Jul 22

Written by:
2009/07/22 04:21 PM 

No more ads being served

I had a look at my Adgator stats, and since 11 July I have not earned one cent from serving ads. Probably because I am not serving paid ad campaigns, even though I have physically served thousands of ads, but got next to nothing, in fact nothing for it.

Where the problem is, according to advertisers, is not with serving ads but it seems that nobody is clicking on the ads that should send you to the advertisers website.  Apparently Adgator says that this is due to bloggers placing the ads below the page fold (where the website ends at the bottom of the screen).

Also a warning that one major brand and a major media agency have warned that they will stop advertising with Adgator if the click ratio doesn't improve.  Exactly who the two companies are, are not known at this time.

Filtering out Bloggers

If you put an Adgator ad on your blog, you get a percentage of the cost per impression or cost per thousand (CPM). Advertisers are expecting more clicks in order to attract new business.  In a move to increase the click on ads, Adgator will now be showing bloggers their click/impression ratio.  Bloggers with a higher ratio will be the first to get new campaigns.

The problem with this concept of filtering possible bloggers as publishers out is that there is generally a very small percentage of click-throughs in the world of advertising. Generally the click through ratio ranges from 0.1% to 0.65%, with a 1% being exceptional. This means that if you display 5000 ad views you are likely to only attract about 5 clicks. This assuming your ad is clickable and that it is well designed with a good call to action.

That is why Pay per Click (CPC) ad campaigns are more expensive than pay per impression (CPM) add campaigns. But if a advertiser has no clicks he might end up not paying for his campaign even though 10 000 ads were served.

CPM and CPC

CPM and CPC costs are never a simple thing to work out.

• You have to look at the the size of the add. Larger ads are more expensive.
• The niche space it will be displayed in, i.e. Business, Technology, Political, etc.
• The Pagerank and popularity of the site the add will be displayed on. Higher Pagerank would demand higher price.
• The competition and keyword competition. More competitive keywords demand higher price.
• Link back to website. Having a link to a website costs more.
• Branding. More popular brands will pay more.
• Text based ad or Graphic add.
• Static graphic or animated graphic.

Cost per click is such a weird advertising model for me. It means that advertisers will only pay for the amount of clicks that it’s ad campaign gets. Some problems with this model.

• A badly designed ad might not encourage readers to click through. This is no fault of the publishers.
• A badly placed ad will not encourage clicks.
• Theme conflicts will not encourage click.
• I don’t see normal print media adopting this model, why electronic media? Where have you seen a pint add only pay when the customer actually visits the store or company as a direct result of seeing the print add. Ridiculous.
• Cost per click can end up displaying thousands or millions of ads, without paying for a single one. This means that the advertiser is getting free exposure.

The better way of doing it is to have a combined model. That is have both a CPM and a CPC model for any advertiser.

Flat-Rate Placements (FRP)

The other model to consider, which not many do, is the Flat-Rate Placements or FRP. In a flat-rate-placement (FRP) program, advertisers pay a fee no matter how many clicks they get not how many impressions their ad enjoys. Similar to cost-per-impression but without the impression limit, your rate is fixed for the month. Generally if you have multiple advertisers on your site, you would then employ a ratio to determine which ads are displayed more often. Obviously a higher ration would go to the highest FRP.

How does CPM and CPC work.

CPM

CPM, or cost per thousand (M symbol for 1000) means that you pay a fixed price for every thousand ads displayed regardless if the viewers click on the ad or not. While with CPC, cost per click, the advertiser only pays for each click on their ad regardless of how many impressions the ad has enjoyed.

So if your site has on average 5000 page views. It is not unlikely to charge or pay R50 CPM. So your ad cost or income, depending on which side of the fence you're sitting, would be 5000*(50/1000) = R250. If your site serves less then the cost would be less, e.g. 1687*(50/1000)=R84.35

CPC

CPC has a higher cost. It all depends on the keyword. The more popular the keyword is the higher the CPC. This is because of the assumption that people coming to your site through organic search are displayed ads relating to that keyword, thereby having a greater possibility to get clicked.

CPC is normally a bid process, meaning the highest bid gets the best ad position.

I did a quick test on Google Adwords. The term “Website Design” has an average CPC of between R30 –R40, with a Max of R80.

With this information lets work out what the costs could be for a CPC campaign with both a 0.1% click though and a 0.65% click though as well as a 1% click though based on 5000 views per month. Also I will show the actual Click though percentage of my site, reported in the darker orange at the bottom of the table,  as reported by Google.

Click Rate	CPC	Page Views	Formula	Monthly Cost
0.1%	R35	5000	5000*0.001*35	R175.00
0.65%	R35	5000	5000*0.0065*35	R1137.50
0.1%	R80	5000	5000*0.001*80	R400.00
0.65%	R80	5000	5000*0.0065*80	R2600.00
1%	R35	5000	5000*0.01*35	R1750.00
1%	R80	5000	5000*0.01*80	R4000.00
0.32%	R35	5000	5000*0.0032*35	R560.00
0.32%	R80	5000	5000*0.0032*80	R1280.00

As you can see, a potential advertiser could end up paying significantly more on a CPC campaign. Provided he has a great ad. Even at the average CPC and Click Through of my site, advertisers will be paying more than on a CPM campaign. This is better for me of course.

Conclusion

Why show this? Well if Adgator are going to go for the CPC campaign, it could be that at the end of the day their clients will be paying more. My thought is that Adgator might not have done the math correctly, or the options not correctly presented to the clients, or the clients don’t fully understand the differences.

Whatever the case is, we could only speculate. But I do know this, I have not been serving paid campaign ads for the last 11-12 days, not earning revenue. Adgator is looking to change it’s publishing model at the request of their clients.

Many advertisers fail to see the value of pure impressions when it comes to exposure. That is the importance of branding. A user may not click on an ad or buy the product then and there – but the user is exposed to the brand which may lead to a purchase via another channel at a later stage.

Having an exceptional click through ratio does not guarantee conversion. This is a whole different ballgame

The question is, is this now a viable  ad network to get into? I don’t want to waste advertising space to something that will earn a big fat Zero.

Related Reading:

So you want to monetise your blog do you?

Faking your website or blog traffic

Monetizing your blog with ads from Adgator.

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