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How Much Should I Charge for my Advertising Space?

In this post Daniel Scocco answers to another question on the Problogger Question Box (and a question that I get asked a lot). Brian Auer asks:

What about [direct advertising] pricing? Are there any good ballpark price structures? What do we base rates on?

As soon as a blogger decides to play with direct advertising, the question of “how much to charge” emerges. If you charge too much, you might end up with no advertisers at all. If you charge too little, on the other hand, you will be leaving money on the table.

Unfortunately, as Brian wonders, there are no standard pricing structures across the Internet. You will need to take a look around, do some research, and experiment on your own site to find the rates that will maximize your revenues.

That being said, that are some methods that you can use to draw an initial price tag, and some specific places where you can look to cross check the numbers. Below we will cover them.

Defining the metrics: The CPM

Notice that talking about advertising prices in absolute values is useless.

Suppose there are two blogs. One charges $500 monthly for a 125×125 banner spot above the fold, while the other charges $1,000 for a similar spot. Could we say that the first blog offers a much better deal for advertisers?

Obviously not, because the value that the advertiser will get for its money depends on a myriad of factors, above all the traffic that each of the two blogs receives monthly.

If the first blog generates 100,000 monthly page views while the second generates 500,000 monthly page views, an advertiser would be better off by purchasing the advertising space of the second blog for $1,000.

As you can see, the answer to our question comes from a very simple ratio: cost of the advertising space divided by the traffic that the ad will receive.

Several metrics could be used to define traffic, from unique visitors to visits and page views. Most publishers tend to use page views though. Moreover, it is a common practice to measure page views by the thousands, so one should talk about cost per 1,000 page views or impressions. CPM is the term for that, and it stands for Cost Per Mille (Mille being the Latin word for 1,000).

Just to conclude our example, if you do a small calculation you can see that the first blog has a $5 CPM while the second one has a $2 CPM.

Now, we are not suggesting that you should tie your ad rates to the number of monthly impressions of your blog. Offering a flat monthly rate to advertisers is usually the best (and simpler) way to go. Just keep the CPM numbers in mind because they will enable you to compare your prices with those of other bloggers.

What do other bloggers charge?

Like it or not, the Internet behaves like a giant market place, and all websites are subject to the laws of supply and demand. In other words, if you set a price that is significantly higher than the one used by other blogs on your niche, the advertisers will go somewhere else.

The first thing you should do, therefore, is to take a look on blogs that sell advertising space to evaluate what rates they are asking.

The format of the ad (e.g., 468×60, 120×600, 125×125) and the position (e.g., header, sidebar, footer, blended with content) are factors that will directly influence the final price, so in order to be consistent through out your research you should pick a format and position that is popular.

Among blogs selling direct advertising space the 125×125 button ad on top of the sidebar is arguably the most used format, and it should fit our research purpose.

Let’s see what popular blogs on the online marketing sphere are charging, for instance. If you visit the Advertising page of Copyblogger, you will find that the blog generates over 1,000,000 monthly page views, and a 125×125 spot on the sidebar costs $1,500. Divide $1,500 by 1,000 (remember that 1,000,000 is equal to 1,000 times 1,000 page views) and you get a CPM of $1,5.

Similarly, if you visit JohnChow you will find that the 125×125 button add costs $500 monthly, and the blog generates 300,000 page views. Again just do $500 divided by 300 and you get a CPM of $1,66.

As you can see a CPM of $1,5 for the 125×125 buttons is a good average. Even TechCrunch charges a similar rate ($10,000 for 6,5 million page views monthly, converting to a CPM of $1,53), so let’s keep that number as a starting point.

Adapting to your own situation

All the blogs mentioned are viewed as authorities on their niche, which affects how much advertisers are willing to pay to get exposed to their audiences. If your blog is new or if you are just beginning to experiment with direct advertising, therefore, you probably should start with a lower CPM.

Start asking a $0,5 CPM, for example, and as your blog grows and more advertisers come along you can gradually raise it. If you have a blog generating 100,000 monthly page views this would translate into $50 monthly for each 125×125 button placed on your sidebar.

If you are going to use other ad formats or position the ads on other locations of your website just estimate how these factors will affect the traffic that an advertiser will end up getting. Placing a 300×250 banner on the sidebar, for instance, is similar to having 4 125×125 ads, so you could charge 4 times the price of the 125×125 ad ($200 monthly if your blog generates 100,000 impressions, converting to a $2 CPM).

Similarly, increase the CPM if the ad is on the header or blended with the content, and decrease it if the ad will be displayed below the fold or on the footer.

Keep in mind that you should consider real page views for these evaluations. Most web stats programs and software tend to over estimate the traffic on your site. Google Analytics is usually the most reliable one.

Cross checking the numbers and experimenting

In order to cross check the numbers with an external source you could join an advertising network (either CPC based like Google Adsense or CPM based) and use it on the spots where you plan to sell direct advertising.

If you are planning to sell a 300×250 banner spot below your posts, for instance, you could firstly put a Google AdSense unit there and measure the CPM that it will give. Most direct advertising deals should bring you more money that what advertising networks do, mainly because you are cutting out the commissions and negotiating directly with the advertisers.

Finally, remember to experiment endlessly and draw your own conclusions. What works for one blog may not work for another, and vice-versa.

Over to you

Defining optimal advertising rates is a tricky business, and I recognize that the methods and strategies described above might not work for everyone.

What other methods have you used on your blog? How did they work?

This post was written by Daniel Scocco from the wonderful Daily Blog Tips.

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Comments

  1. Doug says:

    Of course I post right after this guy saying they sell for $3-5 CPM. So perhaps growth is possible and John Chow is leaving money on the table :-)

  2. Ocha says:

    Really useful stuff for Me. to day i got mail from one of advertising company from USA, they asked me how much they need to pay if they want their product appear on my blog.

    It’s surprise for Me, my blog with PR 4 but less traffic. Anyone can help me to determine how much I will charge for one banner on my blog per month?

    Thanks.

  3. Dale says:

    Finally, someone talking about monetization of blogs. The price one gets for ad space is simply going to depend on getting to the right advertiser. Its easy to get 2.00 per CPM but you need to go direct to get much more than that. This company seems to be heading in right direction with web based ad system coming with the blog publishing tool. http://www.moguling.com

  4. This is great ! Some nice respones too.

  5. Raffi says:

    Being a community niche blog, we have a completely different approach. We do not have the 1,000 unique leaders daily, we do not exceed the 100 visitors daily. However, we still have sponsors and readers.

    Very few is written about our type of blogs, where the rules do not apply, and direct sponsors are much more interested and are more effective.

  6. MoonDog says:

    This was an exceptional post and I really appreciate the information.

    I have a sports blog I started four months ago. I’m averaging almost 4300 unique PV’s a month and have a PR of 4.

    Not knowing much at first I set up Google AdSense and have been running those ads. Pathetic performance! Since I joined the Yardbarker Network, things have changed. YB uses Adify to establish their publisher base, and since I’ve begun running their ads I’ve started to generate some revenue.

    Adify is by far the best deal going for publishers, IMHO. Current average CPM for three banner ads is $1.33 and growing. Based on what I’ve read in this post and the comments, that appears to be a little low, but I sense a four-month old blog could do worse.

    I’d like to get rid of Google if I can find another deal similar to Adify. The only drawback with them is they limit you to three ads on your site.

    Thanks for the great info.

  7. Adam says:

    Hello,

    We range around 2500-3500 uniques a day, but we have really high page views. The average user looks at 22 pages. The higher page views per user would typically bring the value of the ad down, correct?

    We have a 728 x 90 in the top fold. We sold this at $2.00 a CPM to a single company for about a year and a half; however, that has recently come to an end. Would it be better to set our price lower considering the fewer uniques if we were going to continue selling the ad space in CPMs?

    Any advice on dealing with high page views and lower uniques would be appreciated. Anyone selling ads on a site like this now?

    Also, can anyone suggest any good ASP.NET advertising software that they’re currently using/enjoying?

    Thank you!
    Adam

  8. KushMoney says:

    This post was a big help to me. Thank you for posting it.

  9. Saijo George says:

    This was a gr8 read , I was looking for some thing like to get a basic idea of how much to charge advertisers on my blog.

    thanks 4 this article mate

  10. Great post. It is very helpful to see, but I would just make sure people NEGOTIATE this process. Everyone wants to feel like they are getting a deal, so sometimes starting higher can be beneficial.

  11. Joel says:

    I was curious how much to charge for ads. Thanks for posting this.

  12. Peter Szabo says:

    Thank you very much for this article it was exactly what I was looking for. Its really hard to decide what to charge for advertising space because each niche is so radically different.

  13. Well this numbers are big. What tips for middle range bloggers?

  14. Grant SMythe says:

    I could kiss you . .well perhaps not really, but how about a huge hug . . . .

    I started up a basic gaming website 12 months ago (aug 17th) to just put up info on the Xbox360′s new Up-coming games . .

    It now has 13 volunteer staff including myself, and we topped our July target of 60k unique views by hitting 90k, and we are well on the way to topping that for August. We have also reach page rank 5 (which I believe is good?), and several Australian gaming promotion companies say our figures are very good for our specific target market. Which I’ll take as a complement from them.

    Now is the time we (read I) need to make it a viable concern – as this will be my last effort at business linked with hobby, and I definitely want to make it work for all concerned . . This information will help me greatly, and your site is fantastic.

    We have plans on running a Xbox 360 Gamers Blogging Service where they can set up and run their own off our backbone, and carry ads across to their site, giving them a small % return naturally. Is this possible and how would one do this, once we are getting some return naturally, but not one for sitting still, I’m looking at these things now, rather than later.

    I’d love to be able to use some of your material (snippets) and of course place as many link-backs as possible in a “Blogger Help section” if that were also permissible once we got that going . . ?

  15. Great advice for me. I think a lot of people need to read this one

  16. Gr8 read mate , I had no clue where to begin with pricing for Ads

  17. Peter Szabo says:

    Awesome Article! Thanks Daniel! I will try to market some advertising directly, soon. So this article helped me a lot to find a calculation base.

  18. Grant SMythe says:

    Actually Daniel, I’d like to use it in some references if possible on something I’ll be writing for small blog owners on making their site pay for themselves and possibly gain some return.

    Plus I’ll be handing it around to our team. I’ll link back to this article of course . . and only use it as a reference and small section of it as an example.

    Please let me know if that is okay.

    Grant

  19. soontobeblogger says:

    Great article Darren!
    Michael Aulia also wrote an article on the topic, he found a site that calculates the prize for you:

    http://www.michaelaulia.com/blogs/how-much-should-you-charge-for-private-advertising.html

  20. Thank you very much for this article it was exactly what I was looking for. Its really hard to decide what to charge for advertising space because each niche is so radically different

  21. Alex Griffin says:

    Thank you for this article! Very useful for all webmasters.

  22. AbeOnTech says:

    Great information, but I think placement of the adverts is a huge contributing factor.

    If you place an advert right at the top of the page it will get a LOT more hits and even views (as not every visitor will wait for the whole page to load) than one placed in the footer.

    This should also be taken into account when charging per month or a one off fee.

    Very good post, thanks!
    – Abe

  23. Parrish says:

    Your page offers good advice. The one question I still have is, if the advertising market improves down the road, how do you go about raising rates in a way that is fair to the advertiser and still fair to you?

    On my site, languagelearninglab.com, I have started by offering a fix rate that is very cheap, I am even offering the first month free (you can even cancel after the first month) to attract possible advertisers.

  24. Steve says:

    Would using your CPM for Adsense on your site have any value for determining the pricing for ads on the site? I mean, if your Adsense CPM is $2, would you recommend using that as a baseline for banners ads. What about if your CPM was $5?

    Should these factors be figured in? Charging $1.50CPM seems very low if simple Google Adsense rates are much higher.

  25. Matt says:

    Thanks for the wonderful article about selling ad space on blogs. I have owned my blog called Feral Jundi since the beginning of the year, and it has been a fun process of trying to monetize it and experiment.
    I am not quite at the 1000 a day Page Views, but I am getting there. This article has given me some great ideas about advertising metrics, and thank you so much.
    Also, if anyone is interested, I blog about the security contracting industry. I mostly focus on overseas contracting in such places as Afghanistan and Iraq. The blog is starting to get some attention by some of the big guys out there, and it has been fun. I attribute my blogging success to Problogger and I am truly thankful.
    -Matt

  26. This was very helpful. I am working on a Media Kit for my site and had to come here for useful info on direct advertising pricing. Thank you so much.

  27. armand says:

    great article. Im researching this kinda stuff at the moment. thanks

  28. Grant Smythe says:

    After reading this, I began to do some more research before embarking on pricing for our site. After discussing prices with places like Microsoft, and with our monthly views, we can charge between the $AU10 – $AU30 mark CPM . . . which would be inline with US currency of around the $US5 -$US15 CPM . Hope that helps some ppl out a little.

  29. Selling direct ads is where most of us that have any sense are aiming to get to. It is a long hard road, but it is there for us all to achieve, if we really want it badly enough!

    The Barbados Blog

  30. gre tutor says:

    what are other ways besides a “your ad here” sign to get advertisers ?

  31. Neale says:

    Great article I work on both sides of the fence been involved in promoting sites in my job & with my own sites part time having space available. I got out of selling space when google had it’s hissy fit but would like to get back in without anoying them using a nofollow or the likes your post makes it real simple to evaluate thanks.

  32. This is a great article. Thanks for the advice. I have someone interested in a text link ad. That’s not as “fancy” as a banner ad. Does anyone have any thoughts on pricing out something like that?

  33. Rafi G says:

    Thanks for pointing us in the direction of how to charge for advertising.

    Another point I would like to see addressed is a different form of advertising. I have been asked at times to write a post as an advertisement for someone’s service or website.

    So, how do I calculate how much to charge for a post?

  34. Vishal says:

    Thanks Daniel for the great article.

    How much should one charge for a 125×125 top sidebar banner CPM ad and blog (new blog) monthly page views<10000.

    http://talk-english.blogspot.com

  35. Dan says:

    I’ve just started writing directly to suppliers and businesses in my niche offering ad space to them. The info on pricing helps a lot. Thanks. Any tips on methods of finding advertisers and selling to them? My niche is pretty old school and most don’t understand blogging yet.

  36. Grant says:

    The best bet is to go for a ad aggregator (no, not alligator hehe) who specializes in anyone particular field.

    Most major companies or suppliers of goods will not look at a site unless it has a solid, continuous view rate of 400 – 450k per month.

    We have been trying for ages to break into the gaming area, and the only way to do that for smallish sites is to be part of an aggregator site compiler who basically gets as many sites in a similar field, then approaches the different major advertizers. That way he has a huge view rate to go to the advertizers with, and get rather good rates per view.

    He then takes a % of course, but their fees are reasonable as they have LOTS of clients, as it’s best to have a small % of many, rather than a large % of a few.

    So once you are a member with them, you will be part of an advertizing system, where they “share” ads across the sites specializing in any one, or several, fields.

    OXCGN gets an average of 2k views per day (today we have 5k – yesterday 2.5k) and an average of 65k per month. That to many “advertizers is small fry, even if your site is well placed on ALexa or even Page Rank, it’s the views on a regular basis they look at, as well as your demographic.

    So you’ll need to have those facts ready when you approach the aggregator for inclusion in their system.

    If you can approach smaller advertizers, they will want to know who your viewers are, how often they visit, how long they stay, how many pages are viewed per week/month, as well as what has been you view rate average over the last 3-4 months.

    They need to know if it is viable for them to advertize with you.

    Additionally, you/they will need to monitor their ads, so some software on your site, or through them will be needed. They may well have an in-house service, so you won’t have to worry about that.

    Rates, depending on views and position, can be from approx $7 – $30 CPM for a full ad run across. But be prepared to take a lot less to begin with. (those figures were given to OXCGN by MS directly for us to use as a guide regarding OXCGN, so other sites may well be different depending on their ranking and style of site.

    I hope this has been of some use, and we will be doing a small Help Page on OXCGN in due course to help smaller sites in this area.

  37. Serenity says:

    I just want to say that this was the most thorough blog I’ve read on this topic so far. I’ve read at least 10 different articles, and though some mentioned the different ways bloggers determine how to charge, none gave real figure examples. Most just reworded the question and left it to the readers to comment the answer! Thank you for the thorough explanation. I def learned something that I will continue to use and make now take the next step in my process.

  38. Serenity says:

    I haven’t actually started selling yet…still doing research, but it seems that if $1.5CPM is about standard for 125×125, then bigger size ads would have bigger CPM.

    Like you said a 300×250 may cost 4x as much as a 125×125, then CPM for a 160×600 could easily be $8 or $9, right?

  39. testbot says:

    Any ideas on video ads? 10 second to 60 second spots?

  40. Grant says:

    The shorter the better, as a persons attention span on a site is mere seconds, not tens of seconds. Unless the video is relevant to some news, then most won;’t even bother with it.

    However, short smaller ads work best. Plus you get more ads in for the given time, rather than one ad over the same time frame.

    Sell the idea as short, specifically targeted ads . .but you do have to allow them to make up their own ads, and they will require a certain size and position – usually . . .

  41. Louie says:

    I love this blog entry! It’s like the only helpful information I could find in relation to this subject. Thankks.

  42. Gavin says:

    Well for me at the moment i won’t charge a thing until ii do my research and find out what works and what does so that I be sure not to charge too little or too much.

    Secondly, I would create an ad in GOOGLE ADS and save it there for the moment while I in the mean time I check against other ads to see how well or bad they are doing find out which are the best keywords to use in my campaign once you have done that you put the ad and wait

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