By: Derek Vaughan

July 12th, 2005

Reader Rating: 8.5

If you're a Webmaster whose site receives even a modest amount of traffic, you've no doubt dreamed of the untold riches that lie untapped in your traffic stream. The burning question is: "How can I make the most money possible from my Website traffic?" This article will help you answer that question, as we explore several of the most common and profitable methods that are currently being employed to convert page views into dollars:

• Traditional banner advertising
• Pay-per-click (contextual) banner advertising
• Subscription revenue
• Affiliate and CPA programs
• Text links

We'll finish up with a review of the finer points of online selling.

Traditional Banner Advertising

One of the earliest and most prevalent forms of monetizing site traffic is the ubiquitous online banner. Originally most popular in the 468x60 pixel version, banners are now available in many different sizes and shapes. In fact, the Interactive Advertising Bureau now lists 16 standard ad units in its guidelines. It's not hard to find a site that uses banners: CNN [1] displays a 728x90 banner at the top of the page, eBay [2] uses a 468x60 banner spot at top of listings pages, and AOL [3] displays banners of various sizes throughout the site.

Business Model and Mechanics

The basic business model of the banner is simple: the Website vendor sells page views (impressions) to the advertiser. There are 2 basic banner ad payment models: paying as you go for every thousand impressions delivered, and a flat fee that's charged regardless of the number of visitors who actually see the ad.

Under the pay-as-you-go model, the most common metric is cost-per-thousand (impressions), also known as CPM. Prices will vary depending on targeting, volume, term of commitment, and market forces. Typical CPMs for less targeted inventory can range from $0.25 to $5.00 per thousand impressions. Therefore, a media buyer who wishes to purchase 100,000 impressions at a $5 CPM will sign a contract for $5,000. Targeted impressions are worth much more to an advertiser. If your site attracts car enthusiasts who are an attractive demographic for a local or national car dealership, you can expect to command 10 times the rate of untargeted ad inventory. Typical CPMs for targeted inventory run between $10 to over $100 per thousand impressions.

It's also common for a site to charge a media buyer a flat fee for an advertising spot. Depending on the placement and traffic, the fees can be quite high. For instance, a fixed placement on the home page, in a prominent spot, with a 100% share of voice on a targeted site is quite desirable.

The advantage of running banner advertising on your site is that you may be able to get paid purely on the basis of page views, thereby monetizing all your available inventory. The drawback may be that not everyone is willing to pay simply to be seen: often, advertisers demand a response to the advertising. Media buyers may be looking for a per-click type of payment arrangement.

The main disadvantage of running banners on your site is probably the adoption of maintenance responsibilities for someone else's creative units, and the responsibility for a banner's performance even if the banner is poorly designed, or the advertiser's Website doesn't convert well.

To make real money from banner ads, it's essential that you have a clear idea of how many unique visitors visit your site, and how many page views they generate -- data that any decent Web analytics program will show. You then have a basis on which you can establish realistic expectations of how much money you might earn.

Next, decide where on your site you're going to display advertising banners. I would suggest testing ads both at the top and bottom of your pages -- this is a proven model that has worked well for large publishers. Once you've decided on ad placements, you should set up an ad server to display the banners, and keep track of pages views and click throughs. I would also suggest developing several banners that 'sell' the ad space, which can run when you have excess inventory. The banner might say something like, "See Your Ad Here -- Contact Us to Advertise," and link to your advertising rates page.

Once your ad server is set up, sell! This is a hurdle for many; we'll address it later in this article.

Pay-Per-Click (Contextual) Banner Advertising

With the emergence of Google's AdWords and AdSense programs, the business of pay-per-click banners has exploded. This type of ad unit offers the tantalizing combination of ease-of-use and payouts for each and every click, regardless of whether that visitor converts to sale or not. It's no wonder this unit is so popular with the likes of Slashdot [4], which shows PPC marketplace links on the right-hand side of the site's main categories and posts, and Go.com [5], which uses Yahoo! Search Sponsored Results to power its search function. And these are just two among many, many other sites.

Business Model and Mechanics

As the name implies, pay-per-click banners are ad units that pay out each time they're clicked (with obvious fraud prevention engaged to prevent self-enrichment). These ads are sometimes called 'contextual' advertising, as the ad suppliers will often regulate where specific ads are placed, to ensure that they're relevant to the Web page on which they're viewed, and the audience that sees them.

The bounty paid out on each click is usually determined by the value of that click as set by the advertiser. This is a nice way of saying that you really don't know what you're going to earn from any given click until you check the back-end reporting.

Don't neglect checking out alternatives to Google's AdSense program. While Google is large and established, many smaller services actually share more of the advertising revenue with you. For example, bidvertiser.com [6] is one alternative that pays out at a much lower threshold ($10) than Google. Also, if you specialize in Webmaster or Web hosting-related traffic, a new service at Webmaster911 [7] offers much higher revenue sharing than Google currently offers.

Subscription Revenue

Any site that has recurring or frequently refreshed content may be a good candidate for a subscription revenue model. News sites fall into this category, with the Wall Street Journal and CNN offering some form of subscription service for their online content.

Business Model and Mechanics

Subscription-based services migrated from the offline world to the online world. The most common forms of subscriptions were originally used for newspapers or magazines. The end-user of the news or information service typically pays a weekly or monthly recurring service fee (subscription fee) to have full access to the publisher's content. The practical implementation of this model online may work as follows.

A publisher offers additional coverage, or premium content that is only available to subscribers. Under this model, the content is usually in a special password-protected area of the site. A new subscriber may gain access to the content by filling out an online form including (usually) credit card information for billing purposes. Once the credit card transaction has been authorized, the subscriber is emailed a unique and secure password permitting access to the subscription-only content. Typical subscription fees are in the range of $10 per month. For example, CNN [8] charges $12.99 per month for its 'NewsPass,' which permits access to premium streaming video content on the site. The Wall Street Journal [9] currently charges $6.95 per month for access to online content for those not already subscribed to the print edition.

A hybrid of the pure subscription model is simply to charge an increasing fee as access to higher level services increases. This model is common in online forums, where additional charges are levied to access certain forums, or users' signature lines are expanded at higher fee levels.

Affiliate and CPA Programs

Affiliate programs have existed from the infancy of the Internet. Amazon.com was an early adopter, and was able to convince many Webmasters to offer relevant books for sale on the site in exchange for a share of the profits -- today, Amazon has an extensive affiliate program [10]. Affiliate programs have matured considerably since then, and there are now many more options for making money from your site traffic.

Basic Business Model

Affiliate programs essentially work like this: the Website owner (affiliate) offers the merchant's goods for sale on the affiliate Website. When a visitor clicks through the affiliate link, an identification code is associated with the visit (usually via a cookie) and in the event that the visitor takes the appropriate action (visit, conversion to a lead, conversion to a sale) then the affiliate is paid by the merchant. The merchant or affiliate network will also usually provide tools for the affiliate to monitor various metrics, such as the number of visitors sent to a merchant site, the number of clicks or sales generated, and the earnings accumulated.

Affiliate relationships may be established either with each merchant directly, or through an established third-party affiliate network. The two most popular third party affiliate networks are Linkshare [11] and Commission Junction [12].

Linkshare boasts that it has created the largest network of affiliate partners of any program provider -- over 10 million partnerships -- in addition to becoming the first affiliate network provider to achieve sustained profitability. Linkshare also lays claim to being a pioneer in online affiliate marketing. The Linkshare network is touted by the company as the largest pay for performance affiliate marketing network on the Internet.

Heidi Messer, President and COO of LinkShare Corporation sums up the service this way:

Text Links

In this era of ferociously competitive search engine optimization, competitive online marketing, and the race to appear first in the search engine results, an active market has arisen in the buying and selling of text links.

The beauty of text links from the Website owner's (or seller's) perspective is this: in order to boost search engine placement, the link must go directly to the Web page that's being optimized. There can be no tracking mechanism, or third party ad serving to interrupt the click. Therefore, these links are not scrutinized in the same manner that more conventional advertising is. It's simply not that important how much traffic comes through the link, or whether it's really being noticed by site visitors at all. This means you can have the links tucked away at the very bottom of your pages in a footer, and use a small font. The links can be very unobtrusive to your regular site traffic: as long as your Website meets the buyer's criteria, they will continue to pay for the link. Of course, as the likes of the TopXML [13] and phpbb [14] sites show, text links can be cleverly integrated into a site's design to provide a prominent advertising feature.

So what criteria do buyers look for, and what are they willing to pay? You can check the spot market for text links at sites like http://www.linkadage.com/Auction/XcAuctionPro.asp [15].

Another benefit of text link selling is that you don't have to really maintain the 'ad' at all. As long as the link is active on the page, you've done your part. This is much less labor and resource intensive than building an ad server into your site, rotating ads, and keeping creatives up-to-date.

Finally, as if it weren't already a great deal, you can have up to 20 text links on a page without suffering any negative consequences in the search engines. So, even if you only sell your links for $25 each (read: cheap) you can still net $500 per month just for letting the links sit there.

A Word on Selling

Let's face it: even the most attractive inventory won't move unless someone gets out there and sells it. That someone may have to be you, if you're an entrepreneur. Many people view selling with disdain, or they hate the rejection that goes hand-in-hand with the selling profession. You've got to get over this in order to be successful in translating your page views into dollars. If you can't do it yourself, then work out a commission-only arrangement with someone who can sell your inventory.

Jean Landry is a sales executive with The Globe and Mail, Canada's National Newspaper, daily offering readers from coast to coast unparalleled national, international and business reporting, analysis and commentary. The Globe and Mail has nearly 1,000,000 readers each weekday and even more on weekends: their online version at globeandmail.com [16] attracts over 2.5 million visitors per month.

Jean offers the following key selling points for Webmasters:

1. Know your audience. Conduct a user survey and collect research when your visitors sign up for newsletters, pdf's, and registrations. Carefully profile your visitors. You may think you know who your visitors are, but you'll need to prove it to people, especially when HP says they want to buy up 10 million impressions from you for $50,000/month -- they'll most certainly want more than who you think is coming to your site.
2. Know your competition. Find out what your competitors are charging for their ad space, what ad unit sizes they are offering and what advertisers want. You may keep an eye on your competitors, as well, to determine their inventory churn or rollover. If you go back every 2 to 4 weeks and you see new advertisers all the time, it either means the site has a really aggressive sales person, or that it can't return results for advertisers, so clients are canceling.
3. Understand the language and understand the benefits and uniqueness of online advertising as an advertising medium. What's a cpm? What's a clickthrough? What does CPA stand for? A few months ago, we interviewed people for an online sales position and candidates couldn't answer those questions. Spend a little less time watching TV and a little more time reading Clickz.com, eMarketer.com, and MarketingFind.com, or check out adglossary.com. Industry knowledge and research can really help you move your inventory and sell online advertising. For example, I bet you didn't know that Internet accounts for about the same % of media time for consumers as TV now -- each accounts for 30% of their media usage time! However only 4% of media budgets are going towards online, while about 25% are going towards TV ...sounds like a pretty good opportunity to reach a huge untapped audience doesn't it?
4. Be creative! Online advertising is boring and predictable and doomed for failure if all you are going to sell is the standard 468x60 banner at the top of your Web page. Ever heard of banner blindness or banner burnout? It means your visitors tend to ignore the most common or basic forms of advertising online if you don't put some thought into their delivery and placement. You need to think about offering content sponsorships on your site, targeting your ads to geographic regions, day of week delivery, etc. Think strategic and offer strategic advertising solutions. If you have a section of your site dedicated to Web design, why not think of a creative way for a major brand's new Web service to sponsor it with customized buttons, content, or an online custom quote service?
5. Be aggressive in your sales...but be professional! And remember online advertising is not new, it's not trivial, and it shouldn't be given away for free or always be performance based. Don't be pushed around by arrogant media buyers who think that they can bully you into not paying their balance just because they didn't make 15 sales (not to mention the fact that they never signed a cost per acquisition agreement -- CPA).

Summary

Converting Web traffic into sales revenue takes persistence, experimentation, and great salesmanship. The methods mentioned in this article: Traditional Banner Advertising, Pay-Per-Click (Contextual) Banner Advertising, Subscriptions, Affiliate and CPA Programs, and sales of Text Links are proven models for creating cash from visitors. Select the techniques and models that are a good fit for your Website and personality -- then get started making money! Good luck converting your site traffic into a viable revenue stream.

[1] http://www.cnn.com
[2] http://www.ebay.com
[3] http://www.aol.com
[4] http://www.slashdot.org
[5] http://www.go.com
[6] http://www.bidvertiser.com
[7] http://www.webmaster911.com
[8] http://www.cnn.com
[9] http://www.wsj.com
[10] http://www.amazon.com/exec/obidos/tg/browse/-/3309511/ref=three_tab_hp/002-0027704-9791262
[11] http://www.linkshare.com
[12] http://www.cj.com
[13] http://www.topxml.com/
[14] http://www.phpbb.com/
[15] http://www.linkadage.com/Auction/XcAuctionPro.asp
[16] http://www.globeandmail.com