How To Build An Ad Based Revenue Model
by Matt Peck, on May 20, 2021 9:00:00 AM
Deciding on a revenue model is an important first step when designing an online business. And while your overall business can have multiple streams of revenue, publishers and media companies usually lean pretty heavily on their ad revenue to survive.
In any case, whether you are planning on providing content for free or need extra cash to supplement your other revenue streams, setting up an ad based revenue stream is a common and effective solution.
Monetizing Options for Your Website
Making money from ads is one of the simplest and easiest ways to implement revenue models, which is why so many companies turn to advertisers as a source of revenue.
The struggle is often generating enough web traffic to your site for your campaign to reach its revenue goals.
This is the simplest way to start monetizing your website with ads, especially if you have low to medium traffic and are just starting out with adtech. Most businesses will sign up through Google AdSense, but there are a number of other options out there.
Platforms like these automatically serve ads based on your keywords and site traffic, so there is very little work that needs to be done on the publisher side and can be easily managed.
- Automatic publishing means you’ll have lower needs for an ad ops expert
- Easy, no cost set up
- Options for you to customize which kind of ads can appear where
- If you have competitive keywords and web traffic, can offer significant revenue
- Payments per clicks/impressions are set by platform, not you
- Website may need to create an earnings minimum in order for you to get paid
- Less control over ads means increased likelihood of compatibility issues and site disruption
- Restrictions may be challenging to comply
- The programmatic platform (and every player on the way like DSPs and SSPs) will take a percentage of your revenue
- Complexity of set-up on management of programmatic platforms means you could be leaving money on the table if it isn’t set up perfectly
Find a Monetization Partner:
If you are starting to see your site traffic grow and want more granular controls over what kind of ads you are publishing, and greater control over their yield, you may want to consider partnering with a third party to manage your inventory for you.
These agencies are experts in online advertising and will maintain ad campaigns for you with more personalization to the kind of experience your site offers. Most of the time, these agencies will work across multiple sales channels, opening your sales avenues to opportunities you may not have reached on your own
At this point, you might also want to consider bringing someone in-house to manage your ad inventory and track your KPIs so that you are able to really nail down what your niche is and communicate that to your ad partner.
- Greater customization and focus given to your site’s audience
- Larger breadth of resources and revenue channels
- No earnings minimums
- Agencies will take a commission out of every sale
- If your website is not producing enough traffic, this could be a risky expense
- Need an ad ops expert to help manage your campaign
Direct sales publishing is usually reserved for websites with high amounts of traffic and a fully staffed ad ops or sales team. In this case, your website is in such high demand that advertisers want to be featured on your site, usually at a premium.
This way you’ll save on commission, and have control over the ad formats and types of ads, and you can negotiate cost with the advertisers directly.
- Opportunity to negotiate price
- High website traffic means advertisers will be willing to pay a premium
- Greater control over ad types and ad placement
- Need enough web traffic to generate demand from advertisers
- Will need a fully dedicated ad ops team to negotiate sales
Build Your Own Ad Stack:
Many savvy publishers use this method in order to maintain control over their publishing without stretching themselves too thin. In this case, you will be involved in both direct buy and programmatic scenarios.
Building a DIY solution that combines these options allows publishers to diversify their inventory while maintaining some of the granular controls over ad styles and ad placement.
This graph helps you visualize how programmatic (or Real Time Bidding in this case) will make up a bulk of your ads with little required labor, while direct buy will be fewer, more profitable, and more demanding of your time.
- Increased Control means you can better optimize each ad type and placement on our site to make the best of your impressions
- Will need a dedicated and knowledgeable team to manage inventory
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How to Increase Your Profits and What to Look Out For
Building up your site traffic is the best way to boost your revenue. Not only are you simply displaying more ads to more users, but you are also making your website more attractive to potential advertisers looking to pay premiums for targeted ads.
Beyond that, make sure to pay attention to these key things:
Your Key Performance Indicators
Similar to boosting site traffic, focusing on maintaining healthy KPIs like session length, bounce rates, and how many ad impressions you receive per session will increase your opportunities to serve users ads and boost your revenue.
Your bounce rates are closely tied to your advertising revenue. The more time a user spends on your site, the more ads they will be served.
Experiment with longer-form content, and make sure it's engaging, so that users spend more time on each page and will be more likely to share, allowing you to serve them more ads.
But don’t arbitrarily stretch things out, and avoid bombarding your users with ads. Filling a page with ads may seem like a good technique, but overdoing this will more than likely drive users away.
Building customer loyalty is a much more effective strategy, and there is no substitute for good content when trying to bring users to your site.
On top of this, track which kind of content and style of ads are producing the best KPIs, and focus on creating similar posts for your audience.
If you are seeing unexpectedly high bounce rates, take the time to explore the front end of your site to make sure ads are performing correctly and aren't damaging the user experience.
Some other things which may erode these metrics, and ultimately your ad revenue, include page load speed and malicious advertisements. If your site is behaving slowly, or is getting ads that are harming your visitors’ experience, it's likely that you're sending frustrated users away from your site, instead of keeping them on your site viewing ads.
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Read the Venatus Case Study
Learn how cleanAD completely eliminated malicious redirects, freeing up 60 hours of AdOps efforts per week, for Venatus Media.
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When deciding how you're going to build your ad revenue, the single most important thing to focus on is your site traffic. The more traffic you have, the more attractive your inventory will be.
Once your audience comes to your site, keeping them engaged is the next important step. You want them to spend as much time on your site as possible, so you can continue to serve them ads while they are there.
But this doesn't mean you want to create content that feels drawn out, and you definitely want to avoid bombarding your user with ads.
You want to create a trusting relationship between you and your users, and that can be a difficult
balancing act between driving traffic, increasing engagement, and getting the most ad impressions without creating a negative user experience.