How do you decide how much to charge for ads? How much will advertisers pay? What packages can you put together that advertisers will be interested in? These questions aren’t easy to answer, but answering them correctly is key to building a successful advertising program.
The ideal ad rate varies from publication to publication. There’s lots of differentiation between publications based on niche, audience size, and advertising packages. But, how can you pinpoint the best ad rates for your publication?
When you’re first starting out as a digital publisher, it can be tempting to look at the competition. What are other publishers in your niche charging? How about other publishers with the same size audience? This is a strategy that many publishers have tried, but it’s not the best way for publishers to monetize their websites and achieve financial success in the long-term.
Try this simple approach instead: set a goal. Figure out how much you need to survive monthly, then add 25% to that number. That figure should be your monthly goal. Let’s look at an example of how this might play out in the real world.
A local news publisher runs the numbers and determines that they need to bring in a minimum of $5,000 a month for their publication to survive. That figure takes into account all operating costs, including website management, employee salaries, and miscellaneous fees. Adding 25% to that number brings the total up to $6,250. This is the publisher’s new monthly goal.
The monthly goal that you set should be realistic, but also optimistic. It should be a number that makes the year feel like a success and makes all the hard work that goes into growing an online publication worth it.
With a set monthly goal, you can get started building “ad packages” that will help you meet (or exceed) that goal. The goal that you set should be your guiding star. Everything that you do in designing your ad packages and setting your ad sales rate should be done with this end goal in mind.
Don’t use website traffic as a baseline when deciding how much to charge for ads. CPM (cost per thousand impressions) isn’t a realistic option for most niche publishers. Instead, think about the maximum price that advertisers would pay to be on your site, and the minimum amount that you need to reach your monthly goal.
A more important consideration than traffic is the number of clients that you can reasonably work with at any given time. Many niche publishers have constraints on the number of display ads they can run or the time they can spend working directly with prospects. Running other types of advertising can expand the number of clients that you can serve, and offer additional value to clients you’re already working with. If you are reaching your limit on the number of advertisers you can support, consider expanding beyond display advertising. Potential options include:
The most successful ad programs have multiple packages at different price points. You could reach the same level of profitability selling 25 monthly ad packages for $250 each as you could selling five monthly ad packages for $1,250 each. You’ll likely have a mix of interest levels from advertisers. Some bigger budget businesses will be drawn to your higher-priced packages, while others will want to start out with the lowest-cost option. Take this into account when determining your ad sales rate and predicting how many packages you’re likely to sell. Building in some higher pricing also gives you wiggle room if you choose to offer an advertiser a discount.
As you get closer to finalizing your ad sales rate, keep these general guidelines in mind:
This last point is particularly important. Will a small coffee shop that’s paying $250 per month to run display advertising on your website sell an additional 100 cups of coffee as a result of those ads? If that doesn’t seem likely based on the size of your audience, then it could be worth reevaluating your pricing. However, it’s also worth noting that ROAS (return on advertising spend) may be less important than you think. An advertiser might be more interested in name recognition and brand awareness than immediate sales. That’s why it’s a good idea to connect with advertisers directly and learn about their goals before starting any new campaigns.
Niche publishers have many advantages that established legacy publishers and behemoths like Facebook and Google do not. Niche publishers can run ads that are naturally relevant and targeted to their audiences. They can also provide advertisers with personal guidance and flexibility, as well as real-time reporting. Keying in on these areas of differentiation is always smart, but especially when setting up an ad program and determining pricing.
Above all else, digital publishers must deliver value in the packages they offer. It doesn’t matter if the package costs $250 or $25,000. Is the value there for the client? If not, advertisers won’t be sticking around for long. As a publisher, you want to wow your clients. You want them to feel like it’s a no-brainer to advertise on your website at the price that you’ve pitched.
To learn more about how to monetize a website and set the ideal ad sales rate, contact Broadstreet Ads.
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