As you look at advertising on other blogs, forums, and websites, you might come across advertising rates that are broken down into CPM.
CPM stands for Cost Per Mille, or basically cost per thousand views. So if a site has its advertising set at $5 CPM and gets 10,000 page views, then the cost to you is $50.
Some advertising doesn’t give you the CPM value, but it can still be quite important to calculate this yourself as a larger site with more traffic might seem like a good deal, until you realize you are paying $100 for every 1000 advertisement views.
The formula to calculate the CPM is:
CPM = Cost of Ad / (Page Views / 1000)
The standard for most blogs seems to be around the $3 CPM mark, as this is the point where the site is able to profit from their work, and the advertiser doesn’t feel like he or she is getting a bad deal.
Depending on the site though, CPM rates can vary from $0.01 all the way up to $100. Really, as an advertiser or a site owner you have to decide what is most worthwhile to you.
Read/WriteWeb, a very popular site I enjoy, has a CPM of $20. And so for a 160×600 Banner on their site, the minimum cost for 20,000 impressions is $400.
TechCrunch advertises a CPM of around $3. An advertising campaign with them for a 125×125 pixel graphic is $10,000 per month and requires a two month commitment.
eXtra for Every Publisher has a variety of advertising positions open, and using last months statistics, which we are blowing out of the water this month, you will see that my advertising rates are between $1 CPM and $2 CPM, which is well below the industry standard.
Why would a site owner go below the $3 CPM mark?
I can think of two reasons of the top of my head, and eXtra for Every Publisher fits the first one: age and traffic focus.
eXtra for Every Publisher is a new site, having been created in July of this year, but because of how focused the traffic is, and how popular the site has become in such a short time, I think the advertising options here are an amazing deal.
The second reason why sites go below the $3 CPM mark is usually because they don’t have focused traffic. Sites like personal blogs, or generic informational sites are so broadly focused that their can be a limitation in how much success advertisers have, and as such, they don’t want to pay as much. A smart website owner will understand this, and adjust their advertising rates accordingly.
When do you go above $3 CPM?
If you have built up a powerful brand, a popular site, and have decided to further monetize your site, then you can raise the rates of your advertising.
I think that there does come a point though where you will hopefully get so much traffic that you can charge $3 CPM and make $10,000 a month, but until that point, if you are the resource for a subject, and you know you can find advertisers willing to pay beyond the $3 CPM mark, then raise your rates.
You will know if you have gone too far as you won’t be able to sell your advertising positions, even with hard work.
The last thing you will want to consider is the amount of space you are giving an advertiser, and its positioning. Larger advertisements and premium advertising space usually goes for higher rates than positions lower on the page and in smaller spots.
Getting advertisers, and setting your rates can be very difficult. If you price too low, then you will have a full slate of advertisers, but you won’t be getting the most revenue return for your effort. If you price too high, then you will have a hard time securing advertisers, and again may not make much revenue for your efforts.
Also, as a site grows and changes, it continues to become a balancing act. There are some who have done very well for themselves through advertising, both at higher CPM rates, and lower CPM rates. It all depends on the site, the advertisers, and the owner.