hi Elliot and Readers:
Is it possible that anyone can give me a range as to what banners can sell for?
For instance on a small GEO website for a city of 100,000 to 300,000 population, should I be asking from a Marriott $1000 per month, $5000 per month,… I am stumped.
I would add marketing to the list.
The 3 M’s:
Market: Who are your best, most likely ad buyers?
Media: What is/are the best way/s to reach them?
Message: What should you say to them, and how do you say it?
No or bad marketing makes a $250 ad seem like throwing money away.
Great marketing makes the same $250 ad seem like the advertising steal of the year.
A GEO site depends on quantity of traffic you get from uniques to hits. Uniques are the most important while hits will show to the advertisers you’re pitching ad space to that your uniques are looking around.
It also depends on what your website is about. Is it strictly for advertisement purposes or are you actually doing any good for the community of the GEO location?
If you’re constantly updating news, weather, events, and your user base continues to grow, you’re bound to easily ask a good sum. Though do some research, create a fake company name and start contacting other GEO domain owners who are established and receive a good amount of traffic to begin comparing.
@ Steve – very nice way of putting it, you couldn’t put it any easier. Its like the KISS method (keeping it simple, stupid!) which so many people neglect these days.
We’re been charging $20 CPM on our targeted sites. We found that the media buyers want to pay by CPM, not a fixed rate per ad. It’s easy to understand and to sell.
With traffic always increasing every month, the CPM model makes good sense because your revenue grows with your traffic.
Thanks for a great article, and I would love to see more on this topic.
A couple of weeks ago I spent some time looking into this for pricing ad space after getting requests direct from companies. Future articles along these lines would be greatly appreciated.
Mark….it depends if your geo site attracts just local traffic, or a large portion of visitors. The more visitors looking to travel to your city, the more valuable it would be to have Marriott featured for them.
Also, I subscribe to the Castello Brothers way of marketing…that we don’t get involved with CPM or impressions, etc…they need to advertise on the official “brand” of the city….and the reason is: the QUALITY of the traffic is whats important. Let me give you a specific example…although the luxury golf vacation market has changed because of the economy these past 2 years. 3 years ago Scottsdale.com did $800,000 in golf packages, with about a 21% net profit…for every 10 visitors that called/requested a quote for a package, etc. we closed 9 of them. 9 out of 10! The reason is simple….people trusted Scottsdale.com as the AUTHORITY and OFFICIAL site for Scottsdale golf (you MUST have the proper content to back it up…we did…) but there is nobody on any other non-geo website that can boast numbers like these. And I know…prior to owning Scottsdale.com, I had 5-6 generic sites with excellent content…and we closed 2-3 out of every 10 quotes.
The BRAND really does mean something. Let’s take Real Estate for example….when searching, let’s say #1 is BobandBettysFairwayHomes.com and Scottsdale.com/realestate is 9….guess who will get picked? People still assume that Bob and Betty will only have THEIR listings featured…where Scottsdale.com will have ALL available homes listed, along with all other info about the City.
Quality of the customer is what it is all about, and I see it time and time again, as people TRUST City.com sites…
The best potential revenue model for Geos is a CPC rate tied to 75% of what Google Adwords would charge for the most suitable search phrase. For example, the current average Adword rate for “Palm Springs Hotels” is $2.39 a click. Based on this the average PalmSprings.com advertiser should be paying us a whopping $2,868 a month. This is much higher than the $1500 fixed rate we charge for top line hotel advertisers.
Either way, we wouldn’t make a fraction of what we generate now if we were using the CPM model.
CPM is the worst model for high brand Geo traffic because it fails to recognize our extremely high viewer conversion rates. Every Geo I’ve known that has failed was using CPM and/or Google Adsense as their primary revenue model.
Thanks for the great input, everyone.
David, please forgive my brain-stall, but how did you get $2868 from $2.39 per click? Also, wouldn’t you charge a Four Seasons or Peninsula more than a $1500 fixed rate. When you figure they are charging $450.00 per night, I would think that would equate to a higher ad rate. After all, your site is potentially sending multiple stays per day.
The average PalmSprings.com hotel advertiser gets 1600 clicks a month from their PalmSprings.com splash page to their web site. 75% X 1600 = 1200 (we disocount to 75% to make us more attractive versus Google). 1200 X Google’s average Adword advertising rate of $2.39 a click for “Palm Springs Hotels” equals $2,868 a month.
And, yes, you are correct. Even though people are amazed we are getting $1500 a month on a one year contract it’s quite cheap when you break it down.
I have no idea how many rooms my clients are booking, but we have over a 90% re-signing rate so somebody’s making money 🙂 On their site, some may book on-line, but most will call their phone number (which is not trackable from us). What I do know is our traffic has a higher conversion rate than Google because our traffic is Net CPC and Google’s is Gross CPC (and that’s a whole other topic).
If you want to know more, please come to the Geo Expo next week in New Orleans. My brother and I speak about this revenue strategy at 10:45am on Thursday and I can promise you it’s worth the price of admission.
Thanks for the info.
I don’t think I can make Geo Expo this time but I will definitely be there next year. I look forward to meeting you and your brother.