3 Signs You’re Not Charging Enough for Digital Advertising

February 15, 2022

Are you charging enough for digital advertising? If you’re like many niche and local publishers, you might be undervaluing your services. That means you could be leaving money on the table and making it harder to take your business to the next level.

How do you know if your rates are too low? Won’t raising your prices decrease demand? Will existing clients be turned off by increased rates?

These are all valid questions. However, they are all easily answered. Just because your existing ad fill rate isn’t at 100%, doesn’t mean your rates are too high. In fact, they might be too low. 

Local publishers will often aim to monetize 100% of the available advertising opportunities on their websites, and other digital channels like email, but not hitting that high benchmark doesn’t mean you’re not succeeding. A fill rate that’s between 60% and 90% conveys that your inventory is well monetized and you aren’t compromising CPM just to fill extra spots.

If your ad fill rate is regularly above 90%, that’s a clear indication that you might not be charging enough for digital advertising. We’ll take a closer look at the other signs you’re not charging enough for digital advertising later in this article.

High Demand for Digital Advertising

We know that the demand for digital advertising has never been greater. Digital advertising across all online channels is expected to exceed 60% of global ad spend for the first time this year, reaching 61% of total expenditure. That share is expected to rise even further by 2024, to an incredible 65%. According to some estimates, ​​global ad spend could reach as much as $873 billion by 2024.

Pricing for digital advertising is both an art and a science. There are a number of ways publishers set their advertising rates. The most common options in 2022 are:

• Packaged Pricing: Creating multiple advertising “packages” and letting clients choose one or more packages for a certain period of time. Packaged pricing is convenient, transparent, and it can be set up to meet a wide variety of budgets.

• CPM Pricing: CPM pricing is popular among the very largest online publishers, but the strategy is more difficult for niche and local publishers to implement. With CPM pricing, publishers are opting for a variable model where advertisers pay based on the number of impressions their ads receive. For example, if a publisher charges $3 CPM, then the advertiser would pay $3 for every 1,000 impressions.

• Flat-Rate Pricing: Flat-rate pricing is related to packaged pricing. With flat-rate pricing, publishers set a price for each ad placement (for example, a banner ad on the homepage might cost $5,000 per month). Advertisers can pick and choose which ad formats and placements they want, and they can set up campaigns that fit their unique budgets.

You can read more about the most popular local advertising pricing strategies in Flat Pricing or CPM? How to Price Local Advertising.

Signs You’re Not Charging Enough for Digital Advertising

Now that you know how most niche and local publishers are handling ad pricing, it’s time to look at the signs you might not be charging enough for digital advertising. 

Whether you’ve opted for packaged pricing, flat-rate pricing, or you’re going the CPM route, consider these signs that you might be undervaluing your services and not charging enough:

Sign #1: It’s difficult to pay the bills. 

Let’s consider this the minimum threshold. If you aren’t charging advertisers enough to sustain your business on a monthly basis, then it’s time to focus on increasing prices and increasing the value of your offering to your advertisers 

Sign #2: You’re undervaluing your audience. 

If you’re a local or niche publication, your audience’s value isn’t in traffic alone. Your traffic is more valuable than an untargeted audience, because visitors who arrive at your site have something in common — perhaps they live in the same location, share similar demographics, or take part in the same hobbies. Your audience is more attractive to advertisers than an untargeted audience, and that’s something you should be promoting.

Sign #3: You’re trying to stay competitive with programmatic solutions. 

Have potential advertisers told you that it’s cheaper to use a different programmatic solution than to advertise on your website? They’re probably right. But of course, we know that price alone doesn’t tell us much when it comes to digital advertising. As a niche and local publisher with a dedicated, targeted audience, your product is simply more valuable than what programmatic solutions can provide. You’re not just a portal, you’re a business consultant and an advertising partner. You provide solutions to business’s problems, and that deserves a higher price tag.

Do any of those signs ring true?

If you’re not sure where your prices should be, consider this approach: Figure out how much you need for your business to survive each month, then add 25% to that number. That figure is your new monthly goal. Use your monthly goal to design “ad packages” and set your ad sales rate with the end goal in mind. Determine how many ad packages you need to sell to reach your monthly goal. (For example, you might need to sell 5 $1,000 packages to reach your goal of $5,000 per month or 10 $500 packages to reach the same goal.)

You can learn more about setting the right pricing by reading How Much Should I Charge for Ads?

Don’t let fear hold you back from setting the pricing that you deserve. 

In a highly competitive environment like online publishing, setting the right prices is tricky business. That’s especially true for publishers who are just starting out. It’s tough enough to win new clients. It’s even harder when you’re anxious about how potential clients will view your prices.

To get started setting realistic advertising rates and growing your business in a sustainable way, contact our team at Broadstreet Ads today!