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Selling Ad Space

Michael Sumner • Nov 18, 2009 • 5 Comments
 

In the past few weeks I have been contacted by several upstart and established domain industry bloggers to advertise MiniSites.com on their site.  The prices ranged from $x to high $xxx per month.  This got me thinking… how are they coming up with these prices?  I have a feeling that several are taking what they would like to earn from their site, and dividing it by the number of positions they have available, and hoping for the best.  Others may be trying to price it at the most they think I can afford to pay.  None of their pitches were effective though, and I’ll tell you why.

Target Market

Before you tell me how many uniques, visitors, and page views you get, tell me a little about your site and your visitors.  What do you typically write about?  What type of visitor do your articles attract?  If you get 50k uniques a month, but they aren’t my target market, I couldn’t care less.  Get a little bit more creative than “My site is a blog about the domain industry, and it is read by domainers.”  In our case, we are looking for intermediate to advanced domainers with quality portfolios.

For example, if I were trying to sell ad space to Bido on PushToAuction.com, I would tell Sahar or Jarred how my visitors are very targeted to active domain sellers looking to start an auction on Sedo, and advertising on my site would present an opportunity to take business away from them.  Also, my site attracts a lot of domain buyers looking for low-cost domains starting at $60.  Since his starting price is $28, PushToAuction.com could send him a lot of active bidders as well.  This would probably get their attention.

Look at my site, see what I’m selling, what my prices are, etc.  If you have a site that teaches newbies on a shoestring budget how to hand register domains, are your visitors going to buy our mini sites?  Probably not, it is most likely too expensive of an investment.  If you write a lot of articles about WordPress and how to build your own mini sites, are your visitors going to buy our product?  Probably not, the DIY crowd that has some level of technical knowledge would rarely pay someone to do it for them.  If you write about how mini sites do not work… well that should be a no-brainer.  If your visitors won’t convert for me, they are worth $0.

If you start your email by broaching this subject, you’ve got my attention.  You added a personal touch, and took the time to show me that you understand what my needs are, and that you can deliver.  If I feel like I’m one of 20 people that was BCC’ed on your email, I’m less likely to continue reading.

Site Analytics

Ok, I’m still reading your email, so the next important question is how much traffic you are getting.  Be prepared to show me screen shots of your analytics, and not just from the current month.  Unless you are a big name domainer, don’t expect me to trust stats that you type into the email… I want screen shots or a PDF.  Don’t make me ask for it, or I’ll just assume it isn’t good news and move on.

I want to see that you not only have traffic this month, but that you have had traffic consistently over a reasonable period of time.  I don’t care if you had 10k uniques this month when you had 1k uniques last month, and 2k uniques the month before that.  I want to know that while I am advertising on your blog, you are going to continue making new posts and driving consistent traffic so my ad gets the expected number of impressions.  If you don’t get consistent traffic, don’t base your price on your highest month.

If you just launched your site a month ago, either price yourself very low, or don’t ask me for a long commitment.  I’m not going to pay for 4 months in advance when you only have one month of traffic to back it up.  How do I know you’re going to keep posting next month, unless I’ve seen you posting month, after month, after month?  I don’t, so I’m not going to make a long-term commitment, and I’m probably not going to buy at all unless you’re not asking for much.

Also, I want to know your bounce rate and the average time on site.  Why?  Because if you’re getting 10k uniques a month, and 80% click away in less than 5 seconds, is my ad getting seen?  Not by as many as it sounds like.  Page views don’t tell you much if half of them are coming from 5% of your readers, and almost everyone else is bouncing.  I would also like to know how many new visitors you are getting each month.  This isn’t important for getting me to advertise, but it is very important for getting me to sign a long commitment.  If you are attracting a lot of new visitors every month, I’m going to keep advertising with you month after month.

If your analytics or ad serving software does not give you data about outbound clicks, get a new one.  Use Google Ad Manager, it will tell you this data for each ad spot you have available.  If you can tell me not only how many impressions I can expect, but also how many clicks, you have my undivided attention.

Pricing

This is without a doubt the most important part of the whole pitch, because all the information you provide above is what justifies the price.  If I’m still on the hook at this point, you’ll lose me quickly by asking for an absurd price.  But how do you determine what I might be willing to pay?

First, find out where I already advertise on domain industry sites.  Email those site owners insinuating that you might want to advertise on their blog, ask for their rates, traffic stats, and try to determine their audience on your own.  Some have an advertising page with prices and analytics, use that when available.  If they say they don’t have any slots, still ask for the info saying you might be willing to get on a waiting list if the numbers make sense.  Let’s say I advertise on XYZ.com which gets comparable traffic to your site, and has a similar audience.  It is a fair assumption that for the same price, I would be willing to advertise on your site.  I would not be willing to pay double that, so don’t ask.  If you have higher traffic, or a more targeted audience, or a better reputation, I’d probably be willing to pay more.

Second, find out what my alternatives are.  Especially if I contacted you, I am probably contacting other blog owners.  Do the same thing as above on sites I am not advertising on.  If a competing site has more traffic than you, a better audience, and is asking $150/month, do you think I’m going to pay you $300/month when I could just go to the other site?  If you already know what the other sites are asking, you can price yourself accordingly and earn my business.  Although you may not realize it, other domain bloggers are your competitors when it comes to selling ad space.  Find out what it takes to beat them.

Finally, see if I am advertising in Adwords.  In this case, I am not, because we already rank #1 in organic results for our important terms.  Let’s pretend for a second that I am advertising in Adwords though.  Why does this matter?  Because you can find out, with pretty good accuracy, what a visitor is worth to me.  Get started by going to Google and searching for a keyword phrase that I would be likely to bid on… let’s say “mini sites” without quotes.  Note what position I show up in for the sponsored search results (since I’m not there, let’s pretend I’m #1).

Most people get CPC (cost per click) data from GAKT (Google Adwords Keyword Tool), but this isn’t precise enough for what you are about to do.  Behold, the little-known, but extremely useful GATES (Google Adwords Traffic Estimator Sandbox).  In part 1. you enter in a keyword phrase with quotes around it (i.e. – “mini sites”) to get the exact-match data.  In part 4c. you select “All Countries and Territories” because it is a term that isn’t really specific to one country, and click Add.  Click continue.

On the next screen, you will see some very useful data.  To be in spots 1-3 in Google’s sponsored search results, I would need to be bidding between $0.54 and $0.75 per click.  Because I’m in the #1 position (in our pretend scenario), I’m likely paying in the upper part of that range, somewhere in the neighborhood of $0.68 to $0.75 per visitor.  What does that mean for you?  Let’s say you’re a very savvy developer that used Google Ad Manager, and you know how many clicks each of your ads get… for the sake of argument the slot you’re trying to sell me gets 200 clicks a month on average.  That slot would likely be worth between $136 and $150 per month to me (0.68 * 200 and 0.75 * 200).  If you don’t know how many clicks your ads get, try asking someone that already advertises with you how many clicks they got… they’ll be happy to tell you (either because they were disappointed, or elated).

Let’s say for a minute that I am in the Google sponsored results, but in the #5 position.  What do you do now?  On the GATES tool that you were just looking at, play around with the Max CPC until the “Estimated Ad Positions” has 5 in the range.  In the “mini sites” example, you would have to decrease the Max CPC all the way down to $0.26 to get the Estimated Ad Positions to be 4-6, and the Estimated Avg. CPC at that point is between $0.12 and $0.26.  Because 5 is in the middle of the range of positions, I’m probably paying somewhere in the middle of the CPC range, maybe $0.19 per click.  Multiply that by the 200 clicks your ad slot generates per month, and I might be willing to pay about $38/month for your ad spot.  That may not actually be true though, which is why it’s important to also see what blogs I’m advertising on, and how much that costs me.

Conclusion

When approaching someone to sell them ad space, or when you get approached, do your homework.  Try to determine who they would likely be targeting, and if your site can deliver those visitors.  Present thorough statistics for several months, maybe 6 to 12.  Finally, do some leg work to try to figure out what they would likely be willing to pay for your ad space based on your competitors rates, and their Adwords spend.  All ad buyers might not be this demanding, but even if they aren’t, it will be harder to reject your pitch when you have priced your ad slot fairly, and justified the price with analytics and information about your audience.  Do yourself a favor and use software to serve your ads, it will give you extremely valuable data on the number of impressions and clicks which will help you back up your price.

Selling ad space isn’t like selling a domain name.  You’re not trying to extract as much as possible out of the buyer.  You’re trying to offer them a fair price and a good value, so they can justify buying from you month after month.  If you get greedy and charge 2x what your ad space is worth because you think you can get away with it, even if you sell it for one month, I guarantee they won’t be back the next month.  Would you rather have $300 once, or $150 a month for a year or more?  Eventually you’re going to run out of people willing to overpay, and your sponsors section will be empty.  Look to build long-term relationships.

 

5 Responses to Selling Ad Space

  1. Thank you for this. I just wrote a post yesterday about opening up advertising on my blog. As one of the people who are new to the domain industry and have just recently started my blog, you have given me invaluable insight. I will definetily apply the tips you have written about to my future advertising platform.

  2. Frank Michlick says:

    Thanks for sharing your view on purchasing advertising, I think it’s quite comprehensive, Michael. I’m actually currently working on a Media Kit for DNN.

    One additional item I would take into consideration is how much other advertising is on the site you’re looking to advertise on – i.e. is the site filled with ads so no one is going to notice your ad or is it going to stand out.

  3. Michael Sumner says:

    Great point Frank, thanks for the comment. One should also consider if a position is being shared with other advertisers, such as when you have a header ad that shows your banner 25% of the time. Another example would be like on ChefPatrick.com, how he has 10 125×125 ads on rotation, sometimes you’re above the fold, and sometimes you aren’t, and you’re always in a sea of ads. His price reflects this though, in my opinion.

    I think exposure is already somewhat factored into the number of clicks for each position, but if that data isn’t provided, the next best thing to look at is traffic vs. the number of ad slots.

    As a site owner, I would rather have less positions available at a higher price, so there aren’t as many slots to worry about keeping full. But others might prefer to be more accessible to small businesses and make money from volume instead of margin. As you said though, the price needs to accurately reflect how much exposure the buyer is getting on the site.

    Good luck with the media kit.

  4. Chirag says:

    This is without a doubt the most important part of the whole pitch, because all the information you provide above is what justifies the price

  5. Mike says:

    Pretty good and precise info , however I doubt that someone who wants to sell ad space for say $100 per month is prepeared to do all this work, for all the site owners he wishes to contact.

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