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What do you need to know before setting ad rates?

ad clicks money Let’s say you have created a website that is pulling in a ton of traffic and now you want to start monetizing the property by serving ads. This is an excellent way to earn some advertising revenue that will help your website grow, but if you have never gone the ad serving route before, you probably have some questions. One of the most commonly asked questions from publishers is how much to charge and what their ad rates should be set at. There is no easy answer here because there are many numbers of different factors need to be considered before deciding on specific ad rates, which may not be the same across all of your pages. Setting your ad rates too high could mean missing out on advertisers and losing business to your competitors, while setting them too low means missing out on potential revenues. Here are some things you need to know before setting advertising rates.

Know your website

This is where data is your friend, as it will help you place ads that are not only seen, but also clicked on and possibly generated a lead or a sale for your advertisers. Make a list of all the web pages, areas and sections that are suitable for ad serving. Your homepage is likely to be the most active, which is why that is often considered to be prime real estate for advertisers. The good news is that you don’t need to settle for just having ads on the main pages. However, you do need to set rates according to the traffic that each page or section gets. You can’t charge the same rate for a spot on the homepage as you do for a page that is a lot less active.

Know your page layout

As is the case with your individual pages, the layout of each page or section is also important when setting ad rates. A banner across the top of the page is obviously going to be a good deal more valuable to an advertiser than a small square advert placed near the bottom of the page. The size of the ad space and the ad location on the page are both important.

Know your audience

People who do not have a ton of disposable income are not likely to click on ads for items they cannot afford. The same rules apply when you are trying to run ads that have little interest to your target audience. For example, if you run a site that is devoted to topics for retirees, you are probably not going to see a ton of joy promoting video games. Know your audience and their demographics, have a report where website traffic come from, find the right advertisers and set rates accordingly.

Know your business model

Before you start running ads, you need to ask yourself what the goal of the website really is. Do you want to earn supplemental income or just make enough money to cover the cost of running a website, or are you looking to grow and have both ads and a membership set-up? Should you use CPC, CPM, CPA or a combination of those? Figure out a suitable business model will help you determine how much to charge for serving ads on your site.

Know ad rates for your niche/industry

Before you get started, do some research to find what your competitors do and what the most common ad pricing are used in your industry. You also need to know the typical click-thru-rate (CTR) for your niche. Some categories have high CTRs while others have low CTRs. If the average CTR is high, you should consider charging cost-per-click (CPC, PPC). On the other hand, if the average CTR is low, it may be better to set cost-per-view (CPM) rates. Of course you can be flexible and use a combination of both CPC and CPM. Regardless of what you choose, there will likely be some trial and error.

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