Pricing of Your Online Advertisement – Where to Place It?
Placement – Whereabouts on a site you place your ad will also have a big impact, both on how much it costs and how effective it is. The same size ad might have completely different results on two sites because they are positioned differently. Is the ad in a place that people will see it and is it on its own or surrounded by other ads?
Before you book the ad, you need to go onto the site and look at the positions of their ad spaces. Can you get an ad space that appears in the middle of a page, so that people will have to look past it to read the page? Is the ad positioned right at the bottom so only people who scroll down can see it? Think logically about whether people are likely to pay attention if your ad is in a particular position.
Hovering ads – Bear in mind that whilst ‘hover’ ads (ads that hover above the page, requiring you to click them away before reading the page) are always noticed, they mostly annoy people; and might actually make them less keen on your business. Also, you will almost certainly need to pay for an external company to create them.
Pricing – There are several different types of pricing for an online ad, each is useful for different types of products and services.
CPM / CPT – (Cost Per Mille / Cost Per Thousand) This is by far the most common method of pricing online ads, and by far the most relevant to small businesses; and refers to the cost per thousand views of your ad. Both advertisers and websites like this method of payment as it is precise, they know what money they are getting, and you know exactly how much exposure you are getting.
You can specify how long you wish your ad to run for. 10 CPM spread over a month will give you the same exposure as 10 CPM over two weeks; but you are likely to be seen by fewer people over two weeks as you appear more regularly. (I.e.: Seen four times by 2500 people instead of twice by 5000 people)
If an ad is £5 CPM, £100 will get you 20 CPM = 20,000 views of your ad.
CPC – (Cost Per Click) A less common pricing method is CPC, this means you pay nothing for views of your ad; but pay a larger amount for every click the ad generates to your site. This means that you only pay for results; however it can be much more unpredictable than CPM. You might end up with less exposure for your money if lots of people visit your site quickly and use up your budget (though this would show your ad is working!).
The problem with CPC is that the website you are advertising on suffers if no one clicks because your ad isn’t very good, or if people aren’t interested in your product. Therefore most sites are not keen to run ads in this way; as the risk is on their side.
If an ad is £1 CPC, then you will reach your budget of £100 after 100 clicks (visitors taken to your site from the advertising site).
If one in every 50 people clicks, then you will only have been seen 5000 times (I.e.: 100 clicks x 50 people), which is only a quarter of what you got with CPM. However, if one in 500 clicks, then you will have been seen 50,000 times (100 clicks x 500 people); although such a low rate of clicks may mean your ad is too small / poorly targeted / not very good!
Bear in mind that the less likely people are to click on your ad (A specialist product will be less likely to get clicks than a general product) the more you will need to offer per click to make it worthwhile for the website.
CPL – (Cost Per Lead – I.e.: Cost Per Sale) This is used commonly for affiliate schemes and products/services that require credit agreements or forms filling out. You pay a fixed amount per ‘lead’ (I.e.: a sale / filled in contact form / application) that comes from the site, which means you only pay for results; but like CPC the site suffers if your ad is not very good. Therefore you have to offer a very good price for them to consider it.
If an ad is £20 CPL, then you will reach your £100 budget after 5 leads/sales.
If you wish to bring in large numbers of leads you may want to look at signing up with an Affiliate company; they will (for a cost / percentage of lead cost) promote your CPL ad to websites, increasing the number of places your ad might be seen. Bear in mind though, that if many sites choose to run your ad you could end up with lots of orders to meet and a large advertising bill to pay in the meantime!
As with CPC ads, remember that the less likely people are to complete a form/sale from your ad (A specialist product will be less likely to get leads than a general product) the more you will need to offer per lead to make it worthwhile for the website.
Percentages – This is where a tracking file (cookie) is placed on the computer of people who visit your site from the advertising site. The site is then paid a percentage of every sale made by people who found your site from them, usually for a 30 or 60 day period after their first visit.
To adequately record percentage sales requires tracking software to monitor the cookie files, and for this reason it is unlikely to be cost effective for small businesses unless you have a significant online site to cover the costs of monitoring it.
If your percentage rate is 10% and you sell £1000 from the ad, you will pay the advertising site £100.
As with CPC/CPL adverts, many sites are reluctant to display percentage ads; as they suffer if you produce a poor ad or target it badly. You need to offer good percentage rates to encourage them to sign up.
If you wish to bring in large numbers of sales using percentages you may want to look at signing up with an Affiliate company; they will (for a cost / percentage of sales) promote your percentage scheme to websites, increasing the number of places your ad might be seen. This provides you with the necessary tracking as well.
One big difference between CPM and CPC/CPL/Percentages is that the website will set a CPM price; whereas they will expect you to set a CPC, CPL or percentage price to try and tempt them.
Monthly – This is where you pay a fixed amount for a month’s worth of advertising space. This is less precise than using CPM, but makes budgeting over a longer time easier; and is mainly used for sponsorship adverts and similar schemes.
Obviously you need to have good tracking or a strong trust in the website to provide a reasonable number of views for your ad.
If you pay £100 for a month’s exposure then you would expect to get a similar amount of coverage as someone who pays £100 for CPM ads. So if a CPM ad gets 20,000 views, you would reasonably expect your monthly ad to get between 18,000 and 22,000.
Article Index
- How to Use Online Advertising - Why and Where?
- Pricing of Your Online Advertisement – Where to Place It?
- Creating and Booking Your Online Advert
- Monitoring the Results of Your Online Ad
- Related Articles
