E-COMMERCE

How do I determine what to charge advertisers on my Web site?

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Marketing & Advertising mentor Lisa H. Buksbaum responds to the following question from an inc.com user:
I have a Web site that caters to a loyal niche market and gets approximately 5,000 visitors per day. The average member visits 10-15 times per month and spends, on average, 20 minutes per visit. I have not used any advertising on the site, nor have I really advertised beyond word of mouth. Cost per thousands vs. cost per click vs. impressions - which is the number I should be using to develop my rate card? How much should I charge?

Lisa H. Buksbaum's response:
You mentioned word-of-mouth advertising, and I would encourage you to fully explore this option. Chances are your members have friends and fellow hobbyists that they can bring online to spend time on your site. After referring 10 new visitors to the site, a member could be eligible for a raffle to win cool prizes. In terms of setting your rate card, what are comparable sites charging in this niche or similar ones?

Advertising can be measured by a variety of methods. They include cost per click, cost per acquired customer, cost per lead, cost per sale, cost per thousand -- and many others.Cost per thousand (CPM) has been a traditional way for marketers to price a banner ad.

The way that method works is a site guarantees an advertiser a certain number of impressions (that is, the number of times a banner ad is displayed and most probably seen by visitors). The price charged is based on the guarantee multiplied by the CPM rate. For example, a Web site that has a CPM rate of $20 and guarantees 500,000 impressions will charge $10,000 ($20 x 500) to the advertisers.

In my experience, cost per click (CPC) is growing increasingly common today because it correlates with performance marketing, which focuses on quantifiable results. With CPC an advertiser only pays when an Internet user clicks on an advertising banner. That enables the advertiser to measure the ad's effectiveness.

Copyright © 2000 inc.com

Related resources at inc.com:
Online Advertising Pricing Models
Best of the Small Business Web: Seed Money

Last updated: Oct 1, 2000




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