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.