Editor’s Note: This article was originally published by Web Marketing Today. Practical Ecommerce acquired Web Marketing Today in 2012. In 2016, we merged the two sites, leaving Practical Ecommerce as the successor.
There are three primary ways to monetize (that is, generate revenue from) a website:
- Ecommerce. Receive profits from direct sales of products or services.
- Affiliate marketing. Receive referral fees from merchants when a product or service you linked to results in a sale as a result of your link.
- Advertising. Receive ad revenue for displaying advertising on your website, blog, or email newsletter.
It’s the third approach that we’ll be exploring in this article.
Your dream may be to build a website, have people visit in droves, and then rake in ad revenue while relaxing at the beach. It’s a common dream, but an unrealistic one — for most people and businesses, that is. If you have the right kind of site and if you work hard and smart, however, you might be able to achieve at least modest advertising revenue from your site. Whether you’ll put in much beach-time, remains to be seen.
Stating the Obvious
Before I begin, let me state a few obvious principles of the advertising field:
- Higher-priced products and services can afford to pay more for advertising than low-priced industries.
- Only targeted advertising will ever be clicked on. If you put a general drug store banner ad on a model racing car website, you won’t sell much antacid. Untargeted advertising sells for perhaps 50 cents per 1,000 page views or less — not enough to earn a living.
- Advertising is priced on supply and demand. Right now there is an unlimited supply of web pages on the Internet. But if there is a demand for your site (that is, if you get a lot of targeted traffic) — and your site has a valuable target audience — then you’ll be noticed by advertisers.
Ways of Paying for Advertising
There are three main methods of pricing advertising:
- CPM (cost per thousand views). 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.
- CPC (cost per click) or PPC (pay per click). In this pay-for-performance model, the advertiser pays only 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.
- CPA (cost per action) is either pay-per-lead or pay-per-sale. Affiliate marketing (which we’ll explore in another article in this series) runs on this model.
Now let’s look at the 8 steps to ad revenue generation.
1. Provide quality content centered around a commercially viable industry
Unless your website is related to an industry that is commercially viable, the chances are you won’t be able to make much money on advertising. Simply speaking, advertisers will only pay you for advertising if it helps them make money.
I have a friend who is a true expert on English grammar. He has developed a whole website around correct grammatical usage. It’s even getting some traffic. Consider who such a site might attract:
- English teachers
- Non-native speakers trying to learn correct English
- Students who have an assignment to complete for class
Are these people likely to spend money on this topic? Not likely. A dictionary publisher might want to advertise here, but since the book sells for $25 or less and there isn’t hot competition for dictionaries these days, publishers won’t pay much for advertising. If you had online English classes, you might want to advertise. But still, these ads wouldn’t sell for much.
Should my grammatical friend expect much advertising revenue? No.
I have another friend who has a nursing website that has attracted interest from pharmaceuticals. Since the drug industry is very competitive and sells some high-priced products, this kind of website has the potential to make good money, if developed properly.
Not only do you need a commercial field, you must also provide quality content:
- You won’t get much attention if people don’t learn from your website. If they learn, they’re more likely to return.
- The Google Panda algorithm update tends to give lower rankings to sites with poor content, measured by such things as bounce rate, the presence of obtrusive ads, and evidence of “scraping” or duplication of something on another site.
- Internet users are getting more sophisticated and won’t settle for mediocre content. They’ll leave quickly if they don’t find what they’re looking for.
2. Optimize your content on high-priced keywords
Assuming that you’ve got step 1 under control, now move to optimize your content around high-priced keywords. You can use the Google AdWords Keyword Tool to find out what keywords get the highest bids in your niche.
You optimize your content in two primary ways.
- Keyword focus. Select the two or three dozen highest-priced keywords in your industry or niche. Then write content about these topics.
- Keyword placement. Put high-priced keywords (wherever appropriate) in your:
- Title tags
- Alt tags for graphics
- Filenames for graphics and webpages
- In hypertext linked words and phrases.
- In the first and last paragraphs
It’s not enough to have great content. You’ll want to focus your efforts on the most profitable topics, and then make sure your content is indexed correctly by the search engines for these profitable keywords.
3. Generate lots of traffic to your site
Perhaps this goes without saying, but unless you have lots and lots of traffic to your website, you won’t make much money selling advertising. How do you get traffic? This is a complex topic, but mainly three ways:
- Search rankings. Get highly ranked on the search engines for your keywords. In part, you achieve this by step 2….
- Links. Get links and recommendations to your website from other sites, blogs, social media, directories, etc.
- Ads. Pay for advertising to get people to your site — so they’ll see the advertising there.
If you were to try to sell advertising directly, one of the first questions their media buyers will ask you is: What is your monthly number of unique visitors or page views? Unless you have healthy numbers, they won’t pursue you. Get the traffic and you may begin to attract interested advertisers.
4. Determine what kind of advertising is selling in this niche
If you’re pursuing an advertising revenue strategy for your site, you will have done a lot of looking at competition websites to see what makes them good — and to determine how you can be even better.
Type and Size of Advertising. Is most advertising in your industry Google text ads or display ads (that is, graphic ads)? If display ads are popular, what size appears most often?
As of February 28, 2011, the Internet Advertising Bureau (IAB) lists seven standard ad units (dimensions in pixels are in parentheses):
- Medium Rectangle (300 x 250)
- Rectangle (180 x 150)
- Leaderboard (728 x 90)
- Skyscraper (160 x 600)
- Half Page Ad (300 x 600)
- Button 2 (120 x 60)
- Microbar (88 x 31)
One size that’s shown as “delisted” is the Full Banner (468 x 60). You’ll still see this widely on the Internet, but not on sites that are seeking to sell to advertisers that pay well. Sometimes you’ll see other sizes, but for designing your own page, stick to the most popular sizes in your niche or industry.
Source of Advertising. Now look deeper to determine the source of advertising. Most third-party ads have two URLs.
- Intermediate URL of the ad server. The ad server is the company that displays the ad as well as counting and collecting information on the click-through, then redirects the user’s web browser to the…
- Destination URL on the landing page of the advertiser’s website, where the Internet user is supposed to end up.
If you can figure out what the ad server company is, you can learn something about the advertising type. The intermediate URL can sometimes be seen by putting your cursor over the ad (without clicking) and looking for a URL at the bottom left of your web browser frame. However, some types of ad technologies don’t disclose the intermediate URL — and it’s hard to see in the URL in the bar at the top of your browser since it redirects so fast. Another approach is to right-click to “view source.”
What you’re looking for is the name of the ad-serving company (not the brand of the ad-serving software). For example, DoubleClick (now owned by Google) is often used to display higher-priced ads on better sites. Ad networks, on the other hand, display lower-priced ads. You’ll see some of the names of ad networks in step 7 below. The detective work you do here may pay off in useful intelligence to help you develop your own strategy.
5. Design your web page template for advertising
Now that you’ve gotten an idea of how companies tend to advertise in your niche or industry, you need to design your webpage template to accommodate the most popular ad sizes. Be careful not to so overload your webpage template so it looks cluttered. Don’t be greedy. A few ads designed to fit nicely on your webpage will achieve a professional appearance without looking overdone. And only the most prominent ads will get many click-throughs anyway.
Typically, a site offering advertising will display a leaderboard (728×90) across the top, with another ad size along the right side of the page. Google AdSense ads can be placed anywhere on the page. But too often they tend to clutter the site and make it more difficult for readers to get to the information they desire. Be wise and experiment.
Now consider three types of advertising on your site. You may even end up mixing these types.
6. Consider Google AdSense text and display advertising
Google is the biggest advertising company on the Internet. Their AdWords ads that appear on search results generate a huge amount of revenue for the company. But you can put Google AdSense ads on your own website. To learn more, see https://www.google.com/adsense/
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, many of whom are finding good results advertising on sites like yours. You don’t have to find the advertisers. Google does it for you. And Google seems to pay publisher sites like yours about half of the revenue it receives from the advertisers. This can be an ideal solution for many small business sites. Since the ads are targeted according to your content, they command a higher bid price than untargeted ads.
Also experiment with display ads (image ads) through Google AdSense.
7. Consider display ads from ad and affiliate networks
A second kind of advertising source is networks beyond Google. There are two main types of networks: ad networks and affiliate networks.
Ad networks. These are companies that you contract with to display their clients’ ads on your website. They may pay you on a CPM basis (perhaps 50 cents to several dollars per thousand ad displays — or less), or they may pay on a Cost Per Click basis. Search on “ad networks” and you’ll find lists of these. Some of the better known include ValueClick, AdBrite, Burst Media, Casale Media, Kontera, Chitika, Tribal Fusion, and Bidvertiser. Some ad networks are focused primarily on one sector; others offer ads across many industries.
The problem I’ve seen is that ads aren’t usually closely targeted to your content, but only to your general industry. Consequently, the click-through rate tends to be lower and your revenue is lower. If your website isn’t highly targeted on a high-priced commercial niche, however, an ad network may be your best source of ads.
Affiliate networks. We’ll consider affiliate marketing in another article in this series. However, affiliate networks fit here, since they offer display ads from many advertisers. The major difference between ad networks is that, while ad networks usually pay on a CPM or CPC basis, affiliate networks tend to pay primarily on a CPA (cost per action) basis, when a purchase or lead results from the click. Search on “affiliate networks” to see lists of these.
Some larger affiliate networks to explore are CJ (Commission Junction), Clickbooth, ClickBank, Shareasale, and Linkshare. You can typically choose the ad and ad sizes you want to display on your site as well as the advertisers you think will provide the best revenue for you. However, the individual advertiser may want to approve your site before allowing you to place its ads on your site.
8. Consider employing a sales rep to sell CPM ads
If you’re finding good success in earning advertising revenue on your site, you might consider employing an agency to act as a sales representative to seek advertisers for your site. Sales reps are advertising professionals who are able to work out CPM deals directly with prime advertisers’ media buyers — deals that you wouldn’t be able to land yourself since experienced sales reps have industry knowledge and an extensive network of contacts. If you have a relatively lucrative advertising potential, this may be the best way to get the most money for your ads.
However, getting a sales rep has three potential downsides:
- Good sales reps won’t even consider working with you if you don’t have a lot of traffic and potential for a lot of ad sales revenue.
- Good sales reps demand a hefty percentage of the overall ad revenue for their services.
- Finding a good, hard-working, productive sales rep for your company is a hit-and-miss venture. You may have to try several sales reps before finding the one that is a good fit for your company.
Hopefully, this overview of the steps involved in developing advertising revenue for your website will bring a healthy dose of realism. Many sites have little advertising potential. But if yours does — and if you’re willing to work hard enough to develop it — you might even be able to earn enough money to afford a trip to the beach now and then, so long as you can find the time.