What Is The Best Way To Charge For Advertising On My Website?

It is not easy to set pricing for your advertising space that that fit to all types of customers.

Each blog and content site are different as they have different sources of revenue. A financial site is vastly different than a music site. There are some key points to consider when you set your rates for advertising:
Metrics for a site

All websites are judged by the three variables: traffic, content, and visitor.
1. Traffic

As your visitors increase the more potential clients. Therefore the more money you can make on your inventory. You should always know the number of views, visitors, and inventory on your site at all times. Each time someone views an ad it is a page or ad view. If there are 3 ads on a page then you could have 3 ad views. Naturally, all traffic is not as valuable, but you need to understand where the traffic is from and why. You don’t want ‘garbage’ traffic.
2. Content

The valuation of the content of the site will determine all the types of traffic and worth of the site. Some will be limited in original content and others will be high quality relevant original content. Your objective should always be to attract sites with top content and relevancy.
3. Visitor

You will need to learn about each visitor to the site. There are wonderful tools to see the age, browser, locations, interests, and sex of the audience. If you have an audience that is similar in tastes and identity then you will attract a better advertiser base.
Models for Pricing

There are more popular ways to charge for your space of advertising:
1. Flat Rate

Here the advertisers pay a fixed price to display an ad for a certain period of time. This is a very good method for small advertisers and publishers as they can predict the cost.

Clients will come to you with the metrics on the site and name the rate for advertising. Advertisers consider the pluses and minuses of the cost vs reward and act accordingly. e. This model allows clients to budget their costs and predict their profits.
2. CPC (Cost per Click)

Here the advertiser is charged each time an ad is clicked. The pricing can be as low as 1 cent to more than 20 dollars a click. You will need to protect yourself from click fraud but otherwise it is a nice method. To protect against click fraud there is special technology and software. Check that the ad server offers this.
3. CPA (Cost Per Acquisition)

This works well for commerce site or site which value completion of a process (such as forex or casino sites). Each time a visitor completes a sale or registration the advertiser is charged. Advertisers control pricing with this method.
4. CPM (Cost Per Thousand Impressions)

This is probably the most popular model for large publishers. Advertisers do not worry as much about click fraud and CPC. Instead they focus on the large volume – and so this is fantastic for 500,000 impressions per month or more. The negative with the CPM model is there is expectation for clicks, conversions and ultimately purchases/registrations. For smaller advertisers, number of available impressions will be low because of targeting criteria, including frequency and Geo-targeting to prevent exceeding budget and yet bring quality traffic.
5. Hybrid or Combination of Multiple Models

With great ad servers like Otlix Ad Server, you can combine multiple models to work for both you and your advertisers. For example, $100 per month plus $5 per click is a combined model of Flat pricing and Cost-per-Click. This means the publisher will have some guaranteed income while earning extras on the clicks! The advertisers can receive discounts on the flat rate while providing great incentives for better performance.
Understanding your Advertisers

The key factor to win a contract is to understand your advertisers – your clients. If you understand their products, objectives, requirements, plans and goals, you can make your quote that much stronger by focusing the quality of your audience to smaller advertisers, or by emphasizing the number of page views to brand your image.
1. Advertisers

It is always a good idea to expand your list of potential advertisers. You can then increase your demand for ad inventory and thus charge more.
2. Characteristics

CPC or CPA rate for a watch advertiser is likely much higher than ad rates for a shoe ad. Knowing the services and products can help with targeting the right part of your website.
Methods for Research

Think with the eyes of the potential advertiser. Their objective is to find popular, high-quality and relevant websites with reasonable ad rate! Determine the best pricing model for your business only after researching! Find similar sites to yours and do an investigation on their pricing.
Adjustment to the Price

Once you start to offer advertising you can also adjust the price with time. As you become more famous you can increase your rates, but at the beginning the best is to offer discounts and promotions to just get started.

For example: You can start charging a low CPM for the first six months to let advertisers sample the effectiveness of their ads. You can also charge a low CPM then increase the rate as your traffic grows! You can also provide bonus discounts for early advertisers to get in the low rates. However, in all cases clearly inform your advertisers these price changes and your rationale. You want to always build long term healthy relationships with your clients.
The First Step in the Process

Establishing the rate is a very difficult process. This post only outlines the samples and opportunities. As you develop your own expertise you will establish the best rules and methods for yourself. All the best of success!

MediaFane Articles is powered by Otlix Ad Server solutions for Publishers and Advertisers.

Otlix has been dedicated to optimizing the use of media since 2006. They provide media solutions as Ad Serving, Ad Delivery, Ads Rotation, Video Advertising and Ad Management tools. These tools can be used to simplify and better ad Campaigns, and they give you a comprehensive overview of all of your campaigns with their smart Analytics and Statistics system.

By: Naor

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