by: AskPat 105 Episode Transcript
Pat Flynn: What's up, everybody? Pat Flynn here, and welcome to Episode 105 of AskPat. Thank you so much for joining me! We have another great question today from Gaby about ads and pricing strategies for your website.
But before we get to that, I want to thank today's sponsor, Stamps.com, because you know these days anything is on demand. You know television, podcasts, you can order food on demand to come to your house. Why not stamps? With Stamps.com they make it so easy. Anything you can do from the post office you can do right now from the desk in your home or at your office. It's so cool you can buy official US postage for any letter or package using just your computer and your printer. And unlike the post office first of all you don't have to wait in line, and second of all it's open 24/7.
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Now let's get to today's question from Gaby.
Gaby: Hi Pat, my name is Gaby. I'm a big fan of the SPI blog. It rocks. You're awesome. My question is about when would it be the right time to offer advertising on my website? Should I base the price on the amount of visitors in a month? How can I find out what my website is worth and how to price ads? Should I offer it through a publisher like BuySellAds.com? If so, is it better to offer a CPM pricing or a fixed monthly price? Thanks so much Pat! Greatly appreciate your insight on this.
Pat Flynn: Gaby, thanks so much for the question! Selling advertising on your site is a great way to earn money and it was actually the first way I earned money on my website. Now there's a number of different ways to do this. When I first started at GreenExamAcademy.com, my first step was to get traffic and build an audience. That was the first thing. It's hard to sell ads or make any money from ads if you don't have any traffic coming in but you don't have to wait until there's a large number of traffic coming in. If you know that the traffic coming to your site is targeted and there's a decent amount and I know that's kind of arbitrary. But once you get a little bit of traffic you can show ads.
Now from there my next step was to do private advertising so it was sort of skipping over Google and working directly with companies to advertise on my site. And I remember in terms of pricing it was interesting because actually a company requested to put their banner on my site. I didn't reach out to them first. And they were like, “what's your price” and I didn't even think about that and I was just so excited to have somebody offer, I was just like, “Uh, $50!” And they were like, “Okay let's do it.” So you know we had that happen. Then I had to find a contract that was sort of like a template online just so I can make it look official and I sent that to them and then I had $50 in my PayPal account and I was like, “Wow, that was really cool!”
And then another company came up to me and was like, “Oh, how much for your site to advertise for a month?” You know a little banner ad on the sidebar. And I was like, “$100.” I just doubled it to see what would happen and they were said okay. And then I was like, “Wow, maybe I should have said $100 the first time” Pricing is really interesting because you don't really know where to go and sometimes it's just throwing darts. And there are some strategies, however, to understand what the correct pricing is so that you can make sure that you're getting paid what you deserve for your website but also you’re not just blowing people away with a ridiculously high price that is out of their league or just doesn't make sense.
So there's three strategies I want to tell you and the first one is to actually go to Google and use their keyword planner. If you actually go to adwords.google.com you can get free access to their keyword planning tool. And that allows you to see how many people are searching for specific keywords and what advertisers are paying, so the cost per click.
There's other sites, like SEM Rush, that might actually be easier to go to. So if you go to SEMrush.com and put in some keywords related to your industry you'll see how much advertisers, if they are paying for ads, how much they're paying per click. And that will give you a good baseline on where you can potentially price so you can sort of understand how much traffic is coming to your site if you have any banner ads of your own. You can understand what the potential click through rate is and you'd be able to understand how much to potentially charge someone on your site, if you're charging them for banner ads on your website. Now there's other tools out there like Long Tail Pro which will also tell you cost per click but it will do it in a much faster way—and more data and with more keywords involved and things like that.
Another thing you could do is see how much your competitors are charging for banner space. And you might want to go to your competitors’ websites. And if you don't know who your competitors are, you can go to sites like Quantcast.com or even Alexa.com to see what other sites people are searching for. But you should have an idea of who your competitors are or who other blogs or websites or forums in the niche that you're in. And what you want to look out for when you go on those sites are things like media kits. Media kits are anything that says “advertising” or “advertise with us.”
Those types of things will give you a clue on how much those companies are charging. Now with a media kit, which is really important, and eventually if you're going to do ads privately you can get a media kit, which is essentially a pdf file that shows statistics of your website, the demographic of your traffic and all these other things that advertisers or other companies would want to know before making decisions to advertise on your site. They want to make sure they're spending their money in the right place. So understanding that your target traffic is matching their target customer. So those are really important things and you can also get the prices and that will give you a good baseline. And then you can see, okay, well I get more traffic than this site, I can charge more or, if I have a better targeted set of traffic that comes in I can charge more.
If you're not sure traffic-wise how you might stack up against other sites you might want to go to a site called Alexa.com. That will give you some insight—it will actually give you some numbers on your websites ranking versus other websites in the world. So you can put in those other competitor sites and then you can put in your own and you can see kind of where you stack up. Now it's not going to give you specific traffic numbers but you'll be able to do estimated guesses on where things might be. And so then you can sort of raise your price or lower your price or maybe keep it at the same if it's around the same.
And the third way that sort of tests what the right price is is to literally just do that test, sort of like what I did. Now I could have just thought about it for months trying to figure out the right price or, you know, just taking action I made $50 right away. And then $100 and then it just kept going up and up and up. I reached out to the other companies. I eventually figured out that my sweet spot was $350 a month.
At this time, this is again on GreenExamAcademy.com, I was getting some traffic in the numbers between 4,000 and 6,000 visitors a day, just so you would have that knowledge. Now in terms of pricing strategy, again this is if you are doing private advertising which I like because you are taking the middle man out. And, Gaby, I’ll talk about Buy Sell Ads in a second, which is a great service but there are some things to think about if you're going to make a decision to work with them. But if you're doing private (working directly with a company), getting them on the phone and dealing with them, you know once you figure out that pricing structure there are some advanced pricing strategies you can use to either help to convince a company to say yes to your offer or to just make more money. And so what that is is using long-term plans.
So you don't want to just do month to month basis and that's sort of the last strategy. You want to offer a one-month trial but that you don't want to do up front. You don't want to say immediately, “Oh well, you can just try it out for a month and see if you like it or not.” No. If they say no to everything else, that's what you want to offer with because that way they're going to have the least amount of anxiety to working with you because they only have a month trial to test and they're not going to lose as much money.
But what you want to do first is offer discounts for having them come on for a longer period of time. So, for example, if you were to charge $100 a month to put a banner ad on your website on the sidebar—and of course you also want to think about where these ads are being put. There's different tiers or levels of pricing that you can use depending on the visibility of these ads—so, sidebar for example, if you're charging just a flat fee, that's going to be shown on every single page or every single page where there's a sidebar. There's also the sort of top banner which is prime real estate and then there's banners after posts. There's banners at the bottom of the footer. Again you have to think about these pricing structures and where certain ads are going to be placed and how much you might want to charge for them.
And you can always create combinations. So if you have, for example, a company that decides to just buy all the ad spots you can give them even more of a discount for getting all of the ad spaces. So a lot of things you can think about but the primary motivation I have for this part of the answer here is to tell you how well offering a discount with long-term contracts went.
There was a company that reached out to me and was willing to work with me for the advertised $250 a month. That wasn't advertised on the website. I had them contact me first and I mentioned that that was my going rate, and that was the first part of the conversation. You don't want to put the pricing right away and have that sort of stop people from emailing you or contacting you. You always want to say “come contact me” because that's how you know that they're interested. And you know you want to start talking to them and contacting them and that's how you can better or give yourself a better chance of you know sealing the deal.
So they contacted me and they said, “Hey Pat, we're willing to work with you for the $250 mark. We'll do one month.” And I said, “You know what? hHw about if we do three months? I’ll give you $50 off, so we'll do $700 for three months, so you’re saving $50. Or if you come on for six months, I'll knock $150 off.’”Actually, I think I actually gave them a month free. So a free month which was $250. So that was five times 250 so I made $1,250. I made $1,250 instead of $250, an extra $1,000 by giving them a little bit of a discount and having them on board for longer. And what's cool is they paid all that money upfront and I just happened to keep the banner on there longer. It didn't do any harm and I had six banner ads running at the same time in my sidebar. And there was multiple occasions like that.
Now with other companies I worked with different pricing that depending on the company or how excited they were or what my traffic was like at the time. So you know it goes up and down. It wasn't the same the whole time but you just got to massage it a little bit and figure it out and also know that it's your website. You have the control you know because it's your website and if you know that your traffic is good in terms of numbers and also quality, then you have a little to say. And so you shouldn't be afraid to tell people or tell advertisers or companies how you'd want it, especially if you're working private.
Now there is the option of going through a site like BuySellAds.com, which is a great site. It is a way for you to get in front of a market place where people are looking to purchase advertising on sites potentially like yours which is good because you have to do less work to find those companies. However, you're going to be sharing actually 25 percent of your earnings with Buy Sell Ads. If you go to Buy Sell Ads and go to their pricing page, you'll see that you're going to be sharing 25 percent of the success fee which is quite a bit actually when you think about it. I mean for $100 it's already $25 that you’re sharing.
But there is something to be said for having a service that does this for you and what's really cool with Buy Sell Ads is you can just simply put code on your site and they do the ad managing for you. It's sort of like Google AdSense but with banners. And you can chose which companies you know that reach out to you if you want to work with them or not, so you have a little bit of control. But that's why I like private advertising better. It puts you in the primary sort of position, in the authority position. It gives you most of the control. And with Buy Sell Ads you have a little bit of control but you're also sharing a lot of those profits as well.
In terms of using a flat fee or CPM, or cost per every thousand visitors, I think that again you'll have to do some math and figure it out but you know, test. Test is the best way to do it. I think that's the number one strategy when it comes to doing these ads, whether you're doing Google AdSense or you're doing private advertising or you're going through a third party middle man company like Buy Sell Ads. Testing is the best way to go and no matter what if you obviously don't do anything you're not going to make money so it's great to see, Gaby, that you are taking action and trying to figure this out. And, again, a thing you can do is test, but I hope a lot of these answers in today's question helped you.
So, Gaby, thank you so much for you question. For those of you listening, if you have a question that you'd like featured here on the show, just head over to AskPat.com. And of course, Gaby, since your question was featured here on the show, you get an AskPat t-shirt sent your way. One of my assistants will be contacting you very soon with information about that. Thank you all so much for listening to this episode and again check out SmartPodcastPlayer.com if you'd like to check that out and get signed up for when that's going to be re-released. And, finally, I'm going to give you my quote of the day. As always I give you quotes. I love quotes. So here's a quote from Richard Branson. He says:
“Business opportunities are like buses, there's always another one coming.” Thanks so much, and I'll see you the next episode of AskPat.