Hi,
I have to write some sort of a business plan for a new website. Part
of this plan is a forecast of possible revenue.
Since this website will get it's revenue solely out of advertisements,
I will need some more information on rates etc.

In particular:
1. Say the website gets 2000 hits a day, what would be a realistic CPM
rate to ask?
2. What's the current percentage of ad space that is actually used.
Say we have space for three ads on the main page, how much of that
space can we expect to actuall fill continually.

Please back up your numbers with the sources and/or links. 

Thanks,
Marjolein vd Berg

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Request for Question Clarification by skmitchell-ga on 04 May 2002 11:27 PDT

Can you tell us more about the Web site?  What audience do you expect?
 For example, if you're drawing 2000 hits a day for a "Joke of the
Day" site you will probably make $0 in advertising.  If, however, you
are drawing a very focused group who is interested in buying an
expensive product, you may do much better.  For example, if you have
2000 folks who are considering buying a home or car, then you can
expect a higher CPM.

The days of the "pay for eyeballs" are past.  Advertisers aren't
interested in just how many folks will see the ad, but what their
interest is, how much they're willing to spend, how likely they are to
buy the product being advertised, etc.

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Request for Question Clarification by mvguy-ga on 04 May 2002 11:39 PDT

As skmitchell pointed out, the intended audience is critical.  In
fact, it's probably the most important thing to know to determine what
kind of rates you can charge.  Also, what types of ads are you willing
to accept?  Are pop-up ads or pay-per-click ads acceptable?  Are you
willing to accept ads from casinos, porn sites or companies that offer
to help you get rich quick?  If you accept those types of ads, you're
more likely to fill the space you have available to sell.

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Clarification of Question by marjolein_vd_berg-ga on 04 May 2002 16:15 PDT

Hi,
I can understand your questions. I am aware that the target audience
is important for the CPM rate. Basically, what I'm looking for are
some industry averages for CPM rates.
The site in question deals with general news. That means no porn or
casino or any of those ads.
The sort of advertisements that are used on the site are not yet
determent and sizes and so on are variable. Maybe you could give me a
short list of different sizes of advertisements vs. CPM rates?

On a different note: the website will also include a mail service
through which people can receive news via e-mail. Are the rates for
advertisements in e-mail different from the rates of websites?

I'm really looking for a general picture of the current web
advertisement industry rates.

Thanks for your help so far!
Marjolein

Hi Marjolein,

As you probably knew before you asked your question, and certainly
after reading the comments that others and I have already posted,
predicting what you can earn from Internet advertising is no easy
task.  Here are some of the variables involved:

-- Your intended audience.  You can get more for advertising if you
have a narrow, wealthy audience than if you have a general audience
(as you are likely to have for a general news site).
-- The types of advertising you are willing to accept.  Ordinary
banner ads used to be extremely popular; these days, there is a
growing tendency toward use of ads that are more intrusive, such as
ads that "pop up" to cover the screen.  The more intrusive of
advertising you're willing to accept, the more you can earn.
-- The aggressiveness and creativity of your sales staff.
-- The number of unique visitors you have to your site.
-- The brand recognition of your site.

Typically, ads are sold on a cost-per-thousand basis, known as CPM. 
Thus if you sell ad space for a CPM of $10, 2,000 ad impressions per
day would bring in $20 per day per ad.

To give you some idea of what you could earn, I tracked down the
published ad rates of various web sites. Of course, you might be able
to sell advertising space for more or less:

Drivers.com charges up to $12 CPM.
http://www.drivers.com/ratecard.shtml

Edbydesign.com charges up to $14 CPM.
http://www.edbydesign.com/ratecard.html

Salon, a general-interest general news site, charges from $1 to $20.
http://www.salon.com/adsales/index5.html

Starbulletin.com of Honolulu charges up to $20 CPM, with discounts
available.
http://starbulletin.com/info/ratecard.pdf

Tucows, which has an audience of people interested in software,
charges $5 to $15 CPM.
http://advertise.tucows.com/ratecard.html

The Seattle Times charges $1.50 to $36 CPM:
http://seattletimes.nwsource.com/mediakit/banners.html

Google search term:
Internet advertising "rate card"

A few of those sites also accept advertising for their bulletin boards
and newsletters. From what I've seen (although I don't have anything
to back this up right now), rates for newsletters are often twice as
high or more (assuming these are newsletters that people subscribe to,
not spam) than for regular banner advertising.

As you can see from this sample, the going rate varies a lot, even
among these general-interest sites, although rates of $10 to $15 CPM
appear to be common.  That doesn't necessarily mean you could sell all
your ad space at that rate, however. These days, many Internet ad
deals are negotiated individually, and newspapers often sell their
online advertising space as part of a package with their print ads. 
There are also various national services that could fill up your
unsold ad space, although the rate you receive is likely to be low,
perhaps ridiculously so.

You could also look at pay-per-click advertising, which the advertiser
pay for only when someone clicks on the ad.  PPC rates are also highly
variable; I've seen ads that go for as little as a penny (for simple
text ads) per click to well over $1.

As has already been mentioned, a good resource for learning about the
ins and outs of Internet advertising can be found here:
http://adres.internet.com/advertising/0,1401,0,00.html
You'll find many terms explained as well as links to various
resources. Note, however, that many of the advertising rates given are
out of date.  Ad rates were much higher in 1999 and early 2000 than
they are now.

For developing a business plan, my suggestion is that you contact some
sites that are similar to yours but wouldn't be competitors.  They may
be able to give you a more realistic idea of what you can expect. 
Here's a directory of online newspapers that may be of help:
http://www.thepaperboy.com/

Best wishes in your endeavor! Don't hesitate to ask if you have
further questions.

Sincerely,

mvguy

Hello marjolein_vd_berg-ga,

These are good questions that I could answer for the rest of the day
:-) These questions you ask require a good detailed answer. I feel
that if you go to the places that I mention and read what they have to
say there that you will have a very good understanding of what you
need to do.

A good resource to check is the Cyberbounty website. They have strict
requirements and will qualify your website before you can work with
them. Here is a quote off their website:

"Unlike other companies we will not fill our program with just any old
sponsor, we have a strict criteria that ensures you get paid a
respectable amount for your impressions. Sure, it may make our list a
little smaller, but you can be sure that what you are getting are
quality sponsors that will not waste your valuable advertising."

They have been around for years and I know people that are using them.
I think that they are worth a look. You can reach them at
http://www.cyberbounty.com

===---===

Another good resource is Microsoft's bCentral website. The website
does not allow me to point to the direct page but you can go to the
section that says "Banner Network".

Their network has over 300,000 sites and they get more than 65% of all
visitors to the Web through their advertising efforts.

More information can be found at
http://www.bcentral.com/products/bn/default.asp

Thank you for the question and have a great day!

Interceptor-ga

Hi marjolein,

First, what you're looking for regarding general CPM rates and other
Internet Advertising information can be found at this URL:

http://adres.internet.com/advertising/0,1401,0,00.html

Your other questions are too vague to answer with any kind of
authority. However, it does appear that you are confusing "hits" with
"unique visitors", which makes your question even more difficult to
answer.

"Hits" refer to the number of times a file is sent from your server to
the visitor. For example, 15 images on a page=16 "hits" (15 images+the
HTML page).

No advertisers care about how many "hits" you get.

"Unique visitors" on the other hand, refers to the number of actual
people coming to your page from different IP addresses...Something
advertisers will be very interested in.

So, 2000 "hits"/day is nothing, and you can't expect to generate any
actual revenue with...2000 "Unique visitors" a day is an entirely
different story.

If you're profit model is strictly advertising based, you must have a
highly targetted group of people interested in a specific category in
order to survive. Additionally, that specific category (or "Niche")
must have a large supply of companies with products to sell to your
target audience.

Good luck! Hey Google, will you please let me in? :)

For a list of industry accepted internet ad sizes and specifications,
check out the non-profit Internet Advertising Bureau at
http://www.iab.net .  Note that "non-profit" applies to many websites,
regardless of intentions, but these guys aren't even in it to make a
buck.

Which brings me to my next comment.  Please think long and hard about
going down this path.  If you are throwing your hat in the ring
because you love what it is you plan to be doing, go for it, but have
another way to pay your bills.  If you are going into this hoping to
make a career of it, you should strongly re-consider.  I'm not trying
to be mean, but if you hope to make real money by selling ads on a
news website, and you're asking the above rudimentary questions, you
will likely fail to competitors like www.nytimes.com cnn.com, and
about a million others (literally).

It takes a lot of money, or some amazing differentiating factor that
spreads word of mouth, to generate any significant traffic. 
Advertisers are becoming less and less interested in even paying for
CPMs these days as well.  Most are willing to pay for CPA, that's cost
per action.  i.e., they'd pay you for actual clicks on an ad (or
signups, registrations, etc), not just serving the impression.  Others
still, are only willing to pay you a percentage of sales they generate
from users who click through from your site.  The benchmark gets
higher and higher, and this trend is likely to continue.  Other
trends....Advertisers are definitely willing to pay more for ads
placed in email products, but your task is to generate an email list
that actually gets opened on a frequent basis...not an easy task. 
Finally, peruse the site www.econtentmag.com (or subscribe for free to
their magazine).  You'll note trends like the surprising one (not
surprising to google) that text ads are more effective than graphical
ones.  Also, read up on an ongoing debate about paid content
subscriptions.  After all, if your sites are note million dollar high,
you may be better off charging subscribers for full access to your
site than trying to make money from advertising.

Trust me...a guy who knows.  (Hell, half the dot.com dropouts in San
Fran know this all too well.)