Online Advertising Guide for Beginners - PPC, CPM, Fixed Cost
Showing ads on your site is a very common way to make money online, but if you're reading this then it might be new to you. If you are wanting to buy ad space on other sites, then this article will be very useful to you as well! Whether you're buying or selling ads, you need to know about the most common terms you'll see as you explore various advertising marketplaces and networks.
There are many challenges you must face to successfully market any product online. It is very important to understand that ads won't make you rich unless your website receives frequent visitors that are likely to click an ad and make a purchase. Any other situation is not worth it to the companies buying the ad views. You need to learn about how ads are bought and sold to truly understand how you can optimize your website for ad placements, bring in new visitors who are considered "valuable" (can afford products, services, etc), and enjoy the profits of a successful site.
3 Primary Types of Advertisements
There are 3 main advertisement types that you should be familiar with if you want to make money online. In the beginning of the web, advertisers wanted their banner or other clickable ad to only ever be shown on a site related to their company, product, or service. Some ad networks changed this philosophy along the way by always showing ads that the individual visitor is interested in (based on past site history and data) even if that ad is unrelated to the site they are currently on. These networks primarily use two methods of selling ads - CPM and PPC. There are still ways to buy and sell fixed cost ads online too. Keep reading to learn about the 3 most common types of advertisements to make money with your website.
CPM, or cost per 1,000 views (also called impressions), is a method in which the ad buyer pays per views on the ad even if nobody clicks the ad. This works out great for a website that has a lot of visitors. Of course, the ad buyer will only actually see a good return on their investment (into advertisements) if people click the ad, go to their site, and then sign up or buy a product. This means that advertisers only want a CPM ad on a site that is related to their ad so that more people click it.
The "M" in CPM represents the word "mille," which is Latin for "thousands."- Investopedia "Cost Per Thousand (CPM)"
PPC / CPC
PPC (pay per click), also known as CPC (cost per click) is different than CPM because the ad buyer only pays when someone clicks the ad. Cost per click advertisements are a great option for advertisers because they can have thousands of visitors see their ad (who may go on to directly visit their site without clicking the ad itself), while only paying per-click.
With search engines, advertisers typically bid on keyword phrases relevant to their target market and pay when ads (text-based search ads or shopping ads that are a combination of images and text) are clicked.- Wikipedia "Pay-per-click"
Fixed Cost Ads
A fixed cost advertisement ($X per month/week/day) is another popular way to make money with your website. However, many advertisers choose to go with networks that automate the process with CPM/CPC ad campaigns across hundreds or thousands of websites rather than paying for an ad on one specific website. That said, there are still plenty of people buying advertising space on sites and you can definitely earn money this way. Sometimes this is done directly (word of mouth, someone is interested in your site, etc) and you receive a certain amount of money to show their ad on the site for a set amount of time. Other times, and more frequently, people use a service like BuySellAds to find websites ideal for a fixed cost advertisement. This option is not as common for newer sites as there are clear expectations that ad buyers have. Your site needs to be popular enough to justify the cost. To put it in perspective, people are often only willing to pay as little as $1-3 for 1,000 views on an ad, or around $1-3 for 1 click on an ad. You need real site visitors, a good site niche, and an ability to convince ad buyers that their purchase is worth it.
Successful Ads Are Converted
No matter what, ad buyers want their website to be shown to visitors that have a good chance of converting into paying customers. Most of the time these advertisers can't pick and choose what sites or pages their content is shown on, but they can choose niches, ideal demographics, etc. When it comes to being a "good website for someone to advertise on", you want your site to have a clear direction and visitors that are more likely to be able to afford what is being advertised. For example, a forum for sports car owners is a better place for a high end car manufacturer to advertise than a forum about cars but full of people that don't actually own a sports car or have money to purchase one. At Wubur, we use strategic marketing methods to target specific types of customers that are more likely to click our clients' ads. This type of thinking should be applied when you consider ads... "Is my website ideal for an advertiser and if not, what can be done to make it more desirable?" Showing ads on your web pages can be very lucrative, but any site with low monthly traffic or "low quality visitors" will not earn much money and may not make it big unless certain pages start to rank in the search engines.
Are Website Advertisements Considered "Selling Out"?
Adding new ad placements to your pages or optimizing your site to try to bring in more visitors (even guests that never sign up) shouldn't be seen as "selling out". By trying to make your website better for advertising you are actually just trying to improve the user experience so much that it naturally attracts new visitors and garners respect within your niche. That's a fantastic goal, so I don't think anyone can really say it's a bad idea to improve your website to the point that it is highly desirable for successful advertising campaigns. You should always attempt to optimize your website to attract visitors who can be considered "valuable leads" for whatever industry your site is related to.
A Note About Selling Ad Spots Directly
If you choose to sell ad spots directly (instead of through a traditional ad network), you must remember that a failed campaign can cost a lot of money. You should only ever accept money from someone if they are buying your ad placements based on real traffic and data. If you lie about your website's popularity and lie to advertisers, you may face trouble with the law, in civil court, or at the very least you'll have ruined trust with an advertiser who may warn others.
Ads May Not Be For You
Some websites may never be ideal for ads. In particular, adult topics, taboos, "angry content", and other similar types of sites are often disallowed or limited in how many advertisers are willing to have their products displayed on the site. Make sure you think long and hard about how you can better your website, but don't try to force yourself into selling ad spaces. There are other ways to make money online, so you don't have to limit your site to just ads! Make sure you sign up at Forum Promotion and stay tuned for more articles soon about incredible methods to earn money online.