If you've made it to this point, you're probably pretty interested in the math and science behind our website revenue calculator. Read on, we're happy to share...
The first part of the page is fairly straightforward: Visitors x pages x $$ per page of ad revenue yields the amount of money that will be dropping into your bank account each month. Multiple that figure by 12 and you've got an annualized number. Furthermore, since there is a pretty solid resale market for content websites, we can do a quick estimate of the market value (the "equity value" number). Content sites usually sell for about three times annual revenue in today's market, less adjustments for any significant risks.
The model for predicting advertising revenue is based on a study of over a 100 small content websites. We had access to a verified view of their advertising revenue and enough competitive intelligence to estimate additional factors about their mix of volume. The sites were clustered and we identified the primary factors which predicted advertising rates. We've made a few additional adjustments based on other experiments and feedback from various advertising technology companies about their programs.
Before we start, it is important to note that there are many ways to win here. We're going to looking at your site's traffic from the perspective of an ad buyer and rating your ad inventory. They will view the space as being highly profitable or less desirable based on their economics. This view may vary sharply from your own perspective as a publisher: cat video fests and click-bait are an excellent example of this. While a brand buyer may turn up their nose at this volume... if you're able to generate the traffic cheap enough, you can make a ton of money in their niches. So don't get offended, please. Meow?
The good news is the website revenue calculator is built to handle all the options. Want to build a top-tier website, optimized via machine learning, and serenade your visitors with premium ads? You're covered. Want to pull cheap click bait traffic off Facebook onto a non-brand safe meme site and spam them with low end ads? You're covered too. There are many ways to win in this game.
We're quoting a page level total ad rate vs. pricing for individual banners. Performance varies widely between advertising slots based on visibility, click rates, and advertiser preferences. This approach works because there are diminishing returns to putting more ads on a page: reader attention is finite and you begin to run out of high quality buyers in the advertising auction.
That being said, the default settings in the model based on successful blogs covering non-commercial topics. We assumed an audience of 50,000 visits per month, assumed each visitor would read about 2.5 pages of content, and estimated advertising revenue would be $4 per thousand pageviews. This will generate $500 per month in advertising revenue. The model is intended to get the "order of magnitude" for a site's performance right. There are a lot of small factors within the execution of a particular concept that can drive a 20% to 30% swing in average advertising results. We're more concerned with the big swings that will explain the gap between a $3.50 CPM and a $35 CPM.
The core of the model came down to three key factors:
So now that we've solved for the what we're selling to an advertiser (for example: EU desktop users, interested in Woodworking and Home Improvement), we need to solve for the how we're going to gather up these brave souls and display advertising to them. This includes decisions about traffic generation, content type, and overall advertising program execution. We're watching three main factors:
If you want to make serious improvements in your site's advertising revenue, you need to look at it like a service business. You're assembling an audience and allowing your advertiers to talk to them. You are going to be paid based on the value you bring to this process: how on point your audience is, the quality of your ad layout on the page, and the degree to which you can target and close business. Chosing the right balance of service (which costs time and opportunity) vs. revenue is crucial. With that in mind, here's how to look at the different types of advertisers, what they bring to the table, and what they will ask of you in return....
The Brand Buyer: If we were in Vegas, these would be the high maintenance global high rollers pulling up to the front in a comped (free) limosine and saying "dahling" a lot. Possessing huge budgets and a corporate mandate to blow it all in the name of building brand awareness, these guys are a flowing river of cash for a publisher. They are willing to buy eyeballs today in hopes that someday, a vital few of those eyeballs will become huge deals on their table. Look at all the ERP and consulting advertising spattered all over airports, in hopes that some passing CIO or VP will accept their call in the future. Brand buyers in action.
Of course, there's also the old saying that "He who has the gold, makes the rules". And rules you shall get with this bunch, both from the advertisers themselves and various ad networks seeking to curry favor with the brands that pay their bills. Strict restrictions on the number of ads per page. Placement limits. Content policies: family friendly and don't hit any potentially controversial topics please. They likely want your site to have a certain level of prominence and respectability before giving you some business.
If you're taking the "high road" in terms of content quality and audience engagement strategies, building high quality content and organic search traffic, brand buyers are probably your best bet.
Re-targeters: Continuing our Vegas example, the next level of advertiser is using personalized data to chase a prospect around the web. These guys are the cool math types with a careful eye on the numbers. They've got a bunch of lists and are using your site to "ping" their target customer on a regular basis.
From a publisher perspective, I've always liked these folks. While they have some rules about placement and content policies, they also have some perspective on how long it is going to take to close business. Unless you're actively promoting affiliate offers, they're likely going to beat anyone else's offer for your advertising spot for that customer (everything is at the customer level with these guys). They also tend to be fairly audience friendly in terms of their messaging: rarely using hard-sell or shock tactics, just gently getting their label in front of the prospect and slowly herding them towards a sale. This segment of advertisers is under threat due to trends such as GDPR but is a welcome source of demand.
Contextual Advertisers: Stepping back even further, these folks are trying to target offers to your traffic based on cues from your content or search engine traffic. Sometimes it works.... sometimes it doesn't. Targeting tactics vary by site: the smarter firms target based on demographics, using your audience profile to target relevant offers for your average visitor. Lower tech approaches are basically keyword matching for the search terms you rank for or the content on your pages.
One key difference between contextual advertisers and the other two groups we've looked at: they have no real expectation they will be able to talk to the same prospect again. This reduces demand and changes behaviors. Brand buyers are less willing to bid on traffic they can't easily pre-quality and pursue with follow-up deals. The rest of the world, realizing they have one shot at a deal, usually attempts to close harder using ads that are visually more aggressive. Keep a close eye on this traffic to ensure they're annoying your audience.
Shouters: So what do you do when you don't have personalized data and can't figure out a relevant offer to make using cues from the words on the page or what the site ranks for in Google? Why you SHOUT of course. Very, very loudly. Pound the table with aggressive imagery, browser traps, click-bait and other tricks. And those banners that look a Window's download button. A certain fraction of the traffic will convert anyway.
That being said, I do have a soft spot for the shouters. They're trying to squeeze blood out of a stone, after all civilized methods of determining a relevant offer have failed. Without them the lower tier of the web wouldn't have a viable monetization strategy. God bless them, each and every one.
Just be sure your audience strategy as a publisher is closer to the likes of "churn and burn" than "nurture trust" if you're going to put this stuff on your site. It works, but at a significant cost of user trust and engagement.
So...who should you talk to? We've profiled a few suggestions for each level of the market.
Compliance Note: We included options for every layer of the market; ad network quality and approval standards vary, as noted. Some links are affiliate links. As with any new advertising provider, be sure to test to validate their program works for your traffic.
Ad Exchange / Premium Inventory: The big boy table when it comes to buying and selling display advertising; has a high level of competition and pays the best rates. Large brands use this market to execute high dollar buys of premium inventory on sites they are confident are brand-safe and deliver a good viewer experience. Generally requires high volume (20MM+ pageviews / month) to get an invitation. Smaller websites can get access through platforms such as Ezoic ( link to their site), which provides a simplified version of Ad Exchange. Ezoic also has a pretty strong optimization service (with a free plan option available).
Major Display Networks: Google AdSense is the market leader in this space, providing brands and merchants with an affordable way to run quality advertising on smaller websites. If you can get approved for AdSense, use them. Google AdSense has strong set of standards around website content and advertising placement; not every site or page meets these critera. You can often boost your revenue by running other major display networks: here are a few well regarded options:
Other Display Networks: Brand advertiser interest tends to drop off relatively quickly once you move away from the advertising exchanges and major ad networks. The advertising will shift to what is known as "direct response advertising" - more addressive formats intended to push a customer through to a sale. These ads usually pay less - but have looser standards on where they can be placed, opening up this demand to a larger set of websites. A few options to check out:
We are always interested in hearing about hard data on advertising performance statistics, particularly for new ad formats and traffic types. Feel free to drop us a line at email@example.com with any questions or comments.