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Formula For Determining Best Rate For Cpm Or Cpc

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I know trial and error may work best as this can vary from niche to niche, but just looking for a starting point.


Up to now I have been subsdising my hosting expanses with Adsense, but I now want to get more seriously into monetizing the site by selling ad banners directly.


I have decided to charge CPM as opposed to CPC.


I was interested in what others here think is better, and what you have found to be reasonable charges for either in your niche.


I wondered if there is a useful way to work out what is the best price so that I'm not undercharging or overcharging. Is there some formula based on what i was getting with Adsense? Obviously I should be earning more via selling banners direct or it is not worth doing.


For example if Google were paying me £100 p.m for 200,000 views, that is 50p per 1000. So I'm thinking £1 per 1000 so at least I double my earnings.


What do you think? More than that?

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I now want to get more seriously into monetizing the site


Yes... I get that itch a couple times per year and have been through the cycle quite a few times.


Here's a list of the most profitable things that I have done.....


1) Decide that I am really willing to show ads. You can show an awful lot of ads and make very little money if you really hate ads and don't want to show them. I want to put two ads above the fold in the most prominent positions possible. I hear lots of people say that they want to make money from ads or complain that they aren't making much..... but an underlying tone in almost everything they say is an underlying curse about how webmasters treat their visitors poorly.


2) Decide to keep the focus on my content and the focus on my ads. What's that mean? It means that you gotta toss everything else overboard. Get rid of the artsy-fartsy design and the colorful design at the top of the site and around the edges. The webpage should consist of the domain name, a search box, the two ads and the content. That's all. Design elements should not be in the competition. If you gotta have an artsy-fartsy design it is either going to obscure your content or obscure your ads. Most newspapers get this and their pages look as described above.


3) Redesign my site to put those ads up there and accomplish #1 and #2. For most of the pages on most of my sites I have a placement above the design that can accommodate the various sizes of leaderboard ads, and a placement at top left or top right that can accommodate skyscraper or rectangle ads.


4) Redesign my redesign and redesign again... and again... and again. Where you put those ads and the sizes and shapes that you use have an enormous impact on your revenue. I have been willing to do tear up my site and do massive work to change ad positions. And through that process I've kept records about the location and the sizes of the ads and how well they have performed. Some presentations make 10x more money than others. If you want to make money you should be willing to experiment. (This used to be easy, but now, with mobile, I am still working to figure this out again.)


Now... after we have done the above we are starting to approach your original question... the real value of the ads.... and that gets us to....


5) Realize that different parts of the same site and different placements on the page have different values. I have a site for an industry vertical, and as most industries there are many different content topics and many types of content within each topic. Some parts of this site might earn a PAGE RPM of $0.50 and other parts of the site might earn a PAGE RPM of $10.00. Why the differential. Some of those pages might be about really valuable topics with closely related products, some might be grab and go content consumed by visitors who are not easily distracted, some might be viewed mostly by mobile visitors, some might be techy content and the majority of your visitors are running ad blockers. (When I have sold ads directly to companies and organizations, I did my best to match their objectives to the portion of my site that would best serve them and charge them accordingly, at least 2 to 3 times what adsense might make for the same ad size in the same page location).


6) Compete ads against one another. This can be done using Google's DoubleClick ad sever. They will allow you to use it for free. The cost to you will be a very steep learning curve (at least it was that way for me and still is). With the ad sever you can tell Google the value that someone is willing to pay for an ad in a certain location of your page, shown to a certain demographic, and other variables, and Google will show that ad if they can not beat the yield with Adsense. Once I started running Adsense with another ad network competing with it, that was when I started making much better money. (Be really careful here. You've got to be good at math to cypher out all of the CPMs, fill rates, defaults, etc. to make sure that you are not screwing yourself. Ad networks often make data presentations that require you to do the calculations backwards to get the real answer. :-)


7) Get into the competition yourself to kill bottom fishin'. Then I started competing ads for my own retail sites against both Adsense and the ad network. With that impressions worth less than a certain amount are given to my retail, which sells products highly related to the website. Since the 4th, 5th, 6th, etc ad shown to each visitor has a declining value to most advertisers... I figure that the people who really like my sites are the best ones to market relevant products to. And, bidding on the bottom side of your ad value keeps weasels from paying ten cents per thousand to get stinky ads on your site.


8) Beware of the ad weasel. The web is haunted by an animal that scours websites who offer to sell ad space. These people are professional negotiators, expert mathematicians, and purebred weasels. They know how to get ad space from people in a way that it takes them a several months before they realize that they are being screwed. If you are offering your ad space to other people, the best thing to do is get a specified payment up front and not a revenue share calculated after the fact. I have wasted so much money and employee time on ad weasels, I now shoot them on sight. My site would be a lot bigger and a lot better if I had never given time to these weasels.


9) Charge for space by the month. Almost all of my ads are delivered by Adsense and another ad network that I have used for many years. However, I do sell a little bit of space on premium pages to a couple buyers. I don't charge by the impression or by the click or by the acquisition. I charge by the month and the buyer pays in advance or his ad comes down at midnight on the last day of his term. The DoubleClick ad sever takes the ad down automatically. Late payment? No sweat. We start the term when your money gets here and turn it off automatically. Charging by the month is so easy and charging for impressions or clicks is subject to accounting and arguments.


10) You run the show or the show will run you. My goal isn't to be in the friggin' ad business. My goal is to run the website. So, when people want me to try their ad network, I've done that enough times to know that 99% of them are not worth the time and the search for the 1% that can beat adsense isn't profitable. When people ask me about running ads on my site, I give them a price for a certain placement and that is the friggin' price. We are not in the hagglin' business, we are in the website business, so you either take my first offer or we are done talkin'. And, we don't allow you to run a test on the site. The minimum is three months or $1000. That's it. Most people who buy ads on websites know what the ad is worth better than the webmaster. So, if the webmaster has a price that he wants he shouldn't be talked down or talked into a test.



The above is my biased personal opinion. What works for me might not work for you. I don't like sellin' ads and talkin' to many of the folks who buy them.


iamlost knows 10x more about ads than just about anybody. If he posts here, read what he says two or three times and there are plenty of threads on this forum where he gives spectacular opinions, though much of it is for people with more brains and resources than me.

Edited by EGOL
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What EGOL said.
Except for the last bit. I know very little about ads, a fair bit about marketing, though.

And if you are going to sell ad space that is what you are going to be doing: marketing.

Way back when (aka ~15 years ago) I expected to be doing eCom and was building out info sites as traffic drivers prior to building the eCom hubs; affiliate stuff was paying the bills on the way. Way off in the distant future was an idea about how to do ads differently and selling ad space direct. Then came AdSense. Ads became THE driver of the web's expansion. Reams of sites, and not just those MFA, became viable because of AdSense. All the others, the other text ad networks, the ever with us banner ads, were simply filler, AdSense was the active ingredient.

And because of AdSense my distant, way over the horizon, vision of direct sell ad space became possible NOW and eCom hubs were dropped from the business model. You have a couple of advantages I didn't back then: (1) you are part of the industry your site is about and (2) ads are far more understood/mainstream/appreciated than a decade ago.

I spent 2-years going, not to webdev gatherings, but to my sites' niches' industry conferences and to advertising conferences. It is hard to remember how non-web focussed industry and ad agencies were back then. After 2-years I made enough of a case to one ad guy that he talked one of his accounts into a 6-month free trial. The trial that made my fortune, such as it is.

To step back a bit:
What EGOL said about page and even page location value is true. An additional point is that that value is not the same for every advertiser: what is valuable to one may not be to another; which is a good thing from an ad seller's perspective. One added value an ad seller has is to match the ad space buyer with the appropriate spaces at appropriate pricing.

I divide a site into nine, three sets of three. Simplified it's first best, better, left over. :) and each of those is divided into good, better, best. Nine price points or combinations thereof. Specifically for each ad buyer.

One thing I don't think EGOL does that I do is that if I've sold ad space on a page there is no competing ad, definitely no AdSense. Exclusivity costs more. :)
Note: I do still run affiliate pre-sell on those pages unless the ad buyer also wants to set up an affiliate relationship as well...

I make a 40 minute presentation to each potential ad buyer. A third on the history and current state of the web and where their preferred audiences are; a third on my site(s), their business, and how much of each of those preferred audiences I can direct to their benefit; and a third on available ad space and value. I guarantee a minimum site traffic volume below which they get refunds (only happened once and that got covered!, knock my wooden head); contract by the year billing by the month ahead; a typical contract is for 2-years with a possible 3-year extension (max 5-years total) at a fixed rate. Initially the rates were fairly low and it was 6-months with 2-years, providing value they can put real numbers on has given me the power of a waiting list and many times those initial rates.

By being a member of the target industry with a site about/for it puts you at least 2-years ahead of the game. You know each other, you know what they need/want/desire, all you need do is put the right package together and take a few folks out to lunch, dinner and market your value. Simple yes, easy? not so much.

You do need to do some research on the value of ads, both third party network and direct sell space, generally and in your niche. Generally, banner ads are the cheapest because they have the least CTR and most associated ad blindness. However, every niche/site is different.

One possibility for direct ad space is the possibility of selling added value. I touched on this in several posts including:
* Lift Up Your Eyes From The Adsense Plains, Cre8, December-2007.
* Lift Up Your Eyes II, Cre8, July-2008.
Note: just replace every mention of 'Flash' with 'video', OK? :)

'Ads' do not have to be what most people think they are. Be creative, this is Cre8 after all!

Happy to answer questions if I can.
I'm all for putting third party ad networks out by the curb with the rest of the trash!

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Many thanks for these very useful replies and resources.

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