Why I Do Not Like CPM Advertising On Blogs
I have had blog networks approach me like Federated Media, etc etc to handle my advertising. They just do CPM advertising though and they take a HUGE CHUNK like 40%+.
I guess I should give you some background on how we do our advertising here.
Basically we price it monthly at a flat rate and we let the market set the prices. We are currently sold out but when a slot opens it will be more then what the previous person paid or less depending. Fortunately (or unfortunately) for us the prices have only increased since we started doing advertising over a year ago. Also we have a very low turnover rate. I think the renewal is something like 90% so I guess advertisers are getting a great ROI. Allowing the market to set the prices IMO is the way to do it. This month (May) shoemoney.com will hit a all time high taking in almost $40,000 in advertising for one month. If the rate of growth exceeds it should do a half of a million dollars in gross revenue (not profit) this year. That is pretty cool.
Ok back on point of why I do not like CPM advertising networks. CPM is cost per 1,000 impressions. Lets say you get 20$ CPM. That means if your site gets 100,000 page views (not visitors) per day you would make 2,000$ per day per adspot.
Techcrunch for instance charges 15$ CPM on the low end. But if you look at there site the ads 99% of the time from Federated Media are COMPLETELY unrelated to the content or niche. This means a bad user experience for users and also a bad ROI for advertisers. While its a quick payday for Techcrunch in the long run I feel it will hurt them. Now I know Techcrunch does do direct flat fee ads (yay!) and much like on shoemoney.com you see the same ones there over and over and over.
So even though I could make probably 20-30% more with CPM advertising networks (from what I have been offered) I just feel in the long run it will cost me more money.
On a CPM basis you are always trying to game the social networks. The average front page Digg brings in at least $3,000 (don’t forget there is more then 1 CPM running) to these sites. but I really think you have to shift the focus of your site if you want to do CPM. Also you see sites quickly turn into page viewing whores implementing all kinds of things to get you to view more pages (hot or not, voting scripts, CLICK HERE TO READ MORE, etc etc).
With direct placement flat fee advertising I will guarantee that I will continue to do the exact same thing I have always done. I have zero incentive to game social networks or to buy 3rd world crappy non converting .00001 per visit traffic.
I know people really want to get into Federated Media but I can tell you … no I promise you that they are not worth it.
EDIT: I originally in included Blog Ads in with Federated Media for CPM networks Got my blog advertising mixed up but the points still stick.
(1 votes, average: 5 out of 5)
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i definitely didn’t like cpm when i first heard about it, and just think it’s crazy to put your eggs in that basket alone.
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BlogAds isn’t CPM based. It’s publisher set fee for 1 week, 2 week or 1 month runs — just like you do. Also, the cut to BlogAds is anywhere from 10-30% depending on the size of the relationship
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I also base pricing on flat rate… I hate the thought of buying on CPM numbers.
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Very interesting Jeremy ! As usual completely out of the box and off the herd.
In fact the kind of commission which these agencies charge further compel the blogs to chase pageviews like mad, because in the end they only get a part of it. So more pageviews, the better.
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But i think blogads offer monthly ads too..
Yes, you gave a good example of techcrunch.. similar is the case with engadget - all classmates ads.
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I don’t think bad ads affect the user experience that much. Misplaced ads, definitely with CPM, hurt advertisers SEVERELY! I think that if I was making more money off my blog on a CPM basis, I would have more posts and I would strive even harder to make them better quality.
I like it for publishers, hate it for advertisers.
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And flat is easy. Do you setup advertisers on month to month or blocks of months agreements?
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Imagine having one of those nasty ads such as “ding ding ding click here to claim your $1000000000 now” or “your computer is infected shake shake shake download now” .. it would ruin the whole shoemoney experience … that is the kindda ads federated media delivers. Reminds me of cpxinteractive, no matter what page you are on, its all about poker…and u are the next big winner…lol
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I think a lot of starting bloggers are seduced by the ease of CPM Advertising because they don’t get a lot of clicks to their ads and think that by putting up CPM Advertising it doesn’t matter if they’re relevant, all that matters is traffic. The issue is that even the ads are part of the user experience. Serving something your readers will find interesting is much more useful and usually will net you a higher profit.
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there is a careful balance to be had here. Trying to cash in too quickly is a problem in any business. If I were looking for ads to place I would much rather place ads that were static instead of being subjected to a price per view. Pricing per click like Adsense is a slightly better model but still not as targeted.
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Mr. Shoe - you do realize that default ads aren’t paying $15/cpm as you quote for TC right? when you see non-related ads on any blog/site, those are typically default ads and pay pennies - not big money. It doesn’t matter what site it is - you used TC in your example but it could be any site or blog.
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“Techcrunch for instance charges 15$ CPM on the low end. But if you look at there site the ads 99% of the time from Federated Media are COMPLETELY unrelated to the content or niche.”
That’s the problem with not selling cpm ad spots directly to advertisers. If you use a media network for cpm, and they do not use an ad qualifying system, the ads get less targeted. What you end up with is remnant inventory ads everywhere. Solutions are, outsource direct sales, adserving, and targeted media networks and tech like The Rubicon Project or Right Media.
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We allow them to sign up for as long as they want to be locked in at that price
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What do you recommened for a small / new blog with little traffic? Is a AdSense type service or affiliate program the only way to go until traffic grows?
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I like flat rates as well. They are usually preferred by advertisers unless they are unfamiliar of the site they are purchasing from.
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Static banner ads seem to be one of the best from my perspective. The advertiser gets a solid spot on the page in addition to a back regardless if its “followed” or not. And best of all the publisher gets a solid check every month, regardless of impressions, or clickthroughs or lead generated etc…
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Do you know any CTRs? (Click Through Rates) Would be very interestig.
I think in the long run the fairest ads for the advertiser are cost per click.
That takes care of all those social media hypes (including digg) because all those PageViews are irrelevent for the advertiser. Only successful traffic that brings clicks costs money. And after the click it is the business of the advertiser to make money with a high conversion rate.
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Shoe,
If you were able to controll content that was displayed would you consider CPM? Or are there other issues?
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Thanks. A good article.
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Thats more than john chow.
How much is that in profit?
I wonder how much john chow make in profit!
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No wonder you’ve done as well as you have. Thanks for the lesson as always.
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I agree, the CPM metric is worthless because it doesn’t factor in clicks to your advertisers. Here’s another issue, if you simplify your content (like you said, take out the “more” links and such) then your probably sending just as much (or more) traffic to your advertisers and your server is going to be less strained which means lower hosting cost.
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Agreed, gotta keep the traffic good and the money right. There is no need to burn out your page viewers.
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except shoemoney.com from what I could tell from the post.
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So right now you basically make money when people signup for the affiliate ads on this blog. If you don’t mind me asking, how many leads is that to get $40,000 a month?
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40k shoe you da man literally
i also agree to control your own price
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I think worthless is off the mark. Selling CPM means selling to advertisers based on traffic to the page. Pages with higher volume traffic can sell for a higher cpm. When selling direct to advertisers with com, sales will sometimes include an estimated CTR as well. This can be optimized with ad spot placement on the operations side and interactive banner/video creative on the graphics side. So worthless, no. In fact it’s well in the other direction. to the point that it’s still the desired goal of web publishers.
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One question I always had for ad networks is if they charge for impressions even if users never see ads. I use adblock for Firefox and I never get ads. Is the advertiser billed for these invisible impressions?
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Here why I don’t like flat rate for larger blogs and sites — What happens if a page or section of your site gets double the traffic than the others. If you have a flat rate across the site you’re constantly having a 50% off sale. If you get a savvy advertiser that knows the value of premium site inventory, you are getting hosed.
For smaller blogs the cpm way is not he best since inventory numbers are low.
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I think CPM is best for those people whose web site gets millions of Page views….
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i think sometime CPM is the best solution to make money but it depends on your web site performance. You have to be carefull while choosing your advertising method to make money.
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$40,000 for May is a next haul. I can see why you like it the way you’re doing it. You know what you’re getting and you don’t have to wonder if your visitors will fluctuate.
~Terry
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This means a bad user experience for users and also a bad ROI for advertisers. While its a quick payday for Techcrunch in the long run I feel it will hurt them. Now I know Techcrunch does do direct flat fee ads (yay!) and much like on shoemoney.com you see the same ones there over and over and over
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If you have a flat rate across the site you’re constantly having a 50% off sale. If you get a savvy advertiser that knows the value of premium site inventory, you are getting hosed.
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Cant we make a new page named as “Affliated” under our blog ?
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yeah, sometimes cpm networks put unrelated ads, but imho i think cpm works for sites not related to internet marketing… btw another downside is sometimes it shows flash….
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Thanks for posting this Shoe. I’ve been thinking a lot about using CPM on some of my sites but you brought up some points I hadn’t considered and I find myself agreeing with you. Thanks for sharing!
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Interesting. I know they do BoingBoing as well. That being said, it might be harder for them to match with a niche blog. So, great points. An 40k a month ad revenue, wow!
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Damn that’s a lot of hits! I have a loooong way to go before I can even consider this. Any tips for people with lower (much lower) pageviews? Is there hope for the little guy?
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CPM on arcade sites where you can run your own for example browser game site and ROI will be good probably.But on blogs i don’t think so.
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Where did I read that before?
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So we know the revenue for ShoeMoney.com now, but what’s the profit? How much money to you spend on this blog?
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Great Article. Am slowly starting down this path. Thank you for the insight.
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How adtoll is working for you ? do you have any empty adtoll spaces ? I once bought an adtoll ad for 1 day here but got 2-3 clicks only.
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CPM is for sites either with large amounts of traffic or sites that get poor click through rates. They arent necessarily for blogs. Sponsorships on sites that get a lot of traffic just arent afforable for the majority of advertisers. Then it becomes only affordable for brand advertisers. Thats where CPM comes into play. It would be nice if on here just one person could understand that!!!
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Dear cpt obvious. The title of the post is why I do not like cpm for blogs. Its not why I did not like cpm for websites. It obviously has its place I just do not feel that its in blogs.
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Great post, you make valid points.
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I notice that happening a lot
~Terry
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for me, i use cpm to test what is going to be my price for private ads..
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“Also you see sites quickly turn into page viewing whores implementing all kinds of things to get you to view more pages (hot or not, voting scripts, CLICK HERE TO READ MORE, etc etc).”
I honestly don’t think users really mind this however. But then again, I’ve never asked them. They don’t seem to if they keep using the site. You look at certain niches, like the myspace resource niche, and doing anything and everything to increase the page views of the site is essential to the success of it.
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Is there a cap on length of time? And how does payment work? Per month, or a percentage upfront?
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Maybe CPM are good for Forums and Other Sites
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How would you rate CPC (and CPA I suppose) against CPM and flat fee models (for blogs)?
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I never thought of doing that. That is a good idea! Do you have some sort of formula or do you just figure that CPM is worth $X so private ads are worth $X as well?
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You have just changed my way of thinking, thanks
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Really ! Its bad
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True, Even on blogs, the sidebar can have 2-3 boxes
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I disagree with your assessment.
Your model works because you write about SEO, Affiliate programs and SEM. So of course you have a few endemic advertisers that will pay to place a monthly ad. However, this model doesn’t scale to a larger or more general site. Also, the advertisers you have are terrible, reverse funnel? They make your site look cheap.
My site has great SEO, but cpc and affiliates are terrible for my site. They simply don’t payout. FM has made more than anything else combined. FM also brings me innovative ad programs that I love to participate in, my readers are into and the brand loves. I also have a world class sales team promoting my site to the top agencies in the US.
Also, I am sick of bloggers who think the advertising has to “contextually” match or be exactly relevant to the site content. Your example of TechCrunch, makes no sense. Advertisers want access to TC’s audience, and even though they may not be writing about Microsoft or Visa, those are brand that are relevant to the lives of those readers. Really it is adverting 101.
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CPM is yesterdays old news.
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What does this reply mean? Pardon my ignorance, as I am new to this bloging thing and am trying to figure things out as I go along.
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You’re doing the same thing. Is this some sort of spam?
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And so are you……can somebody explain this to me?
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Really gives advertisers the opportunity to plan ahead. Making advertisers dictate their own contract periods, and fixing the price for the period they decided on is a win-win situation. The question that immeadiately leaps to mind is - what is the max period?
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You are totally right.
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It’s hard being new. You snatch at whatever you can get, because that’s what you need; anyone that will read or advertise with you. When you aren’t even clearing a hundred bucks a month, if someone says they will work with you, you’ll usually take it. Mostly, I just pull advertisers that work deals with JC and SM, because I figure that they will be more reputable. At the same time, I don’t pull new advertisers from small blogs, b/c if they are getting scammed, I don’t want to be too. Once six months or so has gone by, and my traffic is up, I’ll decide who is paying and who isn’t so that I can do some triage.
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