[June 6th, 1998]

See Also   Yahoo!, E-lists or Free promotion? Here are My Results   Great Expectations   Improving Your Banner Ad Revenues   Understanding Your Banner Ad Hosting Costs

If you've followed the advice in last week's article, you will have calculated the cost of hosting banners on your site. Now that you understand your costs, you are in a better position to make effective use of your precious banner ad space.

First, you need to review all the banners you are currently hosting. Calculate the net revenue each ad is generating, by subtracting your banner hosting cost from the amount you are being paid to host it. And where the numbers don't make sense, don't host the banner.

Even if your sums do show you are making some money, you may be able to make even more by changing the way you utilise your space.

So what are the alternatives? Here are three ways to improve your banner ad revenues.

Increase payments from advertisers
Some sites do receive considerable payment for carrying banner ads, with some realising more than $100 CPM. They achieve this by demonstrating to advertisers that their site attracts a demographic segment that the advertiser is particularly interested in. Ads perform better when there is a close correlation between the type of customers a product is aimed at and a Web site's audience and advertisers are therefore willing to pay more.

If your site attracts a niche audience, you need to be able to quantify it and describe it to prospective advertisers. One possible method is to capture information about your visitors in a guest book or when they sign up for a specific feature at your site, for example a newsletter. Be aware however, that asking for this information can reduce the number of registrations that you receive. An alternative method is to add a survey to your site with some sort of inducement, for example a prize draw, to encourage visitors to complete it.

Once you have characterised your audience, identify advertisers to whom it might appeal and approach them directly.

Advertise affiliates' goods and services
Signing up to sell other peoples goods or services from your site can be an excellent source of revenue. And using some of your banner ad inventory to promote these programs can produce incremental revenues far in excess of rates paid by normal banner ad programs.

However, to help make your decision on which affiliate programs to advertise, and how much banner space to assign them, you need to calculate their effective CPM. This can be done quite easily.

After you have been in an affiliate program for some time you will be able to calculate the number of sales for each thousand banner impressions. This ratio, multiplied by the average commission from your affiliate gives you an effective CPM. So for example, if you have a sales-to-impression ration of 0.2%, or 2 in 1000, and the average commission from your affiliate is $20, you are achieving an effective CPM of $40.

Swap banners with other sites
Another useful technique is to swap banners with other sites. For this to work effectively you need to find a site with complimentary products, a similar audience profile and similar traffic levels. Although there are banner exchange schemes available, you will probably achieve the best results by identifying target sites and negotiating with them directly.

Again, you need to calculate the effective CPM you are achieving. As no money changes hands it might seem difficult to do this. However, assuming the other site attracts a similar volume of traffic to your own site, your effective CPM is simply the amount the site you are swapping with would normally charge to host your banners.

Finally, remember that although unsold banner inventory does represent a lost earning opportunity, there is no point in hosting banners that pay so low they are actually losing you money. Some sites seem to equate the presence of banners on their site as being some sort of stamp of success. There is nothing wrong with having a banner free site. Your Webmaster will appreciate not having banners ruin his page layouts and your customers will appreciate the lack of distraction.

Alternatively, why not put unsold inventory to good use by advertising other areas of your site? This will increase the average number of page views per visitor and thus the total number of impressions. And the longer a visitor spends on your site, the more likely they are to find something that is of interest to them, or something they'd like to buy.

Do you agree with me? I'd love to hear your comments.