A Startup's Guide to Generating Online Ad Revenue

Chad Wiebesick
by Chad Wiebesick 01 Aug, 2008

by Chad Wiebesick

As a new online business, you already know that one way to generate some much-needed revenue is through online ads. But then you hear about all the different ways marketers promote their products and services - banners, social networks, contextual advertising, online videos, blogs, email, and the list goes on. There are innumerable
ad sizes, formats, technologies, and marketing channels. But start with some basics and you'll quickly learn how to be a savvy online advertising channel.


Creating Appropriate Ad Opportunities


A website owner's most valuable asset is the site's audience. Remember, advertisers buy audiences, not ad space.

If you're a small site with a defined audience, you have a few immediate options: contextual advertising and affiliate marketing. Both tactics have a low barrier to entry and can quickly connect you with advertisers.

Contextual advertising (Google AdSense is the most well-known, but there are other providers like Context Web, Enhance Interactive, and Vibrant Media) delivers text-based ads or graphic ads targeted according to the content of your site. The contextual vendors use technology to scan your site and dynamically place relevant ads next to matching content. Some vendors also allow publishers to customize the look and feel of the ads by font, color, and ad size.

Affiliate marketing starts by selecting advertisers from an affiliate network (Commission Junction and LinkShare are two popular choices) rather than allowing technology to decide which advertisers appear on your site. You then earn a commission each time one of your users responds to the advertisement by performing a predetermined action - such as making a purchase or signing up for an email newsletter.

Once your site grows, you will have even more advertising options. Large sites have critical mass to sell advertising on their own. A good place to start is the mainstay of online advertising - the traditional display ad. Display advertising accounts for the majority of all online advertising spending, second only to search advertising, according to industry analyst eMarketer. Refer to the Interactive Advertising Bureau's most popular standard ad sizes (468x60, 728x90, 120x600, 300x250, and 336x280, among others) and create ad real estate throughout your website. If you don't have an internal sales force, you can join an ad network like Advertising.com, Tribal Fusion, or ValueClick. These companies sell your inventory on your behalf and typically take a 40 percent commission. They also handle campaign management, tracking and customer service.

Additionally, larger sites (and some smaller sites) can sell advertising in e-newsletters as a viable revenue source. Because newsletters are opt-in, they tend to have higher response rates than standard banner advertising, especially when they include text ads. Since people subscribe to read about matters of interest to them, a well-placed text ad can resemble editorial content and is not as easily ignored as a banner. Stand-alone email blasts, the cousin of e-newsletters, were once the rage amongst advertisers for objectives as diverse as driving sales, generating leads, and building loyalty. However, due to federal legislation (CAN-SPAM Act) and consumer backlash, email is not the Holy Grail it once was. Instead, focus your efforts on developing an e-newsletter.


Acquiring Advertisers


If you want to attract advertisers, you have to make yourself available. This includes using sound SEO principles to rank well on the search engines, as well as some self promotion. But before making your site truly available, be prepared.

Make sure you have a media kit. Though it sounds like a no-brainer, many advertising-supported sites don't have one or make it difficult to find. Be sure to include advertising opportunities, ad specs, rates, demographics, traffic stats, case studies, and contact information for sales and production. And don't require advertisers to fill out contact info in order to download your media kit. Make it free and easy to download. Also, be sure to update your media kit regularly. You want to show advertisers that your site is growing and gaining market share.

As your traffic grows and you build some momentum amongst advertisers, you'll want to increase your visibility to attract higher-tier advertisers. To that end, consider listing your site in Nielsen/NetRating's @Plan database or ComScore's Media Metrix database. These media planning research tools are used by interactive ad agencies
to determine on what sites to run their ads, based on the highest concentration of their target audience. Bear in mind, publishers must have a minimum number of page views and unique users to get entered in the databases. Also, publishers don't automatically get listed - they need to pay for the privilege.


Retaining Advertisers


There are probably hundreds of websites online very similar to your own. And that means you need to keep your advertisers coming back and prevent them from spending their budgets on your competitors.

- Be flexible with pricing and open to new advertising ideas. You don't want to give away the store, but getting a top-tier advertiser will be worth dropping your initial price to get them in the door. This will encourage other large advertisers to follow suit. And some advertisers will want to try something a little different. You
want to be able to accommodate.

- Be responsive to customer service calls and follow up promptly. Nothing says "amateur" like long response times or incomplete answers.

- Accept the Interactive Advertising Bureau's Terms & Conditions.

- Be flexible with optimizing a campaign to increase performance.

- Move ads from an underperforming site section to a higher-performing spot. If newsletter ads are getting better responses than 728x90's on the homepage, work with the advertiser to reallocate more weight to the newsletter. At the end of the day, view yourself as a partner, not a vendor.

Congratulations on starting your website. Work hard and you'll soon find your audience. Then leverage that opportunity with some advertising - first in the simplest forms, but before long you just might find some of the biggest advertisers online banging on your virtual door to get some exposure.