Revenue Generation Models: “Web Advertising Models” Brief “A webmaster can generate revenue by selling advertising space. How does the webmaster make money from the adverts?” Monetizing your site How to get revenue from your website? Essentially there are 3 ways of generating revenue from your website, namely:  Direct Sales Sell products and services directly, making a profit on the margin between the sales price and your costs. This is known as online retailing or e‐commerce, and also includes subscription services (e.g Team Treehouse, Tuts+ online training etc).  Affiliate Sales (Affiliate Marketing) Point people to e‐commerce sites that sell products or services, making a profit on the referral fees you receive from merchants. This is known as affiliate marketing. Your fee is generally earned when the customer, who has linked to the seller from your site, makes a purchase – your site is normally identified by a cookie or via a URL parameter that identifies the referrer. e.g. Link below is the URL for an Ironing Board from “Kelkoo” price comparison site to the Lakeland retailer http://ecs-uk.kelkoo.co.uk/ctl/go/sitesearchGo?.ts=1333128671568&.sig=d44OApO7xoPewtbamqWUbzwV8x4&offerId=be6ebcece415634ec439b9c7bad70af7&searchId=1076114721108_1333128671567_1492629&affiliati
onId=96935993&country=uk&wait=true&ecs=ok&contextLevel=1&incoming_aid=8913949&servic
e=ecs3r8&merchantid=4896423&comId=4896423&catId=134401&isFromKelkoo=true&contextOfferPos
ition=3-1&contextPageSize=19
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Often the referral fee is earned when the customer makes any purchase from the seller’s site. Affiliate advertising can also work in an off‐line mode, e.g. “Ring for a quotation” typically a reference is quoted by the customer when making the call and the referral fee is earned from that. Advertising (e.g. Google AdSense) Provide quality information on your site that attracts (targeted) visitors; then sell advertising space on your site. Google AdSense text ads may well be your best approach here (more about this later). In this blog we will be looking at advertising revenue generation. Is your site a success? When we’ve been looking at websites we’ve talked about site success in terms of the how many visitors you get, what keywords you use, driving traffic to your site. But is this really what determines your site’s success – how do you quantify the value of each visitor to your site, surely a more accurate (and identifiable) way of measuring your site’s success is by how much money it makes? In terms of ad revenue, this means capitalizing on your website traffic by selling advertising (if this is appropriate to your site). The important thing to remember here is that you must have the traffic in order to make money from advertising – you can’t have a successful advertising revenue stream without lots of traffic (so your site needs good content that attracts visitors). Stating the obvious Higher priced products and services pay more for advertising ‐ so if you’re looking at advertising low value products like CD’s etc the advertising fee generated will be correspondingly low so you will have to generate lots of sales to make any decent return, conversely high priced products like financial services (e.g. mortgages etc) will generate high returns per sale. It is commonly accepted that only targeted advertising is ever (deliberately) clicked on, so if for example your site was all about luxury sports cars it would make no (or little) sense to place adverts for garden sheds on the site as visitors coming to your site are looking for information about high end sports cars not garden storage; in this example use of contextually related adverts like insurance services for performance cars makes sense. Based on the “page view” revenue model, untargeted advertising pays typically less than $0.50 per 1000 page views. Advertising is priced on supply and demand ‐ you need a high demand/high traffic site (valuable content that users want to visit/re‐visit!) Advertising is priced on supply and demand; there is an unlimited supply of web pages on the Internet, but if there is a demand for your site (i.e. if you get a lot of targeted traffic), and your site has a valuable target audience, then you'll be noticed by advertisers. Most of the CPM ad‐networks will only do business with high traffic websites. Advertising Strategy If achieving advertising revenue is your goal, then you will need to:  Develop high quality content for your site that people will want to visit (and revisit). You need website traffic!  Your advertising needs to be targeted, so your content should reflect a commercially viable industry  Optimise content for high‐priced keywords  Generate lots of traffic (SEO, quality content, etc)  Determine what kind of advertising is selling (your niche) 
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Design your webpage template for advertising – this is all about being able to add adverts to your site in a sensible way, so that they are prominent but don’t detract from the content on your site Consider Google AdSense (text & display) Consider ads from ad &affiliate networks Market your CPM ads – if your site is for example about “Things to do in Greenwich…” its content is very much locality based, it may be worth speaking to local businesses and asking if they would like to advertise on your site. Is advertising appropriate? Before embarking on an advertising revenue strategy you need to ask yourself whether advertising is appropriate to your site. What is the purpose of your site? If it is to market your own business then other advertising may detract from that goal. Typically marketing type sites aren’t supposed to make money, their goal is to generate interest in the business, to drive marketing leads (CTA: “pick up the phone”, “ring us” etc). The site shown below is for Civica UK, http://www.civica.co.uk this is a typical example of a website which acts as a marketing vehicle for the company. The site is funded as a marketing vehicle, other advertising is not appropriate and would distract from the site’s main aim and CTA (“speak to Civica”). IAB The Interactive Advertising Bureau (IAB) is responsible for industry standards for the online advertising industry. These include guidelines for the size and placement of advertising on websites, shown below are some of their core standard ad units. Details of these, including standard sizes can be found at the IAB website http://www.iab.net CPC, CPM, CPA, Sponsors There are three main methods of pricing advertising:  CPM (cost per millia/thousand views1). This is the traditional way television, radio, magazine, and newspaper advertising is sold. A few higher value sites can sell ads this way on the Internet, but it's not easy as your site needs massive amounts of traffic to generate any sensible revenue.  CPC (cost per click) or PPC (pay per click). This is essentially a “pay for performance” model, whereby the advertiser only pays if a potential customer cares enough about the ad to click on it. By far the largest amount of Internet advertising is sold via this model (Google AdWords is an example of this model).  CPA (cost per action) is either “pay per lead” or “pay per sale”; essentially you earn a referral fee for a sale or marketing lead. Affiliate marketing uses on the CPA model.  Sponsorship is where a company pays to advertise a site channel or section (e.g. a bank sponsoring the Money section on a media site). A fixed‐fee sponsorship approach was famously used in 2005 by (then 21 year old) student Alex Tew who developed his Million Dollar Homepage to pay for his University fees2. Google AdSense Google is the biggest advertising company on the Internet. Their AdWords (pay per click) ads that appear on Google search results generate huge amount of revenue for the company. Google AdSense allows you to place Google Ads on your own website, their own marketing describes it as: “Google AdSense is a free program that empowers online publishers to earn revenue by displaying relevant ads on a wide variety of online content” (http://www.google.com/adsense/) Notice the important term “relevant” – the advantage of AdSense ads is that Google tries hard to display only ads that are relevant to the keywords on your webpage. Also, they have millions of advertisers, so you don't have to find the advertisers, Google does it for you. In return for placing adverts on your sites Google pays a 1
Page views, also known as page impressions The Million Dollar Homepage is a website conceived in 2005 by Alex Tew, a student from Wiltshire, England, to raise money for his university education. The home page consists of a million pixels arranged in a 1000 × 1000 pixel grid; the image‐based links on it were sold for $1 per pixel in10 × 10 blocks. (source: Wikipedia) 2
percentage of the revenue it receives from advertisers. Since ads are targeted according to content they command a higher bid price than untargeted ads, typical earnings are about $0.20 per click. Ad placement is crucial, wherever possible try to have your ads “Above the Fold”. Google AdSense is easy to use, and Google provides a whole host of tools to help you administer your ads, including the ability to switch between text and display (image) ads. Google makes it easy to add AdSense to your Google Blog, see http://www.youtube.com/watch?v=32VknlEnYgc Although easy to use (and Google is a reliable payer) you will typically make more money with an affiliate marketing partner than you will off Google AdSense ads. Other Ad Networks Below are examples of some of the affiliate Ad Networks: CPX interactive (http://www.cpxinteractive.com/) is an ad network which provides ads in different size and types: banner, leader board, skyscraper, pop‐ups etc. You select the one that best suits your needs and then blend that with your site layout. They have a minimum payout amount of $50 (so you don’t receive anything until your ad revenue reaches this figure), and they have an entry requirement of 10,000 impressions per month. Value Click Media (http://www.valueclickmedia.com/) is a CPM network which requires 3,000 impressions per month for getting the site approved. Like CPX they have different size and types of advertisements; their minimum payout is $25. Tribal Fusion (http://www.tribalfusion.com/) requires a minimum of 500,000 unique users per month. They are regarded as one of the best CPM networks, but they are very difficult to get on to (very strict site requirements); their minimum payout is $50. Burst Media (http://www.burstmedia.com/) only approve sites having 25,000 monthly impressions (5,000 unique views). They provide different ad formats, and their minimum payout is $50. FAQ/Terminology The following is from the FAQ page at Lijit.com (http://www.lijit.com/help/advertising‐faq) What is CPM and eCPM? Advertisers buy ads by something called CPM or Cost Per Millia. That translates to cost per thousand ads that are shown, or impressed. Different campaigns cost the advertiser different CPM's depending on the target audience. When these campaigns all run on your site they blend into an "effective" CPM (eCPM). Lijit reports your eCPM in your Lijit account stats dashboard. An eCPM will fluctuate day‐to‐day as different campaigns come and go. What is an "ad tag"? An ad tag is a piece of code which communicates with ad servers via the internet to serve advertisements on your web site. This term is synonymous with "ad unit" or "ad block" or "ad wijit". What is a fill rate? A fill rate is the percentage of time an ad shows. For example, if a campaign has a 20% fill rate, the ad will show a maximum of 20% of the time. What does "above the fold" mean? Above the fold refers to the default location where an ad tag appears on a website. If it is visible when the page first loads and before the reader starts to scroll down, then it is considered an "above the fold" ad. What is a floor price? The floor price determines the minimum CPM value of the ad being displayed in an ad tag on your website. If you set a floor price for an ad tag, consider adding a passback tag to ensure that you continue to show ads to your readers if Lijit doesn't have an ad at your requested price. What is a passback tag? A passback tag is an ad tag you provide to Lijit that gets used in the event Lijit Ads aren't available at the Floor Price you specified. Whenever you set a floor price (minimum CPM you want to receive) it is important to provide an alternate tag, if you have one, so you can optimize the monetization of that ad placement. A passback (or alternate/default) tag can be an ad tag that you received from any other online ad provider that you work with. For instance, if you already have a relationship with Google Adsense, you can give us that ad tag. If Lijit can't find an ad at your specified price, we will serve your reader the Adsense tag. What is frequency capping? Many advertisers only want a unique reader to see the same ad a few times within a set period of time. Common frequency caps are 3 impressions per each unique reader in 24 hours. For the publisher this means you want to find the best ad targeting possible to maximize the revenue you receive within the frequency cap. Understanding CPM and Fill Rate changes Display advertising is a constantly changing market. Fluctuations in CPM and Fill Rate are common and usually indicative of quality of content (are you producing original, engaging content), the type of audience on your website (advertisers look for specific audiences to advertise to), the time of year (for example holiday time tends to drive higher CPMs), beginning and end of business quarters amongst other factors. How do I get paid? Before you create your own ad tags, you will need to apply for advertising with Lijit. You can do this by visiting your "Wijits" Administration Page and then "Ad Tags". First time publishers will be greeted with the Publisher Agreement and a simple Application screen before you are granted access to build and install your Ad Tags. After you accrue a minimum of $25 in your account (see this in your "Account" / "Earnings" page), you will be eligble for receiving payment on the ad revenue you earned. How do I request and receive payment? Once you accrue a minimum of $25 you will be eligible to receive payment. You need to visit the "Account" section of your Lijit account, select the "Earnings" tab, and set your payment information by clicking the "Edit Payment and Registration Info" link. All payments are made via PayPal. You will be prompted for your PayPal ID and asked to supply required tax information (tax information is required for U.S residents only). When will payment be processed? As long as you have provided Lijit with your payment details, and accrued more than $25, you will receive revenue from the previous month at the end of the subsequent month. All transactions will be completed on the 28th of each month. As long as you set your payment details before the end of the month in which you earned over $25, you will receive payment at the end of the following month. You only need to set your payment details once. Lijit will automatically pay you at the end of every month if you earned more than $25 in the previous month. References .Net Magazine Above the Fold – Brian Miller http://www.websitepublisher.net/generating_revenue/ http://www.smartinsights.com/digital‐marketing‐strategy/online‐business‐revenue‐models/online‐revenue‐model‐
options‐internet‐business/ http://www.wilsonweb.com/ecommerce/wilson‐startups‐research.htm http://donnygamble.com/how‐to‐monetize‐your‐content/ http://www.tipsandtricks‐hq.com/which‐cpm‐ad‐network‐to‐use‐for‐a‐relatively‐new‐blog‐1367 http://www.shoutmeloud.com/5‐cpm‐advertising‐programs‐to‐make‐money‐from‐your‐blog.html http://www.lijit.com/help/advertising‐faq Video ‐ http://www.youtube.com/watch?v=32VknlEnYgc Google Adsense in blogger Video ‐ http://www.youtube.com/watch?v=iAceed8sW1o&feature=relmfu Google Adsense