Even though it is very important to price your advertising formats correctly, it should all come down to one major factor – what are you offering of value and what will advertisers be prepared to pay?
Of course, you know the marketplace you are in, but do you really know how much value advertisers are attaching to your product? If you do not know, ask! – it really is SO important to remind yourself that 'value' is what it all comes down to. If you offer value, then you can at least charge something for the advertising space!
So, what type of product do you offer and more importantly, what kind of customers will buy from you?
If you run a website, which leads 20,000 consumer visitors per month and your site is all about mobile phones, then you'll probably be restricted in the overall scale of advertising fees. Why? Well, there are a lot of mobile phone websites out there, which are doing a similar job and may attract around the same amount of visitors within the same age group, demographics and buying habits. In this case, you'll probably charge the going rate and hope your revenue increases, as your visitor numbers and popularity do.
Now, let's have a look at the other end of the scale.
You own a website with thousands of pages, which attracts over 300,000 of the worlds richest people. It is a very high quality product and you have a vast number of customers who pay a large annual fee to access exclusive luxury offers from big spending advertisers.
Is this scenario unrealistic and a little over the top? Well, yes probably. However, I think you can see where I am going with this.
Remember, as long as you are offering something of real value to a relevant audience, you can charge what your product is worth to your potential advertisers.
So, what is the going rate? Well, this is quite tough to gauge, as it really does depend on many factors.
I chat to a lot of publishers and media owners in a consulting role and a high proportion of them do not have any idea what to charge. Then I ask them three main questions:
- Does your product offer value?
- Is there a lot of competition for your product?
- How much would you pay to advertise in it?
The reason I ask them how much they would pay, is to get them in the mindset of the buyer – when they think of a price, they automatically think of value and they are usually honest with their answers. Then, I will break it down and offer advice on what I believe to be a fair price for the product.
If you offer website advertising, then you have to decide whether you are going to charge by a cost per thousand impression method or by a set price. Then you have to decide if your ads are going to rotate, or have the added value of being the only ads (solus position) on that particular section. Offering solus ads is probably the best solution for the client, but you have to make sure that exclusivity does not lose you money. Remember, 10 different ads rotating on a section with 100,000 impressions is probably going to make you more than 10 different advertisers, than it would if one advertiser took all 100,000 impressions. However, if you are sufficient enough to get one advertiser to pay for all 100,000 impressions, then go for it.
In my experience the advertisers who wants to reach more of a consumer audience will be looking for higher impressions. Then, it's the B2B market that is more willing to take fewer impressions, but pay a higher cost per thousand for them. Of course, this depends a lot on your site and the overall content and target market.
A general rule of thumb for web ads is anything from £ 5 ($ 10) to £ 100 ($ 200) per thousand page impressions, depending on the target audience and the type of site. If you want to charge on a set price basis, then you can do this by working out how many impressions a page or section gets per month and price it on a monthly basis using the cost per thousand pricing structure. So if you want to charge £ 50 per thousand impressions and a section gets 10,000 impressions per month, you can sell that slot for around £ 500 per month.
An important point about comparing prices to other media:
I always question the thought process of online publishers, when they offer ridiculously low prices; based on the fact that traditional media is seen as being a lot more expensive than online media. They also feel the need to be able to answer any objection with a lower price option and this can be a big mistake.
It all goes back to the original question – what would you pay for the advertising? Forget about comparing traditional magazines and other media with online advertising – they are completely different and have their own advantages.
A lot of people have the idea that magazines are for brand awareness and online ads are for real warrants. Well, I believe this is true in many B2B markets, but it is worth mentioning that more and more people are reading material, seeing an advert and then going online to get more information.
So, in conclusion – I think that a lot of advertisers are still using a selection of different media formats and you should sell online advertising in a very different way.