Online Advertising 101

This post of mine first appeared on Aussie Bloggers. I have made some changes to that original post, mainly because I displayed at the time a devastating lack of knowledge about basic mathematics. You may note that whilst I write about online advertising that my blog contains not a single piece of it. I write from experience of being employed in the online advertising industry.

You have been blogging for a while now, built up a healthy amount of daily traffic, have probably brought your own domain name and now you want to run ads on your blog to make some money. There are hundreds of companies out there that supply advertising to blogs but if you know nothing about online advertising, then choosing a company that is going to offer real value for the space on your blog is almost impossible. In this post, I am going to give you the basics about online advertising to help make that choice a little easier.

Types of Online Advertising

There are two main types of advertising that appear on blogs; display and search. Display ads are those colourful boxes that you see littering almost every single page on the internet these days, whilst search ads are boxes of text, usually hosted by Google. Neither one is better than the other, but one type may be more suitable for your blog.

Firstly, you need to decide how much space you want to devote to advertising. If you don’t want your blog cluttered by advertising, then search ads are probably the best way to go. If you have more space on your site, you might decide that display is for you. Either way, you need to decide if having advertising on your site is going to alienate your readers and how much advertising is too much.

A word of advice: If you can’t tell where the advertising stops and your blog begins, you have gone too far.

Buy Types

Online advertising is sold using one of three main buy types;

CPM (cost per thousand): The advertiser pays a fixed amount per thousand impressions, an impression being a user seeing the ad.

CPC (cost per click): The advertiser pays a fixed amount per click, a click being a user clicking on the ad to visit the advertiser’s site.

CPA (cost per action): The advertiser pays a fixed amount per user action; the action can be an inquiry or lead, a sale, or any other kind of specified transaction.

The best buy type for bloggers would be CPM as you are paid for every single time the ad appears, however, the most common buy type offered is CPC. This is because it offers the best value for money for the advertiser as their ad gets shown to every user, but they only pay when someone clicks on it.

An increasingly large number of companies, such as Amazon, are now selling ads on a CPA buy, which means you only get paid if someone clicks on the ad on your blog and then buys something from that company. Good thing for the company, but not such a great deal for you.

How Much Money Will I Make?

Realistically, not that much. Yes, there are a lot of stories about people who are making an income from their blogs, but compared to the number of people blogging, these fortunate ones are very few and far between. Advertising is really not a great way to make money unless you have a massive amount of traffic coming to your blog. This is because advertising is designed to benefit the advertiser and not you, the humble blogger.

Most advertising is sold as CPC (cost per click) at roughly 20 cents a click. The average click through rate (number of clicks/number of impressions) for advertising is 0.05%. Therefore, if you serve 2,000 impressions a day, the most clicks you will get is 1, which will earn you a daily income of 20c. This is definitely not the type of income you would give up your day job for. To make it worse, blog readers are notoriously bad clickers, unless the ads are related to products and/or services that they are interested it. Therefore, there will be many days when you won’t even make 20c.

The trick to making money with advertising is to have a large traffic volume and to offer ads that will appeal to your readership, but not to make the advertising detract from the real reason people visiting, which is to read your blog. It is a fine tightrope to walk with many pitfalls and traps for inexperienced players. For those that can get the balance right, it can mean giving up your day job but for the rest of us, the best we can hope for is that it pays our hosting costs.

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2 Comments

Filed under advertising, blogging

2 responses to “Online Advertising 101

  1. The post kind of helped me. Well How you get ideas for such posts. sorry if it’s out of topic.

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