How to Set Your Own Advertising Rates for Direct Ad Sales: An Extensive Guide

This is the third post in a series of articles on developing Direct Ad Sales as an alternative revenue source to make money online. You can find the first article and an introduction to the series here.
Having looked at how to set up your advertiser sell page as well as the types of direct advertising options available, we’ll now study some of the ways you can use to determine your own advertising rate. Note that advertisers usually have only two aims in mind when planning to buy an ad for any website..
Firstly, the ad placed must send traffic to their website or generate brand exposure and retention through repeated viewing. Secondly, the ad must provide some Search Engine Optimization benefit in the sense it passes Google PageRank (PR) juice or helps the advertiser’s website to rank better in the search engines.
Not all advertisers have both aims in mind. Some emphasize purely on branding and traffic generation and will focus on buying graphic or text ads with strong ad positioning. Some advertiser will buy ads (or should we say links?) with only the aim of improving their PR or search engine results page ranking.
If you’re able to fulfill both aims at the same time, you’ll be able to offer an ad rate that is considerably higher than if you only able to fulfill one advertiser goal and not the other.
Nine Site-Related Factors Which Determine Advertising Rates
  • Google PageRank. Ad buyers purely interested in boosting their PageRank will consider this to be fairly important when it comes to choosing a site.
  • Alexa Ranking. Smart advertisers won’t really care about your site’s Alexa Rank but there are some who believe that it is an important factor which determines the general traffic popularity of one’s site.
  • Visitor Traffic figures. This refers to the No. of visitors and pageviews per day or month. In my opinion, this is the most important factor because it directly impacts the visibility and effectiveness of the advertiser’s ad over time. Crucial for ad buyers looking for more brand exposure.
  • Position of Ad on your site. Ads placed above the fold i.e. ads seen immediately when the page loads without the user scrolling down, are generally more attractive to advertisers who are looking for traffic/exposure. Advertisers primarily after SEO benefits will not care if link is placed in a less optimal position.
  • Number of links sold. This concerns both ad branding and SEO potential. The more outgoing links you are selling, the less PR strength goes into each link. Ad overcrowding will also reduce the effective brand retention by visitors.
  • Website niche. Websites in industries such as insurance, real estate or financial services can generally price their rates higher because of the higher Returns on Investment (ROI) each advertiser gets from a successful visitor conversion.Personal blogs or websites about obscure topics do not usually attract high paying advertisers unless they command strong traffic.
  • Size & Type of Ad. Is it a rich media (video/animation) ad or is it a static ad (banners and text links)? Does the advertiser want a 120 x 90 button or a 728 x 90 leaderboard? Will your ad or link be placed sitewide or on a single page? These factors concern ad visibility and can influence ad rates.
  • Site visitor demographics. Certain advertisers, especially those with location-specific offers/products or services will prefer that your traffic consists of visitors from a specific location or demographic.For example, sites with the majority of its visitors from Asian countries tend to do poorly with North American advertisers. Businesses selling beauty products for women will also focus more attention on buying ads with websites that have a strong female demographic profile.
  • Relevancy and strength or popularity of a specific webpage.This is only a factor if a specific page on your site consistently receives relevant referral and search traffic. Ad rates for this specific webpage can be set higher than other pages on your site.
  • Search Engine Results Page Rankings. How well you rank on search engines for specific keywords can be a major ad selling factor if because it brings in natural search visitors who are more likely to click on relevant ads.

A List of General Ad Rate Guidelines to Follow

Having looked at the list of factors which can influence the selling price for your ad. Let’s examine some of the common advertising guidelines which you can use to structure your direct ad campaigns.
  • The bigger the ad, the more expensive it should be. While this dictum is universally practiced in newspaper or magazine advertising, the same principle can also apply in online advertising.
  • Ad prices should be adjusted to reflect changes in Google PageRank. Where not all ad buyers are buying links primary for PR benefits, some advertisers are doing so and an increase in PageRank should lead to a corresponding increase in ad price.
  • Ads placed above the fold should be priced higher than ads below the fold, primarily because you were offering the most visually intensive spot on your website for advertising.
  • Rich Media ads require additional bandwidth, can slow down your site and are likely to engage visitors more. They can be priced higher than static ads. Creatives or ad material should also come directly from advertisers.
  • The more text links you sell, the lower the individual price should be for each link. If you are selling 5 links for one site and 25 links for the second, links for the first site should be priced higher than links in the second.
  • Ads bought for an extended period of time (6 months to 1 year) should be discounted and priced more competitively than links bought for the short term (1 to 4 weeks), unless you are offering trial ad testing for certain advertisers. This is recommended to establish favorable long-term relationships with advertisers interested in your site.

Five Methods to Effectively Determine Your Advertising Rates

Here are some methods which you can use to determine the appropriate advertising rate for various types of ads on your website. Each of them have their own merits and disadvantages so please pick the one that best suits your needs or ad selling goals.
I would also suggest using a combination of each method to get a rough range of ad prices which allows you to apply variable ad pricing when negotiating with advertisers.

1. Using Contextual Ad Programs for Impression-based Ad Rates

Contextual ad programs like Adsense can be used to roughly determine an advertising rate for your blog. Amit Agarwal from Digital Inspiration has briefly written about this topic and basically the key point is to use the average values derived from Adsense units to determine a time-based ad rate.
For example, if you want to sell a 120 x 240 vertical banner in your sidebar, place a 120 x 240 Adsense unit in the exact location and monitor it for 7 days.
After 7 days you should be able to determine the average Page eCPM. This information is located under the ‘Advanced Reports‘ section after you login to your Adsense account.
What is the eCPM of Effective Cost Per Thousand impressions? Here is a definition, according to the Adsense Help Center:
Essentially, effective CPM represents your estimated earnings for every 1000 impressions you receive. This can then be compared to other forms of advertising revenue, which may not use such directly comparable figures as cost per click.

Effective CPM doesn’t represent your earnings – rather, it’s calculated by dividing your earnings by number of page impressions, then multiplying by 1000.

If you have an average eCPM of $3 and you want to get a monthly ad rate, you would just need to multiply this by 30 (days) to get $90/mth rate. Since most of you out there are already running Adsense, this method should be fairly easy to implement immediately.
Once you’ve gotten this monthly figure, you can then choose to increase or decrease it to accommodate your ad sales program.

2. Using Link Price Calculators for BallPark Ad Rates

Text Link Ads Calculator is one of the most popular automated calculators when it comes to determining your ad rate. The calculator sets a price based on factors such as your site’s link popularity, traffic, ad location, theme and number of links sold.
I don’t like using the calculator because the results do not seem to reflect the actual marketplace demand in my experience. Most of the time, the link calculator undervalues the price of a link though some have said that the prices are usually higher than their TLA rates.
Factoring in Alexa as a determining element in price calculation might also unfairly skew the ad rate either way, depending on your site niche and theme.
TLA’s link calculator also does not take into account the strength of individual pages which enjoy heavy search and referral traffic. As such, it is not an effective way to determine how much to charge for ads on specific pages.

Another interesting link value calculator at this site allows you determine how much to charge for a blog post or a sitewide/homepage link.

Apparently it also takes into account the HTML/content ratio, domain age, Yahoo backlinks as well as the number of outbound links on the site. I’ve tested it and found that the outbound link count was rather inaccurate.
You can also choose to analyze the results according to the relevancy of advertiser’s topic. Relevant ads lead to higher rates, less relevant or irrelevant ads lead to lower rates.
While it doesn’t allow you to determine the price according to the site theme and ad position, this calculator can be used alongside Text Link Ad’s calculator to get a rough range of prices to set.
All in all, the only benefit of using link calculators is that the convenience of doing so. If you own several websites and don’t want to rack your brains over ad prices for each specific site, link calculators can provide a ballpark figure which you can tweak for final ad rates.

3. Using Link Marketplaces to Get Competitive Ad Rates

A look at some of the direct ad marketplaces or auctions online will allow you to develop an ad rate that are the most attuned to market demand. While this is partly based on the various factors (Alexa, PR, Traffic) mentioned above, the rate is optimized and made competitive due to the large number of ad sellers at these marketplaces.

In order to compete in most ad marketplaces which feature auctions and direct selling/buying, publishers will usually adjust their ad rate to pander to market demand. You should use a similarly competitive rate if you are mainly doing direct advertising sales through marketplaces.
The marketplace rate is a good indication of the ad ceiling or the maximum ad price you need to have in order to stay competitive. For example if most publishers are selling a sitewide PR 5 blog link for $15/mth, your maximum ad price should be the same.
You can however increase or decrease the rate depending on other factors. For example, you would want to increase the rate when:
  • Your statistics are notably better than other websites selling a similar link. These refer to the above mentioned nine factors, such as the number of links sold, site theme and daily/monthly visitor traffic.
  • You want to sell directly to advertisers outside of the marketplace or advertisers have contacted you directly through your website. There is usually a lot less competition outside of a publisher-heavy marketplace so increasing the rates will not affect your sales.
You would want to decrease the rate in order to attract advertisers when:
  • You are selling a large number of ads because this will affect the visibility of other advertisers.
  • Your ad is part of an ad package which includes ads on other websites. The individual ad rate should be lower because the aim is to attract advertisers through collective selling.

4. Using Other Websites or Blogs for Niche-Relevant Ad Rates

This involves looking at how websites or blogs in your niche price their ad rates. The process is fairly easy. Do a search on Google or other search engines for your site’s keywords and look at the top 50 results. If you are looking specifically for blogs, you can either use IceRocket.com orGoogle Blog Search.
Look for the advertiser page for each website and try to find the ad rates. When I come across a site that is very similar to mine in terms of size, link popularity and rank, I’ll write in to ask for their rates.
This is not only a good way to get a appropriate ad rate but also it’s also a useful method to either check out your competitors or buy targeted advertising on websites in your niche.
The downside to this practice is that it can be time consuming. Another way of doing this is more efficiently is to browse through Text Link Ad’s marketplace and see how websites in your niche are pricing their links. The obvious disadvantage of using TLA is that you’ll only get rates for text links but not rates for other types of ads.
An example of another ad marketplace you can use to analyze other websites selling ads isAdbrite, which has a large number of publishers who are selling banner, interstitial and text links ads.
Adbrite listings reveal the pageviews and unique visitors per day for each site so this can help you develop a competitive ad rate that is either higher or lower than other websites.

5. Getting Appraisals from Experienced Webmasters

This is one of the easiest ways to determine your ad rates. Other webmasters may be more experienced in direct ad sales and approaching them for a quick assessment allows them to get an estimate that is usually relevant and competitive.
If you don’t want everyone to know that you are planning to sell ads, I suggest approaching bloggers you can trust. If you’re totally open about it, I suggest emailing some of the bloggers who currently do direct advertising or have experience in doing so.
Another method would be to request for an assessment through webmaster or affiliate marketing forums. There’ll usually be a helpful group of members who will be willing to help.
Alternatively, you can email me after you’ve gone through all the methods above and still need advice on determining an appropriate ad rate.
While I’m really not an expert, I do have some experience in buying and selling ads and links so I’ll be glad to help in any way possible.
And this concludes my post on how to effectively set your own direct advertising rates. The next article in this series will examine the methods you can use to find potential advertisers and will include tips on how to market your ad space effectively. Do leave a comment if you have any thoughts on this post -)
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