Did you miss part one of this series? – I Am Not Selling Any Ads – What Should I Do?
So you have decided to sell ads directly to sponsors on your website or blog.
I’ve made money using this method since the early 2000s. It started off as a trickle – my first ad sale was direct to a small business for $50 a month for one banner on my card game website.
From that point forward I’ve grown my income from direct ad sales to the point that I’ve made as much as $5,000 a month and at least $1,000 a month from direct ad sales for ten years straight.
I used to buy websites with the plan to build up a nice, nearly-passive income stream. I owned several websites in several niches, including miniature motorcycles, rap music, small business, and magic cards. All of these sites made money from ads.
Let’s not forget virtually every mainstream media website, news site, top blogs, youtube, google search – virtually every website you can think of with a sizable audience uses advertising. It is a proven money maker. As long as you have an audience companies want to reach, you have the potential to make money selling ads.
The challenge, once you decide to sell ads, is how much should you charge? Let me reveal my super-secret formula to you…
My Ad Pricing Formula Revealed
For as long as I have been a teacher of how to make money with blogs – over 5 years now – I’ve been asked the question over and over again…
How much should I charge for advertising on my blog?
I actually came up with a very simple formula, one that I tell people when presenting on stage and during coaching calls.
This formula has to be considered only a guide. It does not apply the same way to every niche, but I will explain why in a moment. Here it is -
So if you get 500 visitors per day, you can expect to make $50 per banner ad.
There are many conditions that can change this calculation. Here are some of them…
- Where you place the ad in your site design can increase or decrease how much you charge. Using the adsense heatmap as a guide, you can determine what areas of your site are the most valuable.
For example, if you have 1,000 visitors a day coming to your site, you might charge $200 a month for a banner in your left sidebar, but only $100 a month for the header above the navigation bar.
- What niche your site is in really makes a difference. Some niches will never sell a single ad no matter how much traffic you get (avoid these!), where others can sell out of ads with as low as 100 visitors a day. This ties in to the next point…
- The visitor value of a lead to your sponsor really matters. A person looking to buy a house is worth several thousand dollars to a mortgage broker or real estate agent, hence they can spend more to reach these people. If however your sponsor sells a $10 ebook, they need a certain number of clicks and sales from ads on your site just to break even.
- Your ability to reach advertisers who have the highest lead value for your traffic will dictate how much you can charge. My formula is a starting point, but if your sponsor is making $10,000 a month off of your $100 ad, clearly you have some room to negotiate.
- How responsive your audience is really counts. Many niches suffer from serious banner blindness – in fact as a whole I would say most Internet users don’t “see” most banners because they know they are ads (and hence ignore them). To break through the blindness and get a response, you need a very well targeted ad. This is all the more reason to find the right sponsor that matches what your audience is interested in.
- How much sway you have and trust your audience has in you also counts. An individual expert who is respected and listened to, will transfer this trust to the ads on their site. That’s often why “thought leader” blogs can sell so many ads – sponsors want the kudos and referential trust from being associated with that blog and person.
- Once you break milestone traffic numbers like 100,000, 250,000 and a million pageviews a month goals, you qualify for the “big leagues”. By this I mean you can start landing some big contracts from brand buyers, who often pay more for advertising.
Targeting, Supply and Demand
At the end of the day, what you charge advertisers is a supply and demand relationship, mixed in with your ability to get exposure to the right advertisers.
You can charge as much as you want, as long as you deliver value to the advertiser. They will keep paying you as long as they earn a return, they have a budget and they don’t get more for less somewhere else (if they have budget constraints).
Some niches enjoy companies with massive ad budgets. Cars is one prime example.
Car companies spend money advertising to the general consumer. That’s why you will see car ads on YouTube, on a news site, syndicated on content sites in all kinds of different niches – and of course, on car sites too.
General consumables like electronics, computers, movies, books, and food related products and businesses (McDonalds and Coke ads are everywhere!) are other examples of mass-appeal advertisers who don’t care so much about the niche your site is in, they just want a spread across the general population, because the general population is their audience. Other niches will need a much more targeted sponsor.
In your case, you need to look at what type of person reads your site, why they are there and then think about the sponsors who would best service your people.
With my Magic card game website I approached Magic card retailers, both online and offline, to sponsor my site. One in ten of the contacts I made agreed to sponsor my site, and within a few months I had three paying sponsors and my first significant and consistent online income stream.
You Don’t Know Until You Test
One thing I have learned from running my blog, is the importance of testing price to find a balance that works. I do this by looking at how many ads I have sold and then adjusting accordingly.
If I haven’t sold many ads in a month or two, I will lower the price. If the ads sell out quickly, I increase the price. Bear in mind I do this sort of testing because I have enough of a consistent audience coming to my blog, some of whom want to sponsor my site, that I can test. If you don’t have interested parties coming in regularly, you will have to go out there and find sponsors (more on this in my next article).
For example, when I first started offering the very popular 125×125 box banner ads in my right sidebar, I started at a $200/month pricing point. At the time I was pretty much applying my formula, as my blog had about 2,000 visitors a day according to Google Analytics.
At that price point after a couple of months I was sold out or almost sold out most of the time. My traffic increased so I increased the price to $250 a month, which worked well, although I do go through peaks and troughs in terms of how many ads sell. Once I sold out of all my spots, I increased the cost to $300, however over time some sponsors dropped out and no new ones came back on board, so I dropped it back to $250 (well $249 to be exact), which seems to be the sweet spot.
I also have to factor in that I charge Australian dollars, which at the moment with the Aussie dollar being strong, doesn’t help my ad sales given most of my sponsors are American. If the Aussie dollar drops, it is the other way around.
The great thing about CrankyAds is I can just log in to my WordPress admin panel and change prices any time, which is exactly what I do to test pricing. I recommend you change prices once every month or two – only if you need to of course. If you are happy with how much you are making, then don’t mess with it.
One feature I have used to great benefit over the years, which we just recently made available in CrankyAds, is the ability to offer alternative pricing.
The way I use alternative pricing is to offer discounts for people paying in advance. Pay for six months worth of ads and you get a one month discount. Pay for 12 months and you get two months free.
These are just two examples, you can pretty much do what you like. Obviously the benefit here is to lock sponsors in long term (this is good for you, and also good for your sponsor because if your traffic increases over time, which it will, they still pay the same price and don’t lose their ad spot), you get cash upfront and your sponsor saves money. It’s win-win, especially with the right sponsor.
Start With My Formula
To keep things really simple I recommend you start with my formula –
Your daily unique visitor count, divided by ten, as a base monthly fee per ad.
From there, test. Go out and find sponsors. Make sure your site has an Advertise page and Advertise Here banners running (both things CrankyAds creates for you) so people who visit your site are aware of your sponsorship opportunities.
For further intelligence on what price to charge, take a look at sites like yours and see how much they charge for advertising and how much traffic they state they have to justify the price. Make sure you see that they have some paying sponsors before you assume their prices are relevant.
Don’t under price your ads. You might be surprised how much advertisers are willing to spend. If you don’t ask, you won’t know.
One last tip – If you think you can only charge $10 per month per ad, it’s probably best you wait and build up your traffic before you go after direct sponsors. Use affiliate ads in your ad zones for now (CrankyAds can run your affiliate ads for you too).
There’s no greater statement that your site can’t deliver results to sponsors than charging next to nothing for ads. Do you think your potential sponsor believes you can deliver any result if you charge $10 per month? That’s a great way to demonstrate low perceived value. Raise the price, or wait until you can deliver more results.
Good luck with your ad campaigns, and if you have any questions about pricing, please leave a comment.
Coming Up Next: Where To Place Ads On Your Website
You can read part three of this series next –