Online advertising revenue

Sanjidgc22 · 05-31-2009, 01:37 PM

Site owners wishing to forecast their revenue from their website should develop models such as my simple online advertising revenue spreadsheet of potential revenue depending on the mix of revenue generating techniques from the four main revenue options described in my post on online revenue models which also explains some of the terms from the spreadsheet such as CPM, CPC, etc.
1. Number and size of ad units. This is a delicate balance between the number of ad units in each site section or page – too many obtrusive ad units may present a bad experience for site users, too few will reduce revenue. My online ad revenue spreadsheet has a parameter for the number of ad units or containers in each ad revenue category.
There is a tension with advertisers who know that the awareness and response they generate from their ads is maximized when they are most large and in prominent placements. Many online newspaper sites such as the New York Times or London Times will tend to display ads to the top and right of the screen where they will not interfere too much with reading the articles.
A more accurate revenue model would develop revenue for different page types such as the home page and different page categories, e.g. the Money or Travel sections of a newspaper.
2. Capacity to sell advertising. My online ad revenue spreadsheet also has a parameter for the percentage of ad inventory sold in each category – for example, for the CPM ad display revenue only 40% of inventory may be sold.
This is why you may see publisher sites such as FT.com with their own “house ads” – it is a sign they have been unable to sell all their ad space. A benefit of using the Google AdSense publisher programme is that inventory is commonly all used.
3. Fee levels negotiated for different advertising models. Fees will depend on the market competition or demand for advertising space from advertisers. For “pay-per-performance” advertising options such as CPC and CPA models, it also depends on the response. In the first case, the site owner only receives revenue when the ad is clicked upon and in the second case, the site owner only receives revenue when the ad is clicked upon and a product is purchased on the destination merchant site.
4. Traffic volumes. More visitors equate to more opportunities to generate revenue through serving more pages (which helps with CPM based advertising) or more clicks to third party sites (which helps generate revenue from CPC and CPA deals).
5. Visitor engagement. The longer visitors stay on a site (its “stickiness”), the more page views that will accumulate which again gives more opportunities for ad revenue.
For a destination site a typical number of page views per visit would be in the range 5 to 10, but for a social network, media site or community the figure could be greater than 30.
Please add to the list of other factors in calculating ad revenue model you think are important below.
To assess how effective different pages or sites in their portfolio are at generating revenue using these techniques, site owners like publishers and affiliates will use two approaches.

05-31-2009, 01:37 PM	#1
Sanjidgc22 Warrior Member Join Date: May 2009 Posts: 1 Thanks: 0 Thanked 0 Times in 0 Posts	Online advertising revenue - calculate and maximise! Site owners wishing to forecast their revenue from their website should develop models such as my simple online advertising revenue spreadsheet of potential revenue depending on the mix of revenue generating techniques from the four main revenue options described in my post on online revenue models which also explains some of the terms from the spreadsheet such as CPM, CPC, etc. 1. Number and size of ad units. This is a delicate balance between the number of ad units in each site section or page – too many obtrusive ad units may present a bad experience for site users, too few will reduce revenue. My online ad revenue spreadsheet has a parameter for the number of ad units or containers in each ad revenue category. There is a tension with advertisers who know that the awareness and response they generate from their ads is maximized when they are most large and in prominent placements. Many online newspaper sites such as the New York Times or London Times will tend to display ads to the top and right of the screen where they will not interfere too much with reading the articles. A more accurate revenue model would develop revenue for different page types such as the home page and different page categories, e.g. the Money or Travel sections of a newspaper. 2. Capacity to sell advertising. My online ad revenue spreadsheet also has a parameter for the percentage of ad inventory sold in each category – for example, for the CPM ad display revenue only 40% of inventory may be sold. This is why you may see publisher sites such as FT.com with their own “house ads” – it is a sign they have been unable to sell all their ad space. A benefit of using the Google AdSense publisher programme is that inventory is commonly all used. 3. Fee levels negotiated for different advertising models. Fees will depend on the market competition or demand for advertising space from advertisers. For “pay-per-performance” advertising options such as CPC and CPA models, it also depends on the response. In the first case, the site owner only receives revenue when the ad is clicked upon and in the second case, the site owner only receives revenue when the ad is clicked upon and a product is purchased on the destination merchant site. 4. Traffic volumes. More visitors equate to more opportunities to generate revenue through serving more pages (which helps with CPM based advertising) or more clicks to third party sites (which helps generate revenue from CPC and CPA deals). 5. Visitor engagement. The longer visitors stay on a site (its “stickiness”), the more page views that will accumulate which again gives more opportunities for ad revenue. For a destination site a typical number of page views per visit would be in the range 5 to 10, but for a social network, media site or community the figure could be greater than 30. Please add to the list of other factors in calculating ad revenue model you think are important below. To assess how effective different pages or sites in their portfolio are at generating revenue using these techniques, site owners like publishers and affiliates will use two approaches.