14 How to Create a Banner Ad Revenue Estimate
Does your Web site make you money? Turn off your order-entry system. Now does it? Well, it should. Web page banner ads have been around since the start of the Internet and the number of people using them continues to grow. They're a great way to earn your company extra revenue. How much, you say? It depends only on several factors such as Web banner ad specs (e.g., size), your Web site traffic and how targeted your audience is. No, you don't have to know how to create a banner ad that works. You just need a Web site. Join Big Picture Web today as we estimate how much extra income you could make with banner ads.
How to Create a Banner Ad
Oops. Wrong topic. We're not going to learn how to create a banner ad. Others have done that. WorkZ posted a great starter piece on how to sell banner ads on your site. Web Marketing Today also did a great intro on banner ads. Head over there if you need help on how to create a banner ad program. Today, we're here simply to gauge opportunity. What could we be making if we had banner ads that work to make us income just by being there?
Banner Ads that Work to Make You Income
(click to access the spreadsheet)How to create a banner ad vision of the future? Banner ads that work for you? I've created this Google Docs Banner Ads Revenue Estimator to assist us today. (You'll need a free Google Docs account). It's a spreadsheet with much of the math already done so we only have to focus on just a few things. If you love it, be sure to get additional free tools like this in the future by joining Big Picture Web's mailing list (There's a sign-up box in the right margin). Now then, let's begin.
Money on the Web. Banner Ad Specs
Remember, we're not here to learn how to create a banner ad or discuss web banner ad specs. We're really only going to learn enough to answer four questions:
- How many monthly page views make up your banner ad real estate? Much of banner ad math involves these page views, or impressions. Certain Web banner ad specs may not allow you to display an ad on every Web page. Furthermore, you may have some banner ads that work particularly well only on certain product category pages. Locate the exact pages on which you wish to advertise and then track down the monthly impressions in your Web Analytics software.
- How many ad slots do you have? Do you only have room for a super tall "vertical skyscraper" in the margin or is there room for an 4x4 display of "square button" banner ads? Your Web banner ad specs may be constrained by your your overall Web design. Determining how many banner ad slots there will be on your page is an important step in calculating how to create a banner ad fortune.
- How much will you charge? The basic banner ad unit of measure is CPM or "cost per thousand impressions" (the M is Roman numeral for one thousand). Your CPM could vary widely, anywhere from $10 - $150. It's all a matter of demand. If you have minimal traffic or a very untargeted audience, you may get something closer to $10. Higher traffic? Focused audience? Perhaps large Web banner ad specs? These factors can increase your expected CPM dramatically. It can be hard finding your starting CPM. Look at some of the examples below to help you out. If all else fails, call your competitor and ask them!
- Will this banner ad space be shared? Will you be doing any advertising in these banner ad slots? If so, what percent of the time will your ads be there? Also, will advertisers' banner ads show each time the page is viewed or will they rotate from a pool of advertisers? Know your total number of advertisers in order to know what to charge each one.
How to Create a Banner Ad Income
Once you can answer these questions, you can just plug them into the Banner Ads Revenue Estimator and know your banner ad income potential. All that and we didn't even have to know how to create a banner ad that works. Nice. Let's check out some examples of how this might look.
Example 1:
This popular Web page wants to advertise a banner ad on their home page only. They have a slightly targeted audience and plan to advertise this space exclusively.
Example 2:
A highly popular blogger has a reasonably targeted audience. She has a 2x2 ad slot available on the home page and all of her blog posts, which add up to around 100,000 page views per month. She wants to get a group of eight advertisers rotating in on these ad spaces each month.
Example 3:
Finally, a B2B site with great traffic boasts 300,000 page views in its ad space each month. It has a very targeted audience and its web banner ad specs are a single, large banner that is highly coveted by advertisers. This business wishes to advertise its own services 25% of the time and break the rest up among three top business partners.
So there you have it. Do you have questions about banner ads? About your audience? Your banner ad revenue prospects? Post a comment and let the discussion begin!
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Reader Comments (14)
Is it possible to get this spreadsheet? I got this message when I tried to download it - "[1, 'You can no longer view this document. The owner of the spreadsheet has changed the sharing options.']'
Thanks so much for pointing out the issue. Turns out, it worked in Chrome, but not I.E. or Firefox. You should now be able to open the banner ad revenue estimator spreadsheet.
Also, you can create your own copy of the document and enter in your own parameters by selecting File -> Make a Copy from the Google Docs controls.
In this world of online advertisements, online companies have to spend lots of money in hiring expensive banner ad agencies. These ad agencies are getting richer by making use of the fast flow of money towards their contracts.
That's a great point, Julius. I"ve seen a few examples of people sinking money into display or search advertising with no eye for conversion or ROI. But this is changing. Smart companies are investing in more organic and social efforts - they're doing great. The smartest companies measure their goals through web analytics. They're cleaning house.
Great article!
Really useful
when calculating banner ad revenues:
is it correct to do it with the following formula:
Ad rotation (ad showing for 30 sec= 2/min = 120/hr) x number of viewers = impressions
i.e: banner #1 x 120 (rotation) x 1000 (viewers) = 120,000 impressions
$ revenues
CPM (cost per 1000 impression)
# of impressions / 1000 X CPM = $ generated
i.e: 120,000 / 1,000 X $6 = $720
questions:
Is the rotation does come into play or is it calculated without the rotation factor
these figures are based on 1 hour = it seems like a lot of money being generated from 1 ad for 1 hour with only 1,000 viewers.
by the time the amount of viewers are greater and time spent increases: the $ figures become huge.
I just want to make sure I am not over valuating the revenues
I don't include time in the worksheet for several reasons but here's the biggest one: It's hard to say how long users will stay on a page. Usually it's only the first impression that will count (in the advertisers mind, anyway), so I wouldn't go through the extra trouble of adding in the time factor.
Your calculations assume that every one of your viewers will sit there for an hour and watch your ads refresh every 30 seconds. This is probably not likely so you may not want to include time or rotation into your calculations.
Hi there,
Hey amazing banner ad promo. Loved it
Thanks,
Crish
Hi, I have a highly targeted audience on my website. In the last 3 months we've had from 6K - 10K unique visitors and 150K - 500K page views. Most of the traffic is to view instructional video content. What kind of ad revenue do you think I'd get with this scenario? How would I go about getting started?
Any suggestion would be greatly appreciated!
oops, I meant to add that those figures (6-10K unique and 150K-500K page views) are per month.
You'd have to double check my math, but you could probably stand to make a lot of money: http://screencast.com/t/YzM2ZjkyYjkt.
Josh, thanks very much for your reply. I see in your worksheet you entered $75 for "desired CPM", can you tell me more about what the basis is for this amount? Does it have to do with the very specific type of consumer visiting my site? That sure beats the $1 - $3 per CPM I seem to be getting with AdSense. I haven't begun trying to sell ads directly to advertisers, but might advertisers selling relevant products actually be willing to pay $75 CPM?
Many thanks!
DC - Going back to the blog post, CPM is all about demand. Google pays so little because it's a one-size-fits-all way to advertise. Negotiating your own banner ad placement means you can call the shots to a certain degree. There are only so many content destinations for some niche markets. If there are a lot of folks looking to advertise and not many places to do it, the law of supply and demand kicks in. You have a scarce resource and can up the price per thousand impressions.
Where should yours land? It's tough to say. After this conversation, hopefully you have a better idea of where to start. You can always up your prices if demand is ever too high for a given CPM or decrease them if no one's buying. :)
Thanks for this explanation.. Now I know how to estimate ad revenue in blog... keep it up..