I got an email from a friend last week who is just starting to monetize his blog, and wanted to know how to come up with a price for an advertising banner. I thought I’d share with you the formula I use to come up with a monthly banner ad price for clients.
First, I had my friend give me some details.
1. What niche?
Some niches are more profitable than others. For instance, a typical click via adsense (
) on this blog runs over a dollar. However, a typical click on my celeb blog tends to be less than a nickel. Of course, the CTR is much, much higher over there, but that’s another thing altogether.
2. What’s the estimated traffic?
Usually my friend sees 7-10k per day. Therefore, I’m using 8.5k x 30 as our typical monthly traffic (255k).
Using a traditional advertising formula, CPM (cost per thousand) x 255=monthly advertising rate.
How To Determine CPM
There are other ways to determine your CPM, but the easiest way is to use Google Adwords(
) and Google’s Webmaster area. What keywords do you rank highly for in search, generally? You can find that in Google’s Webmaster area. Now, for fun, put those keywords into adwords, and view a traffic estimation. You can mess around with it until you determine what the CPC (cost per click) for each word is and take an average for a first CPM estimation.
Let’s say his avg CPC on adwords (not adsense) is $1. His price would be $1×255=$255 per month. If his CPC is higher, say $5, then his price would be $1275.
Of course, the adwords method is the lazy way to find an estimate, and it’s not always accurate. Remember, a banner ad on Dooce is worth more CPM than one on another mommy blog, so your CPM is not as easy to determine as the above method. However, this is a good way to get a starting point, and you can tweak the CPM as you wish. The main thing is keeping the CPM in mind, as you come up with your monthly price.
I don’t advocate doing a completely traffic based fee (ie flat CPM charge), but knowing your CPM is a great way to come up with a monthly price, plus or minus what you think the ad is worth, and what the market will bear (ie one $700 banner that has 8 people in line each month to buy it should have it’s price lifted).
Hope this was helpful. Please let me know if you have any other questions that you always wanted answered.
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[...] About Web Logs: Deb’s got the skinny on Performancing’s new Legal Issues forum … Better Blogging With Michael Martine: Runs down 13 SEO optimizing Firefox extensions you must run down yourself … Bag and Baggage: Heard about Avvo yet? A lawyer rating service that’s raised a lot of questions about its reliability, earned a class action lawsuit within a week, and been widely heralded as a much needed consumer website – this is a company that knows how to work the web, at least! … The Blog Herald: I always have a hard time picking one article from TBH to plug in these roundups – they usually have a good baker’s dozen at least – but one it is, and this week, it’s “3 Reasons Why Blogging *is* Open Source Marketing” … Blog-Op: That Chris Lodge – even on vacation, he’s got you covered! What a guy … Blogger & Podcaster: Why social networks aren’t about to take over email’s primacy … Blogging For Dollars: Angela tells you how to wrie a blog proposal – interesting proactive idea to get a blogging job … Chris Garrett on New Media: It’s Friday the 13th – are you scaring your readers away? … Copyblogger: Why be a good blogger when you can become a heroic one? … DoshDosh: “19 Ways to Get More Traffic To Your Site Using Google Images”… Freelance Switch: If you’re a freelance blogger/writer, FS wants you to take the 2007 Freelancer Survey …Google Blogoscoped: Web 2.0? That’s so five minutes ago … I’d Rather Be Writing: Tom talks about “The Paradox of White Space” … Instigator Blog: The skinny on a possible contender to the Akismet throne – Defensio, for WordPress … Lifehacker: Mac bloggers, take note – try a download roundup from Lifehacker to make your computing life even easier (personally, I’m dying to try Camouflage – my iMac desktop is seriously messed up) … Liz Strauss at Successful Blog: Liz has an interesting announcement – a two-way conversation between blogs, on an ongoing basis – looking forward to seeing how this works out … Lorelle on WordPress: Lorelle has some good comments on content theft … Performancing: “Why Live Blog Stats matter” – with a solution recommendation from Ryan Caldwell …Performancing, part 2: How about an “ultimate AdSense beginner guide”? … Practical Blogging: Robyn has some tips on pricing advertising on your blog – good timing, Robyn, thanks … Problogger: Darren has a series called “What we wish we knew” – this one’s about finding readers … Quick Online Tips: “Buying quality blog comments”? In bulk? OxyMORON (the idiots who came up with this spamfest, not QOT, of course)… Search Engine Roundtable: Gives the lowdown on a Google AdWords Editor Team teleconference – some good tips in there! [...]