If you are thinking of earning from your website by selling ad spaces, one of your first questions will be: “What will I charge advertisers?”
In my opinion, your rate will depend on several factors:
- Who is your audience and how desirable is your audience to the advertisers? If your audience are techies or those who have the propensity to purchase higher-ticket items, then you can charge a higher price as compared to an audience of bird lovers.
- What is the rate of comparative websites in your niche? You don’t want to overprice yourself out of the market yet you don’t want to undercharge as well.
- What is the rate advertisers are willing to pay in your site? You may charge $5 per CPM but if nobody’s taking you up on the rate even though you may get inquiries, then it could imply that advertisers may consider your rate too expensive. But if you charge $0.50 per CPM and advertisers are flooding in, then you may be too cheap and can afford to increase your rate.
- What is the CPM you get from other advertising vehicles? Do you run Google Adsense, and if so, what is your effective CPM rate with them? Or if you run banner ads through ad networks like Burst Media, Valueclick or Tribal Fusion, what is the CPM you’re getting? You can use those values to help you gauge your rate. It may not always work (e.g. if we use the CPM we get from Adsense, nobody’s ever going to advertise on our site because our Adsense CPM is too high) but it can give you an idea of what rate to use.
- What is the level of exposure the advertiser wants? You can lower your rate for an advertiser willing to sign a longer term contract, say for one year vis-a-vis an advertiser that signs up for only a month. You can also arrange for special rates if the advertiser is purchasing several advertising products from your site (e.g. advertiser wants to buy banner ads, text ads and newsletter sponsorship).
If you’re just starting in the game, experiment and see what rate the market will bite. You can start at $1 per CPM and see how it goes.
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