Question of the Day: Banner ads
My three cofounders and I are getting ready to launch a new site, “Blahsports.com”:http://www.blahsports.com/. We are only days away from launch and are wrapping up some details. While most of the team is plugging away the keyboard, I am busy drawing up a business plan to present to startup incubators (e.g. “Y Combinator”:http://www.ycombinator.com/ -type of programs). I know we have a wonderful idea and are targeting a niche market — think the next ESPN!– but I still have to draw up financial plans that will include pricing for our banners (our first way to monetize will be ads). This is where my problem starts:
*a) How much should we charge for our banner ads?*
*b) Where can I find compatible sponsors (banner clients) for Blahsports?*
*c) Should Blahsports even put banners up on the homepage right from day 1?*
*d) Or, should we use Adsense to get our first dollars?*
I know the Internet is chalk full of info, but there is just so much to go through and I was hoping that I could get some juice out of the readers of Found|Read. However I am sorry if these question are to elementary… but the worst question is the one that goes unasked ;-) !!
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I would go with adsense. They tend to be less obtrusive and more relevant to content on the page. I would say, after some time has passed and you have your traffic numbers figured out then you could more accurately come up with an amount to charge for banner ads. Otherwise, you don’t really know how much traffic your going to have and your numbers could be way off. Furthermore, potential advertisers may be unwilling to pay for advertising if they don’t know what kind of exposure there ads will get.}
I totally agree with Jason. Why put off your potential customers/users with banner ads? Maybe in a few months but not this early.
According to Jakob Nielsen’s study (http://www.useit.com/alertbox/banner-blindness.html) Banner ads dont bring any value anyway.}
At the end of the day your primary goal should be solving problems for the users. And while you certainly need to monetize your traffic at some point you really shouldn’t be worrying about this right before launch. If your co-founders are the tech guys and you’re the “business guy” then you could add a lot more value to your business and your business plan by going out there and cutting strategic partnerships or co-branding deals before you launch.
But if your question is less operational and more conceptual (i.e. “What should I put in the business plan to make it sound compelling?”) then your best bet is to simply find out what the average CPM rates are in your sector, say that you’ll eventually serve advertisements and then use those CPM rates along with traffic estimates to build your revenue projections.
-W}
I’ve heard everything from $5 to $25 CPM (i.e. cost for 1000 impressions).
Also, as a startup, your job is to worry about attracting users mainly and not finding advertisers (at least in the beginning)… so, go with adsense until you have at least 100,000 visitors a month… then you could sell your own ads in addition to using adsense…
in terms of clickthrough rates, I think 0.1%-1% of impressions is a reasonable number (depending on the type of ad – banner or flash, etc…)… in terms of cost per click… I’ve heard of everything from 10 cents to 15 dollars… very broad… sorry I can’t narrow it down further… but, if you want to be conservative, go with the lower end… i.e. 50 cents or so…
maybe someone else could share some more figures… but, I think one possible way you could calculate potential revenues is as follows…being conservative…
(# of visitors/month) * (5 pages views / visit)* (.5 cent /page view)…
so… if you had 100,000 visitors a month, you could make 2500 dollars in revenue… obviously, if you put in ads other than banner ones, this number will be higher… also you could put ads from multiple sources in one page… this will also increase your revenue…
you could tweak this a bit and assume 10 page view/visit and assume 2.5 cents for an impression if you put in more interactive ads…
Aydin.}
I should also say that I don’t earn any revenue from advertising on my website… we’re a mobile VoIP firm… but, my previous post comes from blogs i’ve read on the net…
if anyone has more accurate figures, please let us know…
Aydin.}
I agree with the above commenters in that putting banners on your site should be the last thing you are thinking about. But, if you insist on having ads there from day 1, adsense is the fastest and easiest way to go.
As a side note… When I hear blahsports… I don’t connect it with any positive thoughts. I would strongly recommend changing it to something more positive/fun.}
You should avoid putting up banners when launching the site. The reaction to ads on sites is very negative a lot of the time, and will cause people not to bookmark or socially promote the site.
Regarding CPM, unless you are a big property or have an extremely lucrative niche you should expect between $1-2 CPM at best.
-Chris}
banners from day one, affiliates or people you support, for free to set the tone and standard of what your looking for.}
I note that you are already carrying Goog Ads on your blog, which is a reasonable way to learn about the market.
Banner advertisers spend money either in a blind spot market (where they don’t know where their ads will be served, with a few restrictions) or by placing ads on specific or targetted sites. Until you are big, you will only be able to place untargetted ads from the blind market on your site. These won’t make you rich.
There are a number of companies which can help you here (e.g. DoubleClick).
If you do get big, the key to maximising your CPMs is to target a strong niche which brands are interested in and then know a lot about your users.
It is worth considering alternative revenue sources such as affiliate links to relevant shopfronts, as you are focussed on sports you might want to consider major sports retailers, many of whom will have affiliate links.
Also consider contextual advertising such as this http://www.text-link-ads.com/
It is worth checking our Wikipedia too http://en.wikipedia.org/wiki/Online_advertising.
First step though – get 10s of thousands of active and loyal users.
M.}
The advice here is good. But I have to point out that making a business around CPM ads is probably not enough. Do the math – you need A LOT of loyal users to get enough CPM ad sales to be rich. Strong branded sites will target $150 CPM but in reality they don’t get list price, nor do they sell out.
I think you will have a very hard time getting savvy investors to pony up on a CPM-based business unless you can prove amazing traffic levels.
As a marketer, I believe less and less advertisers are spending on CPM banners. It’s OK for branding but for most marketing initiatives it has a soft ROI. CPC, CPA and lead generation have much higher revenue potential. Figure out how one of those models applies to your business.
However, first and foremost, users are the key driver. First you must prove you can win them, second you need a plan to monetize them. See my post on developing a marketing strategy in FoundRead.
Good luck.}