How Much Should I Charge for Advertising on My Website: Deconstructing Website Ad Rates
- Defining factors of the website advertising rates
- Site details that influence your web site ad rates
- Things to consider before calculating your website ad cost
- Ads performance metrics that influence online advertising rates:
- Most popular pricing models:
- How much should I charge for advertising on my website?
Maintaining your website or blog is not an easy task, especially when about how to monetize website traffic and create pricing your ad inventory. Each online advertising asset at your disposal, and each digital inventory in general, usually may have different revenue sources, pricing, and models of monetization. Online advertising within one niche can drastically differ from others not only in terms of demand and profits but also in terms of the best-performing strategies.
Apart from this, there are also numerous different approaches to mobile monetization and digital channels. CTV content suppliers can have no clue about how to monetize an app or how much they can get from advertising on a music-streaming service. This is why it is important to thoroughly study all the details regarding your digital assets’ pricing depending on their characteristics and the content you are sharing.
In this article, we are going to explore how much does it cost to advertise on a website, what factors play a defining role for web site rates, and how to choose the best pricing model for your inventory.
Defining factors of the website advertising rates
The good news for every website owner is that monetizing a website is still an extremely profitable endeavor and the industry continues to grow since the dawn of digital advertising evolution and the introduction of web advertising.
According to Grand View Research, the global data monetization market is expected to grow by a 24.1% compound annual growth rate between 2020 and 2027 which is valued at over $1.3 billion. These numbers are truly impressive, but your audience data isn’t the only factor influencing your revenues. In fact, there are numerous characteristics a digital publisher should consider to determine their best-suitable website rates. Let us start with the numbers on the supply side that can help to determine how much to charge for ads on the website:
Site details that influence your web site ad rates
Before we get an answer to the question “How much should I charge for advertising on my website?”, one should know that there are several significant features, unique for each website that can greatly impact your web ad price.
First of all, it is important to remember that there are certain benchmarks or requirements for digital publishers to fulfill in order to start selling ad space on their web pages. These can vary from platform to platform, depending on monetization solutions you’ve chosen, but the general rule is the more value your ad placements can potentially bring to the advertisers, the more they are willing to pay for it.
Major giants like Yahoo, Youtube, Facebook, and Instagram can charge from $100,000 to $450,000 daily and more for advertising on their front page, as these websites get millions of viewers and can potentially bring enormous profits to anyone placing their offer on these hot spots.
When it comes to calculating your online advertising rates, your traffic, content, and audiences come as the most important factors, among with a couple of others:
Traffic is the first and most basic online advertising characteristic used to evaluate a website's potential to bring value to the advertiser. The more visitors you have, the more people are going to see an ad, and the more leads they are likely to generate for the business from one simple message. It is not surprising then, how marketers can expect to pay thousand of dollars for a single ad on a single page.
To evaluate your online advertisement rate, you should first get to know your traffic metrics. On your website, performance measurement page, or platform, check the total number of visitors and page views. Usually, you can view the numbers for different time periods to learn how your site’s performance changes over time, but the most basic number you need now is monthly traffic, so make sure you are viewing performance for the last 30 days.
One page view stands for the number of visitors who opened the page. Some pages within one website perform better than the others, so different pages can bring you different amounts of money within the same period. If a page contains 3 ads, you would get 3 ad impressions per 1-page view. The more impressions (or other action, depending on your pricing model) you get, the higher are potential profits. Nevertheless, please also note that too many ads can destroy your website’s user experience or result in low engagement rates, and huge page load.
Once you’ve reached a certain number of daily or monthly visitors, you can start monetizing your pages via Google Ads, affiliate marketing, or the supply-side platform (SSP). This number can vary greatly depending on your niche and audiences - some marketers claim it's enough to have 250 unique daily visitors, while others argue this number can be as high as 2000 per month. Your final number will mostly depend on the profits advertisers can get from your placements - for luxury products it can be enough to advertise online to that one targeted high-paying customer, while mass-market brands can value the quantity of your traffic over its quality.
If the amount of traffic on your web pages is still too low to start monetizing, you should first grow your website to ensure it will be seen among, for instance, Google search results. This can be achieved by link building, writing the blog, or getting a promotion on other resources with guest posts, etc.
Apart from traffic, rates for websites can vary greatly depending on their content, as this is the main value you offer to the users. Attracting visitors requires regularly publishing lots of relevant useful content, compliant with your website’s niche topic and your target audience’s interests. This can include blog posts and related articles, photos, videos, music, games, discussions, and many other formats. The more target specific high quality content you produce, the more value users can get from it.
Narrow topics are also valuable in terms of uniqueness. If your content provides in-depth answers to a rare, but a well-defined question, it can potentially bring more value than some short generalistic column, especially when it comes to the highest-paying industries. The more unique your content is, the more are the chances to grow a website and start getting profits faster.
Remember that choosing prohibited categories as the main topic for your content will most likely prevent your website from entering most monetization platforms and solutions. Such categories include, for instance, spyware or malware, pornography, illegal weapons and drugs, gambling, casinos, alcohol and tobacco, hate speech and violence.
Another important thing to consider is the buyer's journey. Of course, it is usually up to the advertiser to calculate these things, but understanding your audience as potential customers can significantly add up value to your digital assets without spending too much additional effort or resources. If the users are coming to your pages when they are about to finish their decision-making process regarding a purchase, such impressions will be considered more valuable to the advertisers. Product reviews or comparison services websites convert specifically well and typically have higher online ad rates.
As we already mentioned, data about your audience is one of the most valuable assets of your website, as it provides unique information regarding viewers’ interests, demographics, and behavior. Things like age, hobbies, or locations can provide advertisers with great insights regarding their online advertising campaigns’ and products’ performance (which is the key to growing a successful business and getting profits). Thus, the more information you can provide regarding people who are about to encounter an ad, the higher are the website ad prices you can count on.
Most marketers want to know exactly who they are targeting and what kind of message this target audience persona is going to react to. If your audiences’ characteristics align with the advertisers’ typical client, you are likely to get a long-term partner with a higher ad rate. Higher incomes, stronger purchase intent, or online shopping history makes the user more desired and valuable. Things like age, gender, and marital status can be also important for online advertising as they significantly help to narrow down the audience and understand your customers better.
One more thing to note is your visitors’ geo. Local advertisers would naturally prefer viewers from the same location, as getting their message to other people would be simply irrelevant. At the same time, traffic from some countries is considered more valuable than visitors from others. In general, users from English-speaking countries and those with higher spending power are getting much more attention from the advertisers, which in turn will affect your revenue.
Inventory fraud is one of the main problems in today’s digital advertising industry for all sides of the equation. In fact, it takes $1 for each $3 spent on an ad. It is a reason why advertisers lost over $8 million globally in 2016. The situation gets even worse, as 56% of overall website traffic accounts for bots and botnets which are constantly developing and evolving. This drastically affects both advertisers’ and publishers’ revenues, as it decreases ad viewability and prevents marketers from getting the real numbers of interactions with their ads.
Human traffic can also be fraudulent, as it may include malicious activities like ad stacking, pixel stuffing, click farms, domain spoofing, and many others. Using bot detection and investing in third-party tools might help with some of these issues, but getting the full statistics is necessary to understand the true value of one’s digital assets.
Privacy laws compliance
In the light of loud privacy and copyright 2020 scandals, the need for privacy and transparency has become important as never before. Numerous countries all around the world took the responsibility of creating privacy laws legislation, which significantly affected the global online advertising industry. Today one should be extremely careful and dedicated to complying with all the rules regarding user information. The two key legislations with the most influence include GDPR for companies operating within the European Union and CCPA for California in the US. If your website has something to do with the residents of the aforementioned regions, please make sure your websites’ data policies are GDPR or CCPA compliant before gathering and utilizing any kind of user data.
Technical specifications and details about your ad slots are essential for proper and timely ad delivery, so expect to make sure everything is going fine on that end before taking any further action.
Page design and navigation are among the core details for such an evaluation. Ideally, your website should look visually attractive and well-designed, with simple and structured navigation. Make sure the user experience is flawless and isn’t affected by latency and load time. Metrics like ad viewability and engagement rates can also affect greatly your ad slots’ performance, and thus their value for potential buyers. Finally, every page on your website should be compatible with mobile and tablet devices without any disturbances on the end side.
Things to consider before calculating your website ad cost
Now that we know what are the main factors that contribute to determining website advertising pricing, we are almost ready to apply this knowledge in practice. Our last step before diving in is to review the most essential details for such analysis any publisher from any industry would absolutely need.
Most popular digital ad formats:
There are several options to go for, depending on your niche specifics and business goals. Here are some of the most efficient digital ad formats for profitable monetization, as well as highly targeted advertising campaigns:
- Display banner ads - usually it is a regular banner ad with an image and a short text with an offer or other message. These are the most regular ads, but they are also among the cheapest and easiest to launch due to their universality and technical simplicity.
- Video ads - a simple and effective solution for more visual niches that require showcasing a product or service or sharing the brands’ story or mission. These ads are slightly harder to deliver, they may be more expensive, but they can potentially bring much more value and engagement compared to the regular banner ads.
- Native ads - perhaps, the most user-friendly type of advertising so far, native ads are well-known for their unique ability to mimic the environment they are in. Ad slots blend in with the actual content so that the user might not even notice at a first glance which part of the content was sponsored.
- Rich media - include vivid interactive elements that can sky-rocket your engagement rates. It makes sense to target a narrowly-defined audience with a customized message in order to keep the user experience optimal.
Most popular ad sizes:
Ad placements come in a variety of sizes that can also influence your website advertising cost, depending on your advertisers’ preferences. The more universal are your ad slots, the more advertisers can be interested in purchasing them. Therefore, it is best to opt for sizes that would be supported by most platforms and ad networks (like Google Display Network). However, you can also opt for a specific less widely-used size, especially if your industry, website, or other factors demand so.
Most universal sizes according to Google include:
- IAB Medium Rectangle (300*250)
- IAB Mobile Leaderboard (300*50)
- IAB Leaderboard (728*90)
- IAB Wide Skyscraper (160*600)
- Billboard (970*250), etc.
Ads performance metrics that influence online advertising rates:
Apart from your web pages themselves and their characteristics, there is one more thing that influences your online advertisement rate perhaps even more than anything else. This thing is ads performance, and it is the key set of metrics for most advertisers.
Let us start with the fill rate that defines how many ad placements are actually filled with ads once the user opens your web page. This is an extremely important metric for publishers, as it shows whether the website is leveraged to its full potential. Fill rate is the ratio between the number of successfully served impressions and the total number of requests for impressions.
Ad viewability defines how many of the served impressions got real exposure to human viewers of the web page. It is calculated as the percentage of viewable impressions, that are defined by the industry standards for each size, among the total number of served ad impressions. The higher are pages’ ad viewability rates, the more expensive are web site rates.
Reach stands for the number of unique visitors who encountered your message and interacted with it at least once throughout the campaign.
Click-through rate is the metric that shows ad placements’ and creatives’ effectiveness. It is defined as a percentage of clicks on an ad from an overall number of users who encountered an ad. CTR is one of the most important factors that many publishers stick to while defining how much to charge for advertising on website. High click-through rates also mean better rates.
Conversion rate is the most general metric that shows how effective ad campaigns are, depending on the target action defined by the company’s goals. It is calculated as a ratio between the number of users that took the desired action to the total number of web page viewers. Higher conversion rates mean higher ROI both for the advertiser and publisher.
Most popular pricing models:
There are many business models used by the supply sides to calculate their website ad costs, such as CPC, PPC, CPM, and many others. Each of these has its own benefits and pitfalls, so it is important to choose the one that would be most suitable for your particular case.
- CPM or Cost per mille: One of the most popular pricing models for online advertising where the advertiser is charged for every 1000 impressions their ad receives. Cost per thousand impressions is a perfect option for medium and larger publishers with huge numbers of visitors, as they can easily provide the necessary number of impressions. From the advertisers’ point of view, there is no guarantee that the viewed ads will be clicked upon, so choosing CPM (cost per mille) can be more appropriate for brand awareness campaigns.
- CPC or Cost per click. As we can see from the name, the advertiser is charged each time someone clicks on their ads, and the price may vary from $0.01 to over $10 per click. Pay per click is a better option for smaller publishers, especially when they receive highly effective ad creatives that generate numerous clicks. On the other side, a click fraud prevention system is recommended, to protect advertisers’ interests and publishers’ trustworthiness.
- CPA or Cost per action. This is one of the broadest metrics, as it includes all the desired actions set by the advertiser, and they are charged only once these actions are performed even if an ad already generated thousands of clicks and impressions. Advertisers are usually getting the most value out of these actions, so in this case, the advertiser pays more, as compared to other pricing models. For instance, one such action (e.g a purchase) could be worth $50 or even more, even if you don’t have a lot of traffic yet.
- Fixed price. Finally, the demand and the supply sides can always opt for a fixed website cost of advertising, negotiated beforehand. In fact, this is how traditional advertising worked all these years before the introduction of programmatic advertising. Publishers and advertisers consider website metrics and ad performance, and then set a fixed rate for a fixed number of impressions within some period. Such a model can be useful for small business owners who want to always predict and control their budgets.
As we can see, the choice mainly depends on your website metrics, as well as audiences and ads performance. Once you’ve got the data about your web pages, it should be a no-sweat to choose the best option for your business. Most advertising platforms, like let’s say Facebook Ads or Google Ads, support more than one pricing model, so you can always experiment with CPM, CPC or PPC ads before settling for some regular business model.
How much should I charge for advertising on my website?
So far we have discussed lots of factors that can influence or even define advertising rates for websites. We also learned about important definitions, metrics, and most widely-used ad placement characteristics. It is now time to gather it all together and finally answer the main question of every publisher: How much should I charge for advertising on my website? Here are the simple steps to get your personal benchmarks:
Step 1. Define your website’s “hot spots”. It is important that as many users as possible could see an ad and interact with it in order to get the maximum profits from this page. This is why we highly recommend to examine your web site metrics and find the best-performing pages.
Then, you should consider an ideal ad placement quantity, formats, size, and location. These will depend on your industry, preferences, and design - if done well even a couple of strategically placed ad slots can drastically improve your finances. While experimenting on these details do not forget to optimize for mobile and tablets for a smooth user experience.
Step 2. Check your industry benchmarks. Now that you know how many ad slots you are going to sell it is time to calculate their value. A great way for this is to start with your industry benchmarks by comparing the current rates in your niche on the most popular platforms, search engines, and social media (Google, Bing, Facebook Ads, etc). Here is an example you might find useful, as it contains a click-through rate measured for the most popular industries, as well as the appropriate average cost per click.
We can see that industries like finance, real estate, B2B, insurance, dating&personals, as well as customer services are the most expensive while making money on travel and hospitality could become a real quest. Please also note that technology has the highest CTR of 0,84%, while the employment services industry is barely making it past 0,1%.
Step 3. Consider your CTR and monthly page views. Once you’ve got your industry benchmarks, it is time to add up some more of your website metrics to the equation. Depending on the number of people who see your ads and click on them, your profits can vary greatly. Take a look at the tables below to compare how CTR and page visits can affect your earnings (data is taken from Taboola).
|Monthly page views||CTR%||Clicks||CPC ($)||Earnings ($)|
|Monthly page views||CTR%||Clicks||CPC ($)||Earnings ($)|
From these tables, one can observe that a website with 50,000 monthly page views, $0.58 average cost per click and 0,05% CTR will generate 25 clicks and result in 14,5$ from one ad placement monthly. If we increase the CTR to 0,44% we will get an almost 10 times increase - 220 clicks and $127,6 per month. Finally, increasing the number of page views will improve the situation, even more, resulting in $2552 monthly earnings from one ad placement.
Step 4. Get to know your audience. When it comes to page views and traffic in general, it is always important to consider your audience and its value to the advertiser. The more precise data you have, the more you are going to get. Data from popular online advertising platforms like Google Ads or Facebook Ads might also serve you as benchmarks. Take a look at your traffic geography and try to align it with these average rates by country. You can notice that some countries give more expensive traffic than the others due to higher purchase intents, levels of incomes, as well as bots and ad fraudsters.
Countries with the highest spending potential and English as a first language are also getting the highest CPC, over $0,3 for New Zealand and $0,61 for the United States. Nevertheless, the highest click-through rates are observed in Japan, the United Arab Emirates, and India, so both metrics are important for the calculation of the total website advertising prices.
Step 5. Testing. Once you compare the given metrics and apply them to your own website’s performance, you need to understand where this is all heading. Having benchmarks will help you better understand your approximate online advertisement rate, but in order to get precise numbers, we recommend making a test. Start with an average, based on the aforementioned factors, and move in the necessary direction until you find your ‘golden middle’.
Step 6. Putting it all together. As a result of this comprehensive analysis, you should now have some vision regarding your ad prices for each slot per month or per day. You should also have an understanding of your web pages’ fill rates. Now that you sum all of your ad placements’ prices and take into consideration their fill rates you should eventually come up with the monthly income generated by display ads online. Of course, this number can vary depending on additional factors like seasonality or local events, but at least now you have your online advertisement rate and, what is more important, you fundamentally understand where it comes from.
Side note: In reality, each publisher has their own way of calculating their web site rates. Some prefer to focus on different metrics and their combinations, while others simply divide monthly viewers by 10 and charge advertisers monthly with this price... In this post, we tried to examine the most influential factors that influence website advertising prices and align them with industry and geographical averages to help you get a more or less realistic first outlook.
Eventually, you can always come up with your own method or formula that would perfectly fit your website’s and business specifics. But we hope that this article helped you to get some understanding and take your first steps to successful website monetization.
Website monetization is a complex process that can push you to re-evaluate some of the details of your site and its content, as numerous factors should be considered in order to come up with adequate website advertising prices. It often requires putting yourself in advertisers' shoes and thinking ‘What kind of placements would I pay for the most?’.
Careful examination of your website metrics, as well as your niche average ad performance, should give you some clue regarding the potential profit your website can generate. All these tools and reports are available within the supply-side platform, designed specifically to help publishers monetize their content. You can then experiment with ad sizes and formats, as well as different pricing models to get the best web site ad rates and only the most out of your digital assets.
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Tanya Verkhovets, Content Writer of SmartyAds