Knowing what to charge advertisers can be difficult. You don’t want to charge so much you scare people away, but you also want to make money. Luckily, there are easy ways to determine how much you should price ads on your site, so that everyone is happy. However, you do need find those advertisers. First, learn how to get businesses to advertise on your website before you worry about pricing ads.
Ad Pricing Strategy for Lucrative Advertising Revenue
Most new publishers make the mistake of overpricing their ads because they want to make a lot of money right from the start. This can ruin their chances of being successful because no one will want to buy ad space when they can go to someone else for less cost. It’s better to start with a low price, and then increase the price over time. As your site increases in traffic numbers, you can also increase price with the rationale being that the ads are now seeing more exposure.
Consider Ad Placement
There are some places on your site that receive more attention from visitors than others, so they should cost more for ad placement. Some of the factors to consider for pricing are:
- Is the ad placed above the fold?
- Is the ad on the homepage or another page?
- Is it a stationary ad or does it rotate with other ads form multiple advertisers?
- What kind of visitors do you have?
If you have an ad above the fold, on the homepage, it’s stationary and the visitors are highly attracted to what the ad sells, it should be priced the highest. If the ad is placed below the fold, on a page other than the homepage, rotates with other ads, and the visitors aren’t as interested in what the ad sells, it should be priced the lowest.
If you want some data (always awesome) to see where visitors spend the most time on your page try checking out Crazyegg.com, a service that displays a heat map of your website where visitors spend the most time. For you WordPress users you might want to take a look at this heatmap plugin.
There’s nothing wrong with asking advertisers how much they would like to pay for ad placement. Tip: A good way to phrase this is, “What’s your budget for advertising?” While some will give you an obviously low price, others will be completely honest with you. Take the honest answers to help you quote a price to other advertisers.
Use Ad Network Earnings
Adsense is a great ad network you can use to price your ads. Use Adsense for a while to see how much you make off of it. You can then sell ads at a rate that gives you a bit more revenue than the ad network.
Choose Ad Pricing Option
You have three types of ad pricing options:
- Cost per Thousand – CPM
- Cost per Click – CPC
- Cost per Action – CPA
CPM means you’ll receive money for every 1,000 views the ad receives. For CPC, you charge every time an ad receives a click. Lastly, CPA means the advertiser has to pay you every time a visitor from your site clicks on the ad and completes an action such as buys something or completes a form. Generally, CPM has the lowest payout with CPC and CPA paying more respectively.
To determine how much you should charge for each pricing option, turn back to the suggestions mentioned above. CPM relies heavily on traffic, but CPA and CPC relies more on how motivated your traffic is to click, make a purchase or do some other action. Knowing your audience and traffic numbers will help you decide which one will result in better payouts. Try using this CPM and CPA calculator to help you calculate these costs and ROI for advertising.
Price, Assess, and Change as Needed
Now that you have a better idea of how to price your ads, start advertising them for that price. You’ll soon be able to see how well you’ve priced them. If advertisers purchase ad placement easily, and you’re making good revenue from your site, your prices are perfect. If you aren’t getting many advertisers, you may be pricing the ads too high. If you’re not getting much revenue from your site through the ads you’re placing, you may be pricing them too low or not using the right pricing option for your traffic. Make changes as needed, and before you know it, you’ll find the best pricing for you and advertisers. Just make sure you’re always willing to adapt, experiment, and learn.
How have you priced ads on your website? Are there any specific metrics you have used that work best? Can you maximize profit for yourself and ROI for your advertiser? Let us know in the comments below!