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Earning through advertising is one of the most profitable business models on
the Web. From giant media companies such as the New York Times and CNN to
the smallest blogs and web sites on the Web, all information-driven sites
are looking to get a share of the huge Internet advertising pie.
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There are two ways to earn via advertising: by using a third party advertising company to sell your ad space; and by selling the ads yourself. With a third party advertising company such as the contextual advertising network Google Adsense or banner advertising network such as Burst Media, the hard task of selling the ads for your space is already done for you. The downside, however, is that you get to keep only a certain percentage of the revenues and you have less control as to what types of ads are shown in your site.
If you sell the ads yourself, you get 100% of revenues and you can select which types of ads you want shown on your website. The task, however, is not simple, as you need to find these advertisers yourself.
The key question you will be faced is how much you should charge for the ads.
It is important to note that traffic is not the only consideration in setting the price.
There are different factors to consider when setting a price for the ads on the website:
- How big is the site's traffic? A site that attracts millions of users a month can charge higher rates than a site that attracts only hundreds of users per month.
- How established is the brand
name of the site? A web site with an established brand name in its field can charge way more than a no-name site that has never been mentioned in the press or media.
- How desirable is the site's target market? A site that attracts venture capitalists and CEOs can charge significantly higher than a site attracting teenagers, even though its traffic may only be less than 10% of what the teenager site reaches. The higher the income and spending potential of your audience, the higher the price of ads you can charge.
- What is the ad payment going to be? Is it CPM or cost per impression where the advertiser pays for every 1,000 times the ad is viewed? Or will you charge a flat rate, whether on monthly or annual basis for long term sponsorships? Or are you going to charge CPC or cost per click where you get paid every time the ad is clicked on? Whatever the modality, it is important to have a reliable ad serving system that can help track the impressions and clicks that you can control and the client can access.
- Where is the ad going to be placed? An ad above the fold can charge a higher price than an ad below the fold where it is not going to be readily visible to audiences.
- What is the ad format that is going to be used?
You can charge a higher rate with a leaderboard or large rectangle compared to a 125x125 button. You can also charge more for the more intrusive ads such as above-page or between-pages layer ad units, including EyeBlaster, Eyewonder, CheckM8, Pointroll, Viewpoint/Unicast, Klipmart, and Rovion. Determine what ad formats you want to run in your site and then set the price for each of the ad format you will use.
- How extensive is the coverage of the ad on the site? An ad that will be placed in all of the ad formats of the site -- e.g. it will be the only ad shown in the banner, rectangle, skyscraper, text ad -- can be charged higher than an ad that will utilize only 1 ad format
There are too many unknowns and variables to consider before you can put a price tag on an ad.
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About the Author:
Nach Maravilla is the Publisher/CEO of PowerHomeBiz.com. For more ideas on how to
earn from online advertising, start and run your home
business, read her blog
Earning and Maximizing Advertising Revenues section
December 2007
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