In the late ‘90s, web publishers were riding
high with banner ads. Payouts were great, and many web owners
actually saw their dream of sitting on a beach sipping tequila
nearly realized.
Alas, the glory did not last.
The bubble eventually burst. Cost per thousand
impressions (CPM), the price barometer of banner advertising,
dramatically fell. Whereas some web owners were enjoying CPM rates
of as much as $150/CPM, the rates soon fell to as low as $0.50/CPM.
For that given rate, sites generating 500,000
monthly impressions first saw their banner advertising revenues
reach to about $75,000/month only to find it fall to a mere $250/month.
That is one major ouch! To date, rates for banner advertising
has been slowly increasing, but has not (and may never return)
to the late ‘90s level.
Now, there's a new thing in town that has the
web community, particularly the small business web site operators,
buzzing with excitement. It's called contextual advertising, and
programs include Google Adsense, Quigo's Adsonar, Overture's ContentMatch,
IndustryBrain, among others (for a discussion of the programs,
read "Earning Revenues from Contextual Advertising").
Contextual ads are delivered based on the content
of the web page using an automated system. Contextual advertising
serves up ads that are targeted on the contents of a particular
page, e.g. an article on how to get a bank loan will serve up
bank loans or personal loan ads.
These ads are often text based but some programs
like Google Adsense offers image-based ads; and many programs
are cost-per-click based but preferred publishers (often those
generating tremendous amount of impressions) are paid on a CPM-basis.
The promise of contextual ads is that its improved
targeting capabilities are deemed more effective than other types
of online advertisements (e.g. banner) and hence more likely to
be clicked by a user. As a result, publishers are given the chance
to earn more from their web real estate.
However, contextual advertising is not just a
simple matter of applying and putting up the codes on your website
and wait for the checks. There are a number of ways to maximize
your earnings from contextual advertising, whether you are running
Adsense or Adsonar or anything in between. Here are a few of them:
1. Determine overall fit with your site.
The first rule of thumb of contextual advertising
is that it is not for everyone. Some sites do extremely well with
it, earning 5-figures or more a month, while others earn mere
pennies a month.
Others running Google Adsense, for example, enjoy
being in the "UPS Club" (Google sends by UPS the checks
to publishers who earned $10,000 or more whereas the rest gets
their check through regular mail). Many say that they find it
hard to even reach the monthly check cut-off amount of $100.
The beauty about contextual advertising is that
it is not about traffic, as there are some sites getting only
5,000 ad impressions that earn more than those getting 50,000
impressions monthly. It is about the types of visitors you have.
So what types of site do well with contextual advertising?
Sites where users are in a buying mood
Sites where users are looking for information
on specific products or services that interest them - product,
business opportunity, looking to buy tickets, etc.
Sites where users are researching ways to spend
money
Sites with a high percentage of fresh unique visitors
(regular visitors tend to ignore ads)
Sites where users show an interest to ads, and
not just the site's offerings
If contextual advertising is not working for you
as you expect, be sure to check out other forms to monetize your
web real estate such as affiliate programs and CPM-based advertising.
2. Develop solid content for your users.
The key to a successful foray into contextual
advertising is content. Content is what brings visitors to your
site, and content is what makes them interested in the ad.
Content is also what the technology will read
to serve well-targeted ads. The more quality content you have,
the greater your propensity to earn from contextual advertising.
Looking at it from the advertisers' perspective
(the group of people who are actually paying the publishers),
many prefer their ads to be shown on sites with good content.
One of the common reasons why advertisers turn
off the content network option for their ads (in addition to showing
their ads in the search engine results, such as in Google) is
that they do not want their ads to be shown in spammy or no-content
sites.
Why? Because they feel that poor quality sites
may give them clicks, but not useful leads. A user may have clicked
on their ads - not because of any interest in their advertised
products or services - but because they want to exit the site
as soon as possible and the only way out are the ads.
Advertisers do not just want clicks: they are
paying to get visitors interested in what they have to offer.
They want visitors that they can convert, whether conversion is
defined as a sale, signup to a newsletter, or an inquiry.
3. Read and follow the Terms of Service
carefully.
The Terms of Service spells out the do's and don'ts
that will guide you in your program participation. It will tell
you how you can place the ad codes, where you can place them,
among others.
More importantly, it gives you the reasons why
you can be terminated from the program - from generating fraudulent
clicks to showing competing adverts.
Yet many publishers do not even bother to read
what these terms are - and then complain that they were kicked
out from the program because of a violation.
It is imperative to carefully read and understand
a program's Terms of Service (not just contextual advertising,
in fact). You don't want to lose a revenue source that may be
giving you as much as $5,000 a month just because you did not
read the Terms that you have supposedly agreed!
Some programs such as Google Adsense are strict
with regards to terms compliance, and often sends either a warning
email to rectify your mistake, or an outright termination notice
giving you a few hours to remove the code from your site.
4. Use and analyze available data.
As a participant in a contextual advertising program,
you will be provided with reports that tell you how effective
the program is working on your site. The basic metrics will include
page/ad impressions, number of clicks, click-through rate (CTR)
and earnings.
Some provide effective CPM, or the cost per thousand
impressions. These metrics can help you analyze what is working
well in your site, and whether you can improve your revenues.
For example, if your CTR is only 0.2 percent and
you stumbled across a posting of a competitor in your niche bragging
that their CTR is 4.5 percent, then you know that your content
can handle such a high CTR rate. Then you develop strategies to
improve your CTR.
You can also use your effective CPM data to compare
across your various revenue sources. The effective CPM is calculated
by dividing total earnings by the number of impressions in thousands
(e.g. if a publisher earned $200 from 50,000 impressions, the
CPM would equal $200/50, or $4.00).
Your effective CPM can show you how much your
site is worth in terms of advertising, and it can be your benchmark
when you sell your own banner ads. You can also choose to select
and actively promote in your site affiliate programs that have
effective CPMs that either equal or exceed the rate you are getting
from contextual advertising networks.
Many also look at their earnings per click (EPC),
derived by dividing revenues over the number of clicks (if revenue
is $200 from 600 clicks, then EPC is $0.33). Since the value of
actual clicks from specific keywords are not known, this average
number is an indication of the "value" of the keywords
covered by the website.
Google Adsense has a particularly useful data
that can help you analyze the performance of key segments of your
site - the channels. While reporting is delayed by a couple of
days, you can set up different content, topics or ad format as
different channels.
Google allows as much as 50 channels. If you have
5 sites running Adsense, for example, you can set-up each site
as a different channel so you can get information as to which
site actually brings in the revenues.
Or you can set up your channels based on different
topics on your site to see which topics offer the highest effective
CPMs and those that generate the best click-throughs.
Another way to use the channels is to set it up
to determine the effectiveness of your ad formats -- whether the
leaderboard ads at the top-of-the-fold gets better click-throughs
and revenues compared to rectangles at the bottom of the page.
5. Experiment, experiment and experiment.
There are three things that you can work on to
increase your revenues: the number of ad impressions, number of
clicks, and your click-through rate.
Even if your traffic is not growing as fast as
you hope for, you can grow your revenues if you improve your click-through
rate. And you can improve the performance of the contextual ads
in your site by experimenting on layout, colors, ad format, and
number of ads.
There are no hard-and-fast rules as to the most
effective layout and ad formats: it will depend on how your site
is set-up and the contents of your site. A large rectangle, for
example, may increase the CTR of a site that commonly uses long
articles.
Another site may find that a leaderboard or a
skyscraper may augur well for them. In terms of colors, some sites
report that their CTR doubled or tripled when they blended the
ads with the color of their site, while others believe that using
contrasting colors in the ad block increases the click-through
rates.
You need to experiment and see what works best
for your site. Track how changing a regular banner to a skyscraper
affected your revenues. If the revenue increases, then stick with
it. If not, try something else. Remember, though, that what works
for one web site may not necessarily work for the other web site.
6. Increase visibility of your site.
Increasing your traffic and continuously building
your website is always a good way to improve revenues, not just
contextual advertising. Contextual advertising is a "set
and forget" solution that works especially well for small
online publishers, because it allows the publisher to focus on
building content instead of trying to sell ads.
7. Diversify keywords.
The number of advertisers who are bidding on the
keywords, and the amount they are bidding affects earnings from
contextual advertising. When there is a bidding frenzy for your
keywords, you may find your earnings to increase.
However, if the biggest advertiser pulls out from
the content network or stops their ads for whatever reason, you
may find your earnings go down the drain. One of the realities
of contextual advertising is the seesaw motion of earnings: today
you may be earning well only to find your earnings go down the
following week.
To protect your revenues from wild fluctuations,
the best approach would be to diversify your keywords by developing
content based on different topics. The price of a click for one
keyword may decrease, but you still have other competitive keywords
where advertisers are placing big bids.
8. Enjoy while it lasts.
For those who have found gold in contextual advertising
(or at least sizeable revenues), their fervent wish is for these
types of programs to proliferate and continue - and their incomes
continue to increase. Alas, nothing lasts forever and the Internet
has shown that things can go downhill pretty quickly. There are
a number of things that can affect and reduce publishers' earnings:
Reduction of payout. Google and other providers
reduce their payout to the publishers, as what happened to banner
ad networks (when things got tough, publishers getting 70-30 share
before were reduced to 40-60 in some instances). A reduction in
payout can immediately shrink the publisher's income.
Text ad blindness. Just as users have learned
to ignore banner ads, they can also be conditioned to ignore text
ads, no matter how targeted.
Discounted clicks. To lure more advertisers into
the content network programs, providers often provide enticement
such as discounted price per clicks.
Google for example has introduced in April 2004
"smart pricing" whereby the price of the clicks are
adjusted based on potential conversion.
Publishers whose sites generate numerous clicks
for an ad may be paid on a decreasing scale, thus also cutting
the potential income of publishers.
The programs can be terminated. The provider may
decide to get out of the contextual advertising game and focus
on other business models. Or they may restructure their program
in its entirety that may not be advantageous to the publishers.
The key is the old adage: "Do not put all
your eggs in one basket." You must always have a diversified
source of revenues, and not rely on one income source.
Combine contextual advertising with affiliate
programs, other types of advertising (as long as they don't conflict
with the terms of the other programs), or other business models.
This way, you will not be left empty-handed when
contextual advertising dries up.
About the Author:
Nach Maravilla is the President/CEO of PowerHomeBiz.com. For information
on starting a small or home-based business, visit PowerHomeBiz.com
at http://www.powerhomebiz.com
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