5.25 Selling Advertising

Online advertising uses a variety of methods — contextual ads on search engine results pages, banner ads, rich media ads, social network advertising, interstitial ads, online classified advertising, advertising networks — to deliver marketing messages over the Internet.

Some websites are labors of love by enthusiasts, but the vast majority promote the goods or services of their parent company or of others. Such sites have to be continuously maintained and marketed: time-consuming activities, calling on specialist skills. Large companies absorb such costs in their public relations departments, but others need supplementary income. Unless smaller companies can charge for access, which is generally difficult, they may need revenues from advertisers.

But how do you get companies to advertise on your site, and agree a fair rate for doing so? And how do you ensure that the site is still yours, i.e. does not disappear under a blizzard of other people's banner adverts?

Site Popularity

Value, individuality and utility are the key words. Your site has to be truly special and offer visitors what they cannot easily find elsewhere. That means providing some mixture of unique content, comprehensive links, online games or entertainment, free software and/or services. You're certainly not going to keep visitors coming to your site for the advertising alone — not unless yours is a portal site, which is another ball game. Naturally, you won't get the better companies to give your site a second glance unless it's a professional-looking affair that enjoys undoubted status and heavy traffic. Advertisers have their image to protect, and agreements with companies that don't bring appreciable numbers of new customers aren't worth the management time. With the current glut in advertising space, companies can afford to be choosy. Whatever route you follow — banner adverts or sponsorship — you'll need something more than 25,000 visitors per month to interest advertisers, and that level of traffic is not easily achieved without considerable outlay in build time and marketing expense. You have to shell out a good deal before you can expect much to come in. Hence the balance that most companies aim for. Primarily, the sites promote their own products, but receive additional revenues by advertising complementary products from elsewhere.

AdSense

Google and other search engines will pay you to post ads for their customers on your pages.

Banner Ads

Banner ads can still be used to market your own products, but here we deal with selling on commission. To understand why the effectiveness of banner ads is now questioned, and rates have fallen, you should know something of the terminology. Hits per month is simply the number of items (files, graphics, etc.) loaded down by visitors in the course of a month. As these items will include several gif or jpg images per page, plus frames sometimes, this information is of little value. Webmasters and advertisers are interested in three measures:

1. Visitors per month: total number of visitors per month, including those who repeatedly visit the site.
2. Unique visitors per month: excludes repeat visitors.
3. Page impressions per month: total number of pages loaded down (i.e. viewed by visitors) in the course of the month.

All three should be high. Moreover, a genuinely popular site will see a high page impressions/visitors ratio, and an appreciable percentage of repeat visitors. Now the banner ads terminology:

CPM: cost per thousand pages viewed with the banner ad (M stands for the Roman thousand, incidentally, not month).
CTR: click through rate: percentage of people who actually click on a displayed banner add: can be as high as 5%, but the average is about 0.4% and falling.
PPC: cost per thousand click-throughs from a banner ad on your site.
Rate Card: your rates, minimum buys, banner sizes and payment policies.
Media Kit: your accredited website traffic plus demographics: see below.

Media Kit

Advertisers will want to inspect your site traffic statistics — visitors per month, unique visitors per month, page impressions per month. Access to the statistics supplied by the hosting company may satisfy them, but they can also demand an independent analysis of the server logs. And on the more general sites they'll also check that your visitors fit their target profiles. That means detailed information on gender, age, household income, profession, job title, responsibilities, budget responsibilities, etc. You'll have to get your visitors to complete a questionnaire, probably by offering some inducement.

Rate Card

Now you can devise your rate card, which specifies:

1. What you charge for CPM or PPC.
2. Minimum orders.
3. Banner sizes possible (standard, sizes up to).
4. Any limits to banner file (memory) sizes.
5. Subject restrictions (adult material, gambling, etc.).
6. Agencies accepted?
7. Length of agreement.
8. Payment terms.
9. Tracking equipment employed.

Get CPM if you can. Advertisers can drive hard bargains at present, but you'll not make much money if you accept payment for action (either click through or commission on sales) or allow excess pages to be sold off cheaply at CPMs of a few dollars. Persistent and aggressive marketing is essential. Letters and emails may prepare the way, but generally you'll have to phone the decision makers in sales, armed with statistics and persuasive answers. It's hard work, and a trained salesperson can be a real asset.

Displaying Banner Ads: Mechanics

Banner ads are devices, sometimes 468 x 60 pixel images but more commonly separate pop-up pages, that invite viewers to click through to the site advertised. These have to be rotated randomly through the site, and the statistics recorded. A banner advertising agency can provide the necessary software, but you will otherwise have to purchase the software yourself, at anything from $50 to $20,000. The more expensive programs handle larger visitor flows, and provide real-time information that advertising companies require: pages viewed, click-throughs, click through rates, running totals and summaries of their advertising spend.

Working It Out

So how much are you going to make? Suppose your site has 500,000 page impressions per month, and you've sold CPM at $50. Revenues are then $50 x500 or $25,000 per month. The media agency may take 20% in commission, leaving you $20,000 per month in net revenues.

Unfortunately, that figure $50 is now optimistic, for three reasons:

1. Click-through rates have fallen from a late nineties average of 3% to perhaps 0.4% now, which has made advertisers reluctant to pay the earlier CPM rates.
2. Rates depend very much on the demographics of your visitors. If you can demonstrate that the majority are wealthy professionals, then $50 may be realistic. Other categories will be worth much less, however, from perhaps $20 for average households to $1 for students.
3. There's currently a glut of advertising space, and you'll be lucky to sell more than 30% of your available pages.

Doing the sums again, with $5 and $1 for CPM, gives monthly revenues of $2,000 and $400. Useful, but hardly a bonanza.

Conclusions

Banner ads of big companies can give your site credibility and some revenue. Unfortunately, it can take years and a large advertising budget to build traffic sufficient for the advertising revenues to start providing a decent return. Many visitors dislike ads, particularly the pop-up variety that are difficult to close down, and employ software to prevent their appearance. Even more detested are advertising products unconnected with the site, and the navigation difficulties of dealing with sites that disable the browser back button. The worst examples are counterproductive, and shout desperation. A comparison of advertising methods published by Overture (admittedly not an impartial source) indicates that only 4% of customers find products through Internet ads. Their breakdown was: search engines 42%, store URL 23%, search engine shopping channels 5%, email marketing 5%, Internet ads 4%, shopping bots 4%, price comparison engines 2% and the remaining 7% by other routes.

Sponsorship versus Banner Ads

Whereas banner ads draw visitors away from your site, sponsorship does the opposite. The message and effectiveness of your site is enhanced and emphasized by a bonding between the site owner and its sponsor(s). Rather therefore than surround the page copy with peripheral adverts, you'll write copy that gradually develops into a pitch for the sponsor's products, only allowing links out when appropriate. Naturally, sponsor and site owner must see eye to eye, and in the more successful sites do indeed share a common vision and passion for the site's objectives.

But there's a complication. No site thrives unless it serves its customers, but a sponsored site has the additional requirement of steering itself towards the market objectives of possible sponsors. The winning site takes some time to build, therefore, and these are the recommended steps:

1. Identify the needs of your audience.
2. Ensure your site supplies that need, either by in-house assessment or by contracted-out research.
3. Keep building site traffic through audience feedback.
4. Research companies that are also targeting your audience, analyzing their websites and company reports.
5. Draw up a shortlist of such companies, ensuring that you understand and can find common ground in their objectives and policies.
6. Make the appropriate approaches.
7. Bring in an agency if appropriate.
8. Explore and quantify the areas of mutual benefit.
9. Formalize matters, paying particular attention to: exclusivity: other sponsors or not?
10. Length of agreement.
11. Contingencies in sales, products or web traffic.
12. Policy shifts in one or both companies.

All advertising carries restrictions, but in sponsorship you are more closely identified with your sponsors, sharing in their image and business fortunes. These can be a problem in:
1. Responsibility. Who decides what is promoted on the site?
2. Diversification: can you live with a company very different from its incarnation of two years back?
3. Divorce: can a parting of the ways be amicable, and not injure company reputations?

Banner Ads and Sponsorship: Using an Agency

Advertising is a cut-throat business, and if the contracts are binding they are also very technical. Why not use a Ad Rep Agency to act as honest broker? After all, you'll have your hands full with your side of the business.

Some points to bear in mind. Agencies:

1. Take a high percentage of sales, up to 40%.
2. Are only interested in the larger sites, with a million hits a month or more.
3. Expect extensive demographics, with documentation.
4. Often handle TV advertising as well, which gets preference.
5. Require exclusive rights to sell ad space on your site for periods of 6 or 12 months.

By way of compensation, agencies employ experienced staff, who:

1. Know the business and can negotiate the optimum deal.
2. Are more at home in the rough and tumble of the advertising world.
3. Can better recognize the potential of your site, making helpful suggestions for improvement.
4. Liaise with the advertiser, saving you exasperating telephone conversations, etc.

Banner Ads: Third Party Networks

Rather than use an agency, some sites prefer to register with a third-party network that brings together ad hosting and the ad placing companies. Companies wishing to place banner ads register for membership, stating what they wish to pay (in CPM, CTR and/or CCT). Companies wishing to host banner ads also register for membership. Once granted, membership allows both parties to see what's on offer. There are generally no fees for membership, but the third-party network takes a commission from the hosting company's revenues.

Getting Paid

How much do you charge? Put yourself in your sponsor's shoes. What do they pay elsewhere for what you could offer them? Find out by at least checking the banner ad rates from competitor sites. Suppose they employed an agency — they almost certainly do — what return do they get from their advertising spend here? What do other sites charge for sponsorship? Precise figures may be hard to come by, but you'll get some idea of what's reasonable at present. Show your sponsor that you're serious about their business, and you're halfway to finding the win-win relationship.

Resources

A small selection of what can be found by Internet searches.

Standard Rate and Data Service: Information on banner ad and sponsorship rates.

Finding an Agency

Advertising Age. News and views of the advertising industry, with numerous references.
Burst Media. Advertising network dedicated to specialty-content publishers
Media Bids. Helps you buy print advertising in newspapers or magazines.

Banner Ad Networks

24/7Media Good variety of services; management through Open Adstream software.
Double Click. One of best known. Offers categories and subcategories.

Banner Ad Networks: Pay Per Click Through

Add Network Comparisons. Prices for normal and high traffic pricing shown on site.
Screen Scenes. Search engine for pay-per-click advertising solutions, plus resources for page build and marketing.
ValueClick. Leading network with branches in Japan and Europe.

Banner Ad Networks: Pay Per Sale

LinkShare. Service some 400 companies: offices in US, UK and Japan.
Commission Junction. Includes downloadable guides and success stories.

Banner Ad Exchanges

ClickThru. Delivers one visitor to you for every listed site you visit.
Traffic Generation Network. Various options, based on your actions.

Banner Ad Rotation Software

AdButler. Rental free if you include 5% of their own banners.
Add Tracking Review. Advice on choosing an ad tracking program, plus reviews of products.

Creating Banner Ads: Services

Keeler Kommunications. One of the larger, award-winning banner design agencies.
Media Builder. Large selection of animated banners and other web elements.

Creating Banner Ads: Software

Banner Maker Pro. Creates banner ads, buttons and animated gifs. Good variety of styles and animations.

Questions

1. How do you get companies to advertise on your site?
2. What are banner ads? What is their metrics terminology?
3. What does a media kit include?
4. Compare sponsorship with banner ads.
5. In what circumstances would you employ a banner ad agency or network?

Sources and Further Reading