You have managed to get your website to that magical point where you have established popularity, traffic, loyalty and a community of fans. Your site contains a wealth of information, resources and services that you provide free because that’s just the kind of person you are. You may not have intended to make money from your site but now that you have an audience you realise that it’s possible, or perhaps you have to start thinking about generating income because your costs to manage the site have increased and it’s starting to hurt.
You have been diligent over the years to build up your community, but now you wonder how to go about making some revenue by leveraging this audience (as the marketers would say, you want to monetise your site). Maybe you have some big dreams and plan to one day generate advertising income from your new web project. This is a very common plan for online business given people tend to expect information and services to be free on the web. Advertising may be one of the only revenue generation strategies available to you.
How much traffic do I have to have to make money?
In my experience once you have about 500-1000 unique visitors per day to your site *at least* before you can start to make real money. You can make chimps change from day one from your 50 hits, but this article is targeted at those that have a larger audience, or perhaps are constructing a business plan (either real or in your head) and would like to know how to go about monetising your website. If you get more then 1000 unique visitors a day chances are you already make money from your site (if not you should be!) but my points are still relevant.
As per usual I will illustrate my article using real world examples from what I did to make money. Over about five years I managed a hobby site that started off as a very local site focusing on people in my area that played the game Magic: The Gathering. I wrote reports and did news coverage for the game. Later I expanded the site to Australia and eventually opened it to the world although it remained mostly Australian with a good chunk of Asians and New Zealanders.
Banner programs
At around the time I was getting 500 unique visitors a day I decided to start playing with advertising methods. This was before the advent of Google Adsense (more on this later) but there were many banner programs available that paid either on cost per click (CPC) or per impression basis. An impression is a banner being displayed to a user once, a click is someone clicking the banner and visiting the site being advertised.
These networks act as a middle man between business that want to advertise and people like me that have an audience and want to make some money by displaying banners. Unfortunately these programs display banners that often don’t match your audience. I tried a few but it was a short lived experiment that made me a few dollars if that.
I recommend you avoid any banner programs. If you are confused about what I am talking about regarding banner programs take a look at Burst Media to get a grasp of how they work. For small sites they just don’t make much money. For large sites there are much better ways to make money. I’m sure there are people out there that make good money from these programs (I’m sure the program owners do!) but in my experience a little effort to find the right type of advertising can yield much better results.
I decided the best way to make money was to really leverage the demographics of my audience. I had a fairly focused niche, card game playing young males. I started by emailing all the local and international card game shops and asked if they were interested in exposure to my market. Instantly I had responses but I had to come up with a pricing structure first.
How much should you charge?
By this time my site was getting close to 1000 unique visitors per day, with about 300,000 impressions per month. I had done my research and I knew that advertising on websites was usually via a standard 468×60 banner so I would start with that. I also knew that many companies charged by what is called CPM or cost per 1000 impressions. Back then this was by far the most commonly used scale for pricing of web advertising and you could expect to earn anywhere from $0.10 to $10.00 CPM. I never liked this method of advertising because it didn’t guarantee any visitors. Charging by click-throughs is a far better method, but didn’t become mainstream until later.
I decided that in order to keep my advertisers I had to offer value so I went for a blanket approach. I started charging a flat rate of $30 per month to have a banner on my site which offered as many impressions that my traffic could provide. I signed up my first few advertisers at this rate.
Banner management software
In order to “rotate” different banners across my site I needed some special software that would dynamically place banners. This allowed me to have more than one advertiser banner in a single location so I could optimise my adspace and make sure my audience didn’t get too bored from seeing the same banner over and over again.
Let me save you some time, phpAdsNew is the best banner management software out there. It’s under an open source license and has all the features you could ever wish for at a price you can’t beat, it’s free. If you don’t believe me and absolutely have to try searching elsewhere try this category at the PHP Resource Index.
There is a learning curve with phpAdsNew and you do have to install it on your own server. If you are like me and you do things like this yourself most of the time you shouldn’t have too much trouble. Otherwise you might try contacting your favourite ITGeek and get them to give you a hand.
Statistics are important
The best feature with phpAdsNew is that it allows you to provide a unique user login for your advertisers to check their banner statistics in real time. This means at any point in time they can learn how many impressions and clicks their banners are receiving from your site.
Before you start searching for advertisers you should be very familiar with the statistics of your site. Do you know how many unique visitors you get? How many hits you get? How many impressions? Do you even know what the differences are between these? Try this stats terminology primer on for size if you don’t.
Most web servers come with a statistics package. Ask your web host if you don’t know. The most common are Awstats (demo) and Webalizer (demo) which often are preinstalled on many hosting packages. Become familiar with these packages so you can accurately assess your site traffic.
Increasing ad revenue
I now had the foundations laid and was serving the ads of my first few advertisers. From the point onwards I went to work attracting more advertisers by directly emailing North American online card stores and other related sites. I kept an excel file to track which websites I had emailed and their responses so I could follow up in a timely manner.
I created new banner positions and started initiatives like a newsletter to generate more revenue. I created monthly packages that combined newsletter advertising and different banner positions and offered them at $500 per quarter. I increased the top prime banner position fee to $50 per month and started offering a tower banner position for $50 as well.
Eventually I had to limit the number of banners I could take in the prime positions to avoid dilution. I had a guarantee in place that offered at least 30,000 impressions per month (averaging 40,000-60,000) to advertisers so that they always received a good equivalent CPM rate. I even had some advertisers purchase the rights to “own” a position for a certain period to make sure no other advertisers banners would be displayed.
Eventually I reached a point where I was averaging $500 per month and peaked at $1000 in one month. Some advertisers came and went quickly but many stayed loyal and in fact still advertise today though I sold the site a long time ago. The niche for the site was so focused that it became the pre-eminent site for Australia in it’s marketplace and consequently some Australian advertisers simply stuck their banners up as a branding exercise. They knew that the exposure from the site would help to align their business as one of the pre-eminent retailers or event organisers for the game. Some advertisers stopped caring about click through stats and kept advertising purely for the branding exposure.
Google adsense
At some point Google Adsense popped up and I was in with other early adopters to try it out. My results were okay. The money wasn’t nearly as good as the established relationships with advertisers I had, however the ads being displayed were a lot more targeted than banner networks I had tested early on.
I eventually stopped using Adsense because I could better monetise the adspace with my traditional advertisers. However that was before Google went to work providing such a variety of banner sizes and display options. Nowadays Google Adsense is a viable income source for many websites so I definitely suggest you look into it as a possible option for generating revenue, but remember it’s not the only means and you can earn more if you get busy chasing targeted advertisers.
Ongoing maintenance
I wouldn’t call web advertising income passive, but it sure is close. The systems I had in place handled everything automatically. While I did have to manually create advertiser accounts, pursue advertisers and control billing, once the systems were in place, in particular phpAdsNew, I didn’t have to do much. Of course depending on your website often the maintenance of your community is were the labour is involved, but chances are if you started the site you either enjoy it or have plans in place to eventually remove yourself from the maintenance role.
In the end I sold my site but if it wasn’t for the advertiser revenue my asset would not have been valued nearly as highly as the final sale price. Investing in advertising is like investing in any asset, the time and labour you put in today will lead to benefits in the future.
Yaro Starak
Web Entrepreneur
You are spot on about 500-1000 daily part. I was expecting miracles once i started getting 100 uniques every day, lol. Experience always helps.
There’s so much to learn and so many paths to navigate when first starting out, like I am. My biggest question is with the banner rotation method, does your site need to be formatted with php instead of html?
I sometimes wonder if Google adsense doesn’t turn users off. Sometimes I think it looks a bit amateurish to some, but I guess that depends on who you’re asking. For right now it’s really the only thing I have making me any money (though not much) so I’m sticking with it.
How about a PayPal donate button? Have you ever experimented with that, and what are your thoughts there? I wonder if that too might turn some people off with the thinking, you already have ads on a site, so why should I tip you? Then again it could be something that a handful of people might want to engage in, tipping you so to speak for your efforts. Has anyone had any luck with a PayPal donate button?
Anyway, thanks for this, Yaro. I’ll be staying up to date on your posts from now on. You seem to have quality content.
A Paypal “Donate” button? Are you kidding me? I would stop visiting a website on principle if the author flat out asked for money. Millions of free websites online, everyone posting information for anybody to use, and millions of worthwhile charitable causes to support, and you want people to just *give* money to *you* because you have the character flaw of begging?
I notice you posted this post back in 2005. It must have been something for you at that time to make money with your blog. I wonder what it was like. There was as nearly as much blogs at that time and so, I guess, not as much people on the internet. But I sure do think that blogging was much easier at that time?
Very Cool, just trying to get my site up and going with online advertising as well. Obviously its all about traffic, the more traffic the higher price you can demand. Kind of like a billboard.
How do you ensure that no one else steals the basic idea for you website? Essentially every website could be reproduced at any point in time. Are there any copyright or patent process that you must go through if you are trying to commercialize your website?
Did you set up a bank account for your website or can you use a personal account? Do you need a special license to be able to make money through advertisers?
I noticed this was written in 2005. Do you have any data to support current traffic needs to create income or has it remained the same for the last 6 years? Thanks for the post
It fluctuates based on the number of active sponsors I have Chris, but in terms of an overall stable and near-passive income stream, advertising has been by far the best. It’s not the largest source but it has been there the longest in my career.
“How much should you charge?
By this time my site was getting close to 1000 unique visitors per day, with about 300,000 impressions per month. I also knew that many companies charged by what is called CPM or cost per 1000 impressions. Back then this was by far the most commonly used scale for pricing of web advertising and you could expect to earn anywhere from $0.10 to $10.00 CPM.”
So lets say ONE advertiser pays you $3.00 CPM. At the rate stated above your already averaging about $900 a month with only one advertiser.
but later near the end of the article you say…
“Increasing ad revenue
Eventually I reached a point where I was averaging $500 per month and peaked at $1000 in one month.”
So….if you peaked at $1000 dollars one month how is that a step up from the CPM method stated above with multiple advertisers not just one? it’s like 4 A.M where i am so maybe im just out of it, but if you could explain that’d be great?
Because getting a uniform $3 CPM every month from one advertiser is not easy AND my original stats packages report a lot more impressions than what Google Analytics would report.
However you are right, there are no doubt ways I could have made money with CPM, but I never liked it, I preferred to be paid a set monthly amount regardless of how much traffic the advertiser received.
Okay thank you i have a better understanding now. The only question i have left is if you have a high impression rate, would you have a greater chance of being able to get more money out of an advertiser for the payment method CPM? And what would you say in your professional opinion is a fair price to ask (with the CPM method) for a site averaging 500,000 impressions monthly ? 1,000,000?
I know this may be hard to answer considering you didn’t prefer the method i’m asking about but i would still love to hear your advice. Thank you for your time Yaro, I’m fairly new to this and you have already helped greatly from your article here and your responses. I really appreciate it.
Oh! and also, do i need my own dedicated server to run a site that may have a high traffic of users? I’m sorry for all the questions =x
Can you explain what a unique visitor is? If you get 500-1000 unique visitors per day does this mean that you are getting 500-1000 new people checking your website everyday who haven’t done so previously or can it be the same clientele of 500-1000 unique people coming back every day to use your website?
Thanks
Feargal
Awesome article as always Yaro!! I have always been a firm believer in advertising, although up until now my audience wasn’t really big enough to “make it happen” so to speak, but I honestly am not gonna give up, and I believe it will happen eventually if I stick to it. My preferred method is Adsense, although I haven’t made very much with it yet, but I’m gonna stick with and see what happens. Like you said it’s very well targeted to whatever site you have, which is very important as we all know. I haven’t made any money with direct advertising yet, but I haven’t ruled it out, as I know the huge potential with it. At some point I’m gonna bring direct advertising back to my blog, once I get my readership up big enough. I do definitely agree that you should have a steady flow of visitors before you attempt to make money this way. Thanks for the great post Yaro!
Hi! Great info! I was wondering, don’t you maybe know of a good online site that allows for listings of sites that allow advertising. I’m using addynamo, but like you said…the ads are not relevant to content. I want a place where I can list my site…where other people who want to advertise can find me…so that i can work with them individually. Any suggestions?
Thanks for the info, and although it’s quite old it’s still all relevant. I’ve recently closed down my advertising spots as the pay sucks. Appreciate the tips though.
I have only use adsence and some affiliate links on my site and even though I have enough traffic I don’t have enough revenues from those programs, I will try that kind of advertising placement and see if I will have better results
This is an excellent article! Ive just put up my website and am working on generating traffic. Eventually, I’ll find ways to make some revenue. Thanks for the great tips, Yaro!
Awesome article!
Initially I had not even noticed that it was an article of 2005, it seemed so relevant
However, I believe that for very small niches, focus on local business partners, is today the best solution
Generic banner ads are useless and often harmful, while in a program like adsense you can not find enough companies that invest in advertising, with the risk of having only generic banner as in other programs
Hi Yaro,
I’m Australian and am looking to set up something with a verys imilar model to what yout alked about in your article. My question is, what about tax? Did you ahve to register for an ABN? If not, how did you declare the money on your tax return?
Thanks,
I am a beginner….getting about 600 unique visitors per day. Your article is quite useful for me. Thanks a lot.
I can only speak from experience but Google does such a good job optimizing ads for the highest revenue that it’s hard to compete. I have just opted to use Adsense and focus on building better content for the site. Your post is absolutely true though, its all about the statistics and numbers.
I haven’t make money with banner programs and adsense yet…i found your story and found awesome and helpful…anyway thanks for your tips…
I found this article very informative. I agree with the author that selling ads to businesses in your niche seems like the most productive way to monetize your sites traffic. I am just now setting up advertising spots on our golf review hq website. Thank you
Okay thank you i have a better understanding now. The only question i have left is if you have a high impression rate, would you have a greater chance of being able to get more money out of an advertiser for the payment method CPM? And what would you say in your professional opinion is a fair price to ask (with the CPM method) for a site averaging 500,000 impressions monthly ? 1,000,000?
I know this may be hard to answer considering you didn’t prefer the method i’m asking about but i would still love to hear your advice. Thank you for your time Yaro, I’m fairly new to this and you have already helped greatly from your article here and your responses. I really appreciate it.
CPM is definitely a viable option if you have the impressions. Bear in mind that it’s not easy to get CPM rates above $2 in many niches. What you should do is look at how much traffic you have and what CPM amount would make it worth while for you and see if that is something you think you could sell. If it’s$10CPM you might have trouble convincing advertisers to give you that if you are not in a high value nice.
Ok. This article was really helpful and confirmed what I wanted to do. As of right now I have affiliate links on my site, but I definitely don’t want to have to depend on another company giving me a certain percentage, like 8% of total sales. I definitely like the idea of hunting for advertisers and offering a flat rate.
I made my website over a year ago and it has Alot of members I was just wondering if there could be a way to make a lil extra cash to keep the site maintained