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8 Tips for Maximizing Contextual Advertising Revenues
There’s a new thing in town that has the web community, particularly the small business online publishers, buzzing with excitement. It’s called contextual advertising. Learn 8 ways that you can increase your revenues from contextual advertising.      

by Nach Maravilla

In the late ‘90s, web publishers were riding high with banner ads. Payouts were great, and many web owners actually saw their dream of sitting on a beach sipping tequila nearly realized. Alas, the glory did not last.

(article continued below ...)

The bubble eventually burst. Cost per thousand impressions (CPM), the price barometer of banner advertising, dramatically fell. Whereas some web owners were enjoying CPM rates of as much as $150/CPM, the rates soon fell to as low as $0.50/CPM. For that given rate, sites generating 500,000 monthly impressions first saw their banner advertising revenues reach to about $75,000/month only to find it fall to a mere $250/month. That is one major ouch! To date, rates for banner advertising has been slowly increasing, but has not (and may never return) to the late ‘90s level.

Now, there’s a new thing in town that has the web community, particularly the small business web site operators, buzzing with excitement. It’s called contextual advertising, and programs include Google Adsense, Quigo’s Adsonar, Overture’s ContentMatch, IndustryBrain, among others (for a discussion of the programs, read "Earning Revenues from Contextual Advertising").

Contextual ads are delivered based on the content of the web page using an automated system. Contextual advertising serves up ads that are targeted on the contents of a particular page, e.g. an article on how to get a bank loan will serve up bank loans or personal loan ads. These ads are often text based but some programs like Google Adsense offers image-based ads; and many programs are cost-per-click based but preferred publishers (often those generating tremendous amount of impressions) are paid on a CPM-basis.

The promise of contextual ads is that its improved targeting capabilities are deemed more effective than other types of online advertisements (e.g. banner) and hence more likely to be clicked by a user. As a result, publishers are given the chance to earn more from their web real estate.

However, contextual advertising is not just a simple matter of applying and putting up the codes on your website and wait for the checks. There are a number of ways to maximize your earnings from contextual advertising, whether you are running Adsense or Adsonar or anything in between. Here are a few of them:

1. Determine overall fit with your site.

The first rule of thumb of contextual advertising is that it is not for everyone. Some sites do extremely well with it, earning 5-figures or more a month, while others earn mere pennies a month. Others running Google Adsense, for example, enjoy being in the "UPS Club" (Google sends by UPS the checks to publishers who earned $10,000 or more whereas the rest gets their check through regular mail). Many say that they find it hard to even reach the monthly check cut-off amount of $100.

The beauty about contextual advertising is that it is not about traffic, as there are some sites getting only 5,000 ad impressions that earn more than those getting 50,000 impressions monthly. It is about the types of visitors you have. So what types of site do well with contextual advertising?

  • Sites where users are in a buying mood
  • Sites where users are looking for information on specific products or services that interest them - product, business opportunity, looking to buy tickets, etc.
  • Sites where users are researching ways to spend money
  • Sites with a high percentage of fresh unique visitors (regular visitors tend to ignore ads)
  • Sites where users show an interest to ads, and not just the site’s offerings

If contextual advertising is not working for you as you expect, be sure to check out other forms to monetize your web real estate such as affiliate programs and CPM-based advertising.

2. Develop solid content for your users.

The key to a successful foray into contextual advertising is content. Content is what brings visitors to your site, and content is what makes them interested in the ad. Content is also what the technology will read to serve well-targeted ads. The more quality content you have, the greater your propensity to earn from contextual advertising.

Looking at it from the advertisers’ perspective (the group of people who are actually paying the publishers), many prefer their ads to be shown on sites with good content. One of the common reasons why advertisers turn off the content network option for their ads (in addition to showing their ads in the search engine results, such as in Google) is that they do not want their ads to be shown in spammy or no-content sites. Why? Because they feel that poor quality sites may give them clicks, but not useful leads. A user may have clicked on their ads – not because of any interest in their advertised products or services – but because they want to exit the site as soon as possible and the only way out are the ads. Advertisers do not just want clicks: they are paying to get visitors interested in what they have to offer. They want visitors that they can convert, whether conversion is defined as a sale, signup to a newsletter, or an inquiry.

3. Read and follow the Terms of Service carefully.

The Terms of Service spells out the do’s and don’ts that will guide you in your program participation. It will tell you how you can place the ad codes, where you can place them, among others. More importantly, it gives you the reasons why you can be terminated from the program – from generating fraudulent clicks to showing competing adverts. Yet many publishers do not even bother to read what these terms are – and then complain that they were kicked out from the program because of a violation.

It is imperative to carefully read and understand a program’s Terms of Service (not just contextual advertising, in fact). You don’t want to lose a revenue source that may be giving you as much as $5,000 a month just because you did not read the Terms that you have supposedly agreed! Some programs such as Google Adsense are strict with regards to terms compliance, and often sends either a warning email to rectify your mistake, or an outright termination notice giving you a few hours to remove the code from your site.

Go to Part 2


About the Author:

Nach Maravilla is the President/CEO of PowerHomeBiz.com. For information on starting a small or home-based business, visit PowerHomeBiz.com


November 9, 2004