Why I Use Private Advertising & How I Determine Prices

January 31, 2008 - Written by Gyutae Park  

advertising-that-works.jpgSelling your own advertising space can offer you more revenue but it’s definitely not easy. The main reason why contextual ad networks like Google Adsense are so successful is because they do all of the dirty work for you. They find advertisers, determine pricing, and collect payment. As a publisher, all you need to do is enter in your bank information and put some Javascript code on your site and the cash will start to flow in. However, if you want a bigger piece of the action and more control over which advertisers you’d like to feature on your site, it may be a good idea to free yourself from Google and sell your ad space on your own.

A note of caution is that selling ad space is very time intensive and involving. It’s not just a “set and sit” strategy where you place a piece of code on your site. You must actively sell your site and relay the benefits that potential advertisers will receive. However, the rewards can be great. Depending on your industry and the size of your audience, selling private ads can give a big boost to your online income.

As you might have noticed, I sell private advertising slots here on Winning the Web. At this point I think this is the best method of monetization for the blog for the following reasons:

  • Established readership
    The blog was started only 3 months ago but brings in around 10,000 visitors per month. Since the site is established and has a decent readership, it’s definitely ready to be monetized through private advertising. Don’t resort to private ads until you’ve done a bit of marketing for your site and have at least a small audience.
  • Internet marketing niche has a horrible CTR
    As you can imagine, any site related to Internet marketing or making money online has a horrible click through rate. Webmasters just don’t like to click on ads so programs like Google Adsense don’t bring in much income. Selling ads independently is a great solution to combat this trend.
  • Developing relationships
    Selling private advertising is also a useful method to make friends within the industry. When someone buys an ad spot, I usually follow up with them and initiate a business relationship.

So now that you know why I use private advertising extensively on this blog, I’ll go ahead and explain how I do it. If you take a look at my Advertise page, you’ll see all of the different options that I offer, priced according to the level of exposure that they provide the advertiser. There are a variety of methods that can be used to determine the pricing of a private ad. I’ve listed some below.

  • Other sites in the niche
    How much are other bloggers in your industry charging for private ads on their sites? Take note of the overall trend and use it as a baseline to construct your own price.
  • Double your network earnings
    Since Google and other ad networks take roughly half of the revenue you generate, you can charge double what you make and advertisers would still pay the same price.
  • Multiply your monthly visitors by .003 to get average monthly price
    This is an extremely rough estimation and will vary by niche, but multiplying your monthly visitors by .003 might get you a decent baseline for your average monthly price. In December, WTW generated about 8,000 visits. According to this model, ad prices would be $24 per month, which is a good reflection of current prices.
  • Estimate using cost per click
    Using an analytics package, you can gauge the number of clicks an ad spot generates in a month on average. Then you can set a cost per click and determine monthly prices. So for example if I saw that an ad position received an average of 100 clicks per month and wanted to charge 25 cents per click, I could set a baseline price of $25 per month.

There’s no right or wrong way to determine prices for private advertising. It all comes down to the value advertisers receive and whether or not they get a positive return on their investment from your site. What do you do to set your private advertising prices?

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Comments

29 Responses to “Why I Use Private Advertising & How I Determine Prices”

Matt Hanson on January 31st, 2008

I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

Matt Hanson

Gyutae Park on January 31st, 2008

Hey Matt,
Thanks for adding me. My goal is definitely to provide useful Internet marketing content so you won’t be disappointed!

 
 
Lori on January 31st, 2008

I was curious about this, in fact, I just asked Problogger this question during his “open box” question deal. At least this gives me some sort of ideas.

Gyutae Park on January 31st, 2008

What did Problogger say about this issue? I’m glad it gave you some ideas at least.

 
 
sven on January 31st, 2008 Subscribed to comments via email

Some good pointers. It’s usually a good way to go with private ads due to the fixed earnings they make. There are not many blogs out there that could make money with adsense or something similar. Private ads are usually purchased by people who have an interest in the audience your blog already serves.

Gyutae Park on January 31st, 2008

Actually Adsense can do very well on blogs in certain niches. It’s just that in the Internet marketing world, webmasters usually don’t click on ads.

 
 
Kyle on January 31st, 2008 Subscribed to comments via email

That really was a well timed post as I was just asking some other people the exact same question. Thanks for the advice.

Gyutae Park on January 31st, 2008

That’s great Kyle. What did you get out of it?

Kyle on February 1st, 2008 Subscribed to comments via email

I was asking people about pricing for blogs and advice about where are the best companies to get adds from. I’ve seen a lot of people say AdSense is best, but nobody has really put anything together comparing them. Also your sharing what a monthly link is worth was very helpful.

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Gyutae Park on February 2nd, 2008

Adsense will probably get you the most in terms of relevant advertisers but their payouts may not be the best depending on what niche you are working in.

 
 
 
 
Chris on January 31st, 2008

Do you ever contact potential advertisers yourself or do you just wait for them to contact you?

Gyutae Park on January 31st, 2008

Well it’s a combination of both. The Advertise page is there in case people come to the site looking to advertise. I’ll also mention my advertising rates in some of my posts and in some cases I’ll actually send emails to people who I think would be interested.

 
 
Gerri on January 31st, 2008 Subscribed to comments via email

I have been looking around a number of sites to see how people are advertising and how much they are charging. Pricng is the thing that looks challening to me – you dont want to charge too much or too little. This post has offered a few insights. Thanks.

Gyutae Park on January 31st, 2008

Hey Gerri,
I’m glad it was insightful for you. It’s definitely important to strike the right balance with ad prices. One of the key factors I look at is the fill rate. The percentage of spots that are bought at a given price. I aim for something like 75%.

 
 
Mr. Javo on January 31st, 2008 Subscribed to comments via email

Hey nice information, now I have more idea about how I can calculate my private ads cost, thanks for sharing the tip.

Gyutae Park on February 2nd, 2008

Glad I can help Mr. Javo. So which method will you be using to price your private ads?

Mr. Javo on February 2nd, 2008 Subscribed to comments via email

Well Gyutae I really haven’t any method, I set my ads price looking for blogs with more and less the same mount of visitors and ranking…That sounds a little unprofessional but I don’t knew how to set it. Now with your post I know how to set the prices, thank you keep growing!.

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Mike Huang on February 1st, 2008

Wow! This is my read of the day 🙂 Keep up the good work!

-Mike

Gyutae Park on February 2nd, 2008

Thanks Mike, glad I could be part of your day. 🙂

 
 
Alan Johnson on February 2nd, 2008 Subscribed to comments via email

Personally, I’ll start selling ads after the contest is over, although if an opportunity for a long-term partnership arises (such as my current one with LunarPages, who are official sponsors as of yesterday, definitely a win-win situation for both parties involved), I’m always glad to look into it even before the 25th.

Wishing you the best of luck,

Alan Johnson

Gyutae Park on February 2nd, 2008

Advertising requires a lot of patience and good timing. I think you’re making the right decision by holding off until the contest is over. Hopefully by then you’ll have a bigger readership to market to.

How did you get the partnership with LunarPages?

 
 
David Chew on February 2nd, 2008

Well advertising is another way to earn some money, good luck to you.

Gyutae Park on February 3rd, 2008

It sure is. Thanks.

 
 
shy guy on February 3rd, 2008

I like how you do on advertise page…
Using statistic and options for advertiser to advertise their website/blog on your blog..
Awesome.. I must learn from you

Gyutae Park on February 3rd, 2008

It’s important to include as much website statistics and information as possible. This will give potential advertisers the confidence they need to follow through with the advertising and help them to understand exactly what they are getting.

 
 
Ruchir Chawdhry on February 10th, 2008

Most people tend to severely screw up when determining the prices. Most people tend to overprice too much. I think one should start really low at first, like at $5 (for 125×125) and then slowly go up month after month if your waiting list becomes too big…

Gyutae Park on February 11th, 2008

That’s a good way of doing it, but you can probably adjust the starting price depending on what the competition is doing.

 
 
Michael Heindel on March 11th, 2008

I find private advertising a mixed bag. Sometimes the deal is good and others a waste of money.

If a blogger is taking the time to promote their blog then I am more inclined to pay a higher price for advertising.

Michael

 
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