Establishing a price for blog ads

by Sapphire (February 15, 2008)

Mark at 45n5 wrote about establishing a metric for what blog advertising is worth. I think this is really important - so much so that my comment turned short story length and I decided to bring it over here. Mark talked about pageviews and other stats, wondering which numbers to crunch, and how.

In traditional advertising, niche and demographics of your visitors are considerations, too. That’s really hard for bloggers to calculate. You can run polls, but that’s relying on people to be honest in their responses. But you know what? The TV ratings system is a joke, too. It’s full of issues that make it inaccurate, but the advertisers perceive it as a useful metric, and so in a way, it is.

It’s naive to say that demand sets the price in the market place. Market prices are set by what the supply side can manipulate the demand side into paying. “Manipulate” is a strong word, but I’m talking about anything from simply letting people know you have what they want for sale to launching brainwashing campaigns to make people think they want what you have to actually tricking people. You can be as ethical as you want to be about it, but the bottom line is:

Part of our job as marketers is to make people think our product has a certain value. Even if the “value” you’re going for is very reasonable.

One thing I think we ought to consider is how much work we put in. Even if you paid a blogger minimum wage, you’re talking something like $131 a week for someone who spends 20 hours a week on a blog. Should we really be giving our time away for less than that?

And what’s the advertiser looking at? The number of clicks she gets from your site? The number of sales she makes? Well, let’s consider what Chevy looks at when they advertise on TV. If they get a bunch of sales the week they launch a new TV campaign, they assume the ad worked. If they don’t get sales, they assume the ad didn’t work. This is a bit simplistic - they also make educated guesses about other variables that may have affected sales. But the bottom line is, they are convinced TV ads work, and that’s why they pay for them, and will continue paying for them. Our first hurdle is to convince people blog advertising works. Then the usual market routine of bargaining will help us set the price.

One way to convince people something works is to charge more for it. I know a 125×125 sidebar ad on this site, which appears here, at the new blog, and on the directory is worth more than $10/28 days.  Awstats says the whole domain is getting nearly 10,000 visitors this month. Quantcast, which is extremely conservative, says the blogs alone are getting over 1500 visitors per month. Now, does anybody know how much ads cost in a magazine with a circulation of 1500? How about if the ad appears on every page? What if the ad’s inserted into the content? Etc.

If we don’t ask enough, we don’t create a perception of value. Of course, the asking price is just one piece of the puzzle. We need to talk about whether we want to do what other ad markets have done and try to figure out our audience demographics, such as age and gender. Do we need to have a way of showing results to justify ad prices? Do we need to all agree on a metric - OpenAds, Quantcast, Google’s metrics that I won’t touch, something else?

Posted in Affiliate Marketing
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