Filling your advertising inventory with AdSense and affiliate links? Hoping that putting up an advertising page will convince advertisers to contact you and promote their products or services? They might never come, and if they do, will they pay the fees you have requested?

How did you decide on your advertising prices?

CPM

One way that I have always tried to make my advertising as fair as possible is to decide my rates based on a sliding CPM scale. The more traffic I get, the lower the cost per thousand advertising impressions gets in any advertising spot I have available.

This means that I will still get more money for advertising spots as I get more traffic, but it also keeps my rates at a reasonable and affordable level.

When I had over ten thousands page views a month, I wanted to get twenty dollars a month, or a rate of $2 CPM. Since then, I have been sliding that rate ever downwards. Currently, this blog earns only $0.15 CPM and while that doesn’t sound like much, that still comes to $60 for a 125 by 125 pixel banner in the sidebar.

Also, you have to remember that your CPM rate is per advertisement, and as such over the entire page, you might make upwards of $0.50 CPM to $50 CPM. It really depends on your audience, number and placement of advertisements, size of your traffic, and the competition for advertising spaces on your site.

CPC

Another way that I decided rates on blogs before was to try out an advertising position with my own ad first, placing various affiliate programs or AdSense, and looking at the number of clicks. If you have two hundred clicks on an ad space in any given month, that can quickly be converted into real figures that most advertisers can understand.

Most advertisers want to pay as little as possible for clicks, but if you have proof of clicks, they might be more willing to advertise on your blog then throwing money at CPM advertising where they don’t know what kind of real traffic they can expect to see to their blog.

So we take those two hundred ad clicks we talked about, and convert that into a figure of around $0.20 per click, and you get an advertising total for a specific position of $40 for the month.
Cheaper rotational ads or expensive ads?

You can research the CPC rates you might want to consider on Google’s Traffic Estimator tool, among other places, though I find that their rates are usually an order of magnitude higher than most private advertisers are willing to pay, so use your best discretion.

Competition

Another great way to price advertising is to be competitive. I have advertised on a few sites that I found with rates far lower than other blogs of the same size, traffic, and community. Bargains just beg to be advertised on, and so if you look at your immediate competition, it can give you some key indicators on what you should price your own advertising at.

Just be sure not to price yourself too low, as there are psychological effects of pricing too low that will stop possible potential advertisers from considering you, as they will wonder what the problem with your site is that you don’t value the advertising space properly.

Other Effects

Another thing that most people don’t consider when setting their advertising rates, but it can be very important to potential advertisers is the number of advertising positions you have open.

Advertisers know that the more advertising spots that you have open, the less likely a visitor will notice their specific ad, and as such, the less likely they are to make money, or build branding by advertising with you.

Some people like to go crazy when it comes to adding advertising positions, while others like to limit advertising to just one position. I have always been on the heavier side of the equation, and I try to make sure to adjust my prices to make sure that advertisers are getting the best deal possible.

It can be very hard to find higher priced advertisers for your site, and so I have never been one to chase the “super sponsor” before, but it is something I still think about from time to time.

Discounting

Discounting your advertising in exchange for longer advertising periods is almost always a smart move. It reduces the amount of time you have to spend actively searching for advertisers, and it provides the advertisers a better chance to really drive their branding home, but there are other ways you can hopefully win advertisers through discounting.

Contests have helped many bloggers become very popular in a short period of time, and usually those prizes are sponsored in some way. If you find a company that has a product your audience would really like, it never hurts to ask them if they would send the product to a contest winner in exchange for advertising. The worst they could say is “no”, and then you either try to negotiate with them, or move on.

You could also try to sell them on buying multiple types of ads, or price exclusive deals for slightly more money. Currently, I have a few different advertisements for WordPress theme makers. I probably could have asked for slightly more money from one of them and in turn gave them exclusivity during the month as the only advertisement about WordPress themes.

The only issue with providing exclusivity in such a way is that as soon as you agree to provide exclusivity, competing companies come out of the woodwork wanting advertising inventory.

Lastly, another great way of getting advertisers, if you don’t need the cash in hand is to trade for product. I have received free product from a few advertisers, and in turn provided them a spot to place their banner on my site. This is one of my favourite types of advertising because it allows me to get the product, and I only accept this type of advertising when it is something that I really want or think I would enjoy. This type of advertising is fairly guilt-free as I am promoting something I own and usually enjoy.

Conclusion

There are many other ways to price advertising, and I think most people randomly select a figure they would be comfortable with. Usually though, in the advertisers mind, it ends up being too expensive or too inexpensive that they wonder “what’s wrong”. Correct pricing can help secure you more advertisers, and make sure you are getting properly compensated.

Originally posted on May 18, 2008 @ 1:22 pm