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How much advertising revenue will my website make?

October 25, 2014 | Digital Marketing, Startup Thoughts

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webiste ad revenue

We’ve heard this question many times over when we take on a new Startup website venture project for our clients.  It’s an exciting question as well as an interesting one to answer.  Months of an entrepreneur’s ideas, dreams and thoughts can sometimes be quantified with realistic figures that then can determine how much advertising revenue the website will make, minus the typical expenses of keeping the website operational (not marketing costs) such as web hosting and servers.

 

One of the most important determining factors of how much money your website can make from website advertising revenue comes down to what market your website business is in, which then supports what is realistic for the amount of website traffic that you could receive.  For example, if your Startup website was in the business of providing information about ancient dinosaur snails, then the market size for that seems to be on the smaller side. Therefore, it would support less potential website traffic and with that, less potential revenue from ad revenue.   However, if you were in say the credit card and loans market which has massive website traffic potential, then the advertising revenue potential of that website could be much higher.  But just as the website traffic potential is greater, it is a more competitive arena; and with that, the entrepreneur should be more creative in their marketing strategy and approach.

 

One typical way to approach advertising revenue is to use a feed of advertisers. This eliminates the need to hire a sales force to sell your own advertising spots.   Of course, selling your own ads can generate the highest return but sometimes it is not ideal for a small startup.

 

To bring some actual potential statistics to life, we created this short “Potential Website Advertising Revenue Table” below to help clarify potential scenarios. But first, here are a few key points that will ease you into these stats:

    • The Website Advertising potential revenue we are talking about is on a Cost Per Click basis – also known as CPC.

 

    • If there is an ad on your website page and somebody clicks on that ad, then that is part of the cost that it takes per that click.

 

    • The actual CPC is based on what the actual advertiser is paying per click.  So let’s say for example that the cost an advertiser is paying for their ad is $2.00 per click.  That $2.00 goes to an ad network feed and then the feed displays that $2 ad on your website.  You don’t make the full $2 of course, but you do make a portion of that $2 because you are doing the ad network feed a favor by giving that ad a relevant audience. In the end, the ad network feed needs you and your website needs the ad network feed. Some website Startups use an ad feed network at first, but then once they build up enough traffic, they then start to sell their own ads for their ad spots. Sometimes they even change from a CPC method to straight time based which means you simply sell an ad on a monthly basis for a period of time as opposed to relying on people actually having to click on the ad.

 

    • Now let’s think on a larger scale….   If you have say 100,000 page views per month, that is technically 100,000 chances that somebody may click on an ad that is being displayed on your website and each of those clicks means ad revenue.

 

    • Let’s say that of the 100,000 page views per month that you get, it produces an average Click-Through Rate (also known as CTR) of = 1%, which can be considered reasonable and not aggressive in some markets.    That 1% can range anywhere from 0% to 10%. Anything is possible, but for the sake of this article, we can keep things at 1% to help articulate the figures.  There are countless articles on what the average CTR is so that is a larger question.

 

    • 1% CTR of 100,000 page views is 1,000 clicks.  Take those 1,000 clicks and multiple it by what the advertiser is paying per click – that’s how you begin to figure out how much revenue you can make.

 

    • Let’s say that the advertiser is paying .80 cents per click (this could be different based on the market you are in and how much the advertiser is paying).  That .80 cents per click is not all yours. The ad network feed takes some of course. Let’s say you make 50 cents of it.  50 cents x 1,000 clicks = $500 per month.

 

    • Now you can do the math to figure out exactly how many page views / clicks / CPC.

 

    • Another Example = if you had 3,000,000 (3 MIL) page views per month and you had a .2% CTR, then that would be $4,380 per month that you could produce in revenue.

 

    • So if you had 3 million page views per month with a low CTR of .2%, then approx. $52k in revenue per year could be generated.

 

  • Below is the “Potential Website Advertising Revenue Table” to give you an idea of what it could look like from 50,000 page views all the way up to 10,000,000 (10 MIL) page views with a low CTR.

Website Ad Table Revenue

If we increase the CTR, then revenue can increase.  If we increase the CPC, then revenue can increase.  But one of the most important elements of your Startup website business is to generate your web traffic and brand because if you are generating website traffic to your site, then everything else can follow.  Focus on building your traffic and brand through creative marketing strategies and then hopefully advertisers will be knocking on your door!


* Note: The above table is for explanation purposes only and every website and web traffic can be different. Figures are not guaranteed.

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