With the financial bloodbath caused by the COIVD19 Pandemic as well as a generation of "lazy" Millennials looking for the easiest possible route to monetary success, passive income has become one of the hottest topics on the internet. When it comes to generating "passive income" from a website, display Ads are the holy grail, the alpha and omega, and Tupac Shakur rolled up into one.
If you are someone who currently has an active website this article will outline how to get yourself a piece of the passive income pie. I will also be discussing whether or not it is actually a good idea for you to use this monetization strategy in your online business.
Who Can Actually Money with Display Ads?
Unfortunately, for those hoping that you can just pull together a website and fling up a few ads I have some bad news for you. In order to make even a little bit of extra income from online advertising you first need to have and/or acquire website traffic.
And to be clear, I am not talking about a few hundred people visiting your website for 10 seconds before losing interest and moving on. I am talking about a significant amount of traffic (i.e., 5000+ per week), and the kind that spends a large amount of time consuming content on your website.
To be in this position, you will need to have a website that provides genuine value to your visitors. This ca be in in the form of education or entertainment. It does not really matter how or why, just that they (i.e., your visitors) feel like they are getting it, and are interested in getting more.
If this does not sound like your website and you are not willing to put in the effort to create a site like this, then my advice to you is to close this browser tab and move on 😉.
How Much Money Can You Make?
Before I jump into how much money exactly you can make, I need to first explain the components that go into determining this. Generally speaking, your milage with this monetization strategy will vary depending primarily on three factors.
1. The amount of quality traffic your website generating.
2. Your industry/niche.
3. Whether you are doing direct sales or using Ad Networks (e.g., Google AdSense)
Factor 1- The Amount of Traffic Your Website is Generating
The first factor is straight forward and does not require a deep explanation. Essentially, the more quality traffic you are able to generate the more money you are going to make from display ads. It is that simple.
Factor 2 - Your Industry/Niche
The industry your website is targeting plays an enormous role in how much you can earn with online advertising. The reason for this is that internet display ads operate in a “pure” market environment from an economic standpoint.
The value of any ad is determined by how much money a company is willing to pay for access to an audience. The more money a company stands to make by advertising to an audience, the more they are willing to pay for an ad. This is true for both Ad platforms and direct ad sales.
For the most part Ad platforms operate like an auction. Businesses place a “bid” to display their advertisements on websites that match their specific keywords and industry. The Ad networks will then process all of these bids and automatically prioritize the placement and position of ads based on the amount that was bid. This ensures that they (i.e., the Ad Networks) are able to maximize their revenue, and the advertisers who are willing spend the most money are rewarded with the most traffic.
Of course, there are industries and businesses where the value of a paid website visit is much higher than others.
Consider a company in the Auto Insurance industry. They know that if a visitor they receive from an online ad converts into a customer, this customer will likely be spending hundreds of dollars with them on an on-going basis. This makes each individual sale extremely valuable. As a result, a company in this industry is willing to pay a premium to get favourable placement in front of as many relevant eyes as possible; and so will all of their competitors.
On the other hand, let’s think about the Dance industry.
With the popularity of TikTok giving raise to the bizarre “Dance Cover” craze, there are now ton of wanting eyes looking to be entertained by choreographed jigs. In addition to this, there are also a lot more people interested in becoming dancers themselves.
Even with this being the case, there are still very few large profitable companies operating in this space.
Unfortunately the average choregraphed dance aficionado is not spending hundreds of dollars per year on their hobby. This leads to little very competition for business bidding for ads in this niche.
You see, the relative popularity of the dance as compared to insurance cannot make up for lack of value generated per customer. You can have a website in the dace niche that gets 30,000 visitors per week, and you will still earn less (i.e., from display ads) than a website in the car insurance niche that only gets 3,000 visitors during the same period.
Factor 3 - Ad Networks (Passive) vs Direct Ad Sales (Active)
Though not quite as important as the previous two factors, the choice between selling ads directly to businesses and programmatically displaying ads on your website (i.e., through Ad Networks) can play a large role in determining how much you will earn.
I want you to think about your website as a piece of online property. Basically, a digital plot of land you own and control. To make money from this online property, the easiest method would be to pay a firm to connect you with buyers interested in renting this “land” from you. This is akin to using ad networks like Google AdSense or Yahoo ads.
However, if you are willing to put in a bit of effort, imagine how much more money you would make if you instead built a luxury apartment complex on the land and rented out the individual units. This loose example illustrates the difference between doing direct ad sales and using an ad network.
If you are the kind of person who is willing to invest into your website to maximize its earnings, here is a step-by-step approach you can take to cut out the middleman and sell your ad placements directly to businesses:
Step 1
Meticulously track your website audience and traffic patterns. The easiest way to do this is to set up Google Analytics and review your traffic on either a weekly or monthly basis.
Step 2
You then need to determine the types of ads you are going to display on your website (i.e., text, image and/or video) as well as where you are going to display them. You need to take your audience’s likes into consideration as well utilize a bit of common sense.
If you are adding an ad to your website’s search, a text ad is most appropriate as it flows more naturally with search results.
However, in the case of a 2000-word article, you would want to instead use an image to draw your visitor’s attention. Adding a text ad in this case would be like emptying a bottle of water into the ocean.
Step 3
After this, your next task is to determine the value of each ad spot. This is where the research you did in step 1 comes in. An ad located in more areas and/or in sections that get more views should cost more money. The same applies in the reverse.
Working out the cost for each ad spot is a delicate balancing act. You need to make sure that it is priced significantly above what you would have made through using an ad network, but not so much that it becomes unattractive to businesses.
Think about this from the point of view of the businesses. Assuming that 5% of your audience will actually interact with the add and purchase something from the business, how much money would they stand to make?
Step 4
After you have gathered your data, figured out what types of ads you are going to display and determined your price, you will then need to translate this into a sharable “package”. This means figuring out a way to communicate this information, either visually, though text and/or audio to attract would-be advertisers.
Step 5
Once the previous 4 steps are complete you now need to advertise your package to relevant businesses. This can be done in a variety of ways, but there are two main approaches.
There is the passive approach which involves “plugging” your advertising packages in your media and on your website. Alternately (or additionally) you can actively get in touch with businesses who would benefit from advertising to your audience and sell them on the idea of doing so. Generally speaking, you should do both until you have filled up all the available spots on your website.
Ok … so how much money can I make
Let us now consider the two industries we discussed in the previous factor and use some real numbers to determine just how much money can be made. So, we essentially have two websites to compare. One we will call dancedancedance.com, a website covering everything dace and performance. The other we will call carinsurancedeals.com, a blog containing articles on about how to find the best deals on your car insurance.
To make things fair let’s assume that both websites are getting 10,000 visitors per week (i.e., 40,000 per visitors month). Let us also assume that you will be using 3 ad spots on both websites.
If we decide to use advertising networks to generate our display ads, based on the average CPM for the Dance Industry (i.e., $0.035), and the average CPM for the insurance industry ($15.63), we can expect to make around $4.20 per month and $1,875.00 per month respectively.
So, if you are running carinsurancedeals.com it may make sense to throw up a few ads and collect an extra ~$2000 per month passively.
For dancedancedance.com however, earning ~$5 per month, even passively, is not quite as attractive. In this situation it may be better for you take an active approach to selling ads.
For example if you were to instead analyse your website traffic, then reach out to dance theatres located in the countries where most of the dancedancedance.com visitors reside, you can get thousands of dollars for those same ad spots.
What Are the Best Ad Networks?
Now that we understand the difference between using an Ad network and doing direct sales, we will now take a look at some of the best options for website owners who still want to take the passive approach. Based on my knowledge of the market, in my opinion the items listed below are the top 3 Ad networks:
Google AdSense
Pros:
- Easy to Setup and Use.
- Supports both display and text ads.
- Supports “Smart Ads” that automatically adapt to the available space and screen size.
- Supports flexible pay-out options (Western Union, check, wire transfer).
- Low minimum pay-out ($100 USD).
Cons
- It can be moderately difficult to get your website approved. If your website is new and/or has low traffic you will likely get denied.
Media.net
Pros:
- No minimum traffic requirement.
- Offers multiple ad types (CPA – Cost per goal completion, CPM – cost per 1000 impressions/views and CPC – cost per click).
- Powered by Bing (i.e., so only quality ads will be displayed to your visitors).
- Low minimum pay-out ($100 USD).
Cons:
- Media.net ads have a very distinct appearance. You may have to change your website’s theme to match your ads.
Adbuff
Pros:
- Only serves premium ads that will earn you a high CPC and CPM.
- Supports flexible pay-out options (PayPal, Bitcoin, Payoneer and wire transfer)
- Low minimum pay-out ($100 USD).
Cons:
- Very Difficult to get your website approved. Requires a minimum of 2000 unique visitors per day.
Why You May Not Want to Use Display Ads
As tempting as it looks, there are actually many situations where it may not be worth it for you to monetize your website with ads of any kind. In fact, I would argue that this is the case for the majority of websites on the internet.
Essentially, whether or not you should consider using this monetization strategy comes down to the purpose of your website. If you are selling a product or service, then your customer’s experience should be your primary concern. In this case adding display advertisements not only worsens the experience for your visitors, but also cheapens your brand.
On a subconscious level, what it does is raise question about your true intensions and introduces doubt as to whether your product/service is really as good as advertised. After all, if your service was genuinely valuable to customers then you would have no problem making money from it. You would be placing emphasis on the refinement and promotion of said service/product instead of butchering the visual appeal of your website to “subsidize” your earnings.
Conclusion
Running display ads is a great monetization strategy for high traffic content driven websites. And, for this, using Ad networks is by far the most convenient way to get started.
However, as a rule of thumb, if you are not able to make at least 10 dollars for every 1000 website visits then it will likely be far more profitable for you to focus on direct ad sales. In fact, doing direct ad sales will always be more profitable than using an ad network.
If you have read the entire article up to this point, you would know that in order to pull this off you will need to create and present an attractive advertising package to the businesses you want to work with. In addition to this you will also need to create an Ad Management Portal for them upload, track, and view the performance of their ads on your website.
If you are interested in monetizing your website through direct ad sales, you have to make sure that your Ad Management Portal is actually compelling and easy to use in order to attract, and more importantly keep your advertisers.
Creating something like this will require experience and technical knowhow. Get in touch with me if you are serious about your business and want to ensure that this to gets done correctly.