When people first think about monetizing a forum, the place they commonly begin is with standard display advertising, which can include graphics, text and/or rich media. This is for good reason. It is a mature, established way of generating revenue and there are many tools and services that exist to facilitate it, which makes it easy to get started with.
Display advertising is a term that encompasses the various formats and techniques used by ad networks and advertisers to display ads to visitors of your forum. The techniques will vary, with each having its own upsides and downsides and it is important to understand the nuances of these techniques so that you are giving yourself the best chance for success.
This may seem like an odd place to start, but let’s just get it out there right away: create a privacy policy. Putting aside any legal reasons, it’s a great idea, a best practice and is required by at least some of the companies that you may want to work with, not only for your display advertising, but for other forms of monetization that we’ll discuss later in this book.
Your privacy policy describes your methods of gathering data from visitors and how that data is used and shared. It may sound scary, but as long as you understand your policy and stay true to it, it isn’t. Trust Guard offers a great, free privacy policy generator at FreePrivacyPolicy.com. Answer the questions in the form honestly and make sure that you indicate that cookies will be used for advertisements and to compile data – both of which will occur in the course of serving ads.
Though that should do the trick for most forums, this book should not be taken as legal advice. If you have any questions about your unique situation, you will want to seek out a qualified professional.
This is a tricky question to wrestle with. Some people will tell you that you shouldn’t have advertisements when you first open your forums. They will say that at the beginning you should be focused on traffic growth and that advertisements won’t generate much revenue anyway, so you should hold off until later, until you are more established.
That viewpoint has merit, but the alternative view is that people aren’t always fond of change. If you have people join your community when it has no ads, those people may expect that your forums will never have ads, as unfair as that may sound. So if you plan to have ads in the future, it may be a good idea to just add a few now.
While change is inevitable in most areas of your community – whether it be new members, new designs, new features or new ads – you want to try to make sure that when you change, it is meaningful. In some cases, it can be more beneficial to simply have ads at the start, even if they are placeholders and you aren’t making much, if any, money.
This allows people to immediately come to the understanding that you will have ads and will lead to them being less likely to feel that you have betrayed them after they have already committed their time to your community.
If you are reading this, there is a good chance that you have already launched your forums and they may even be well established. But, if you happen to just be planning to launch your forums, keep these thoughts in mind.
There are four basic revenue models that you will encounter in dealing with ad networks and advertisers. To firmly grasp their potential, you need to understand the differences between them and how they work.
You should not confine yourself to just one model. Instead, you should consider what will work best with your community and blend the different strategies to achieve optimal results. This may require some experimentation.
The sponsorship model can also be referred to as “tenancy” and it works best on forums that have a niche audience. For example, let’s say you have a forum about blue widgets. It would be natural for an advertiser who sells blue widgets to place an ad directly on your forum since they already know that your audience is who they are trying to reach.
In this model, you are selling an ad for a fixed time period to the advertiser for a flat rate. Let’s say you have an ad zone on your forum that is 125 pixels in width by 125 pixels in height (normally written as “125x125”). You might sell that space to an advertiser for $100 per 30 days. It doesn’t matter how many impressions the ad receives (how many times it is served to visitors), because you are selling time in that ad space, not impressions.
Sponsorships are typically sold on a guaranteed basis, meaning that you are guaranteeing exposure for the advertiser and they will not be outbid or replaced by a higher paying advertiser.
CPM stands for cost per thousand impressions (or, more technically, “cost per mille,” with “per mille” being Latin and meaning “by a thousand”). An impression occurs each time a visitor loads an ad on your forum.
To use some simple math, let’s assume an advertiser is paying you a $1 CPM. This means, for every 1,000 ad impressions you serve to them, they will pay you $1. So, if you serve 100,000 ad impressions, you will receive $100 (100,000, divided by 1,000, multiplied by $1).
This is cost per action or cost per acquisition and refers to the act of a user clicking an ad on your forum and then completing a very specific goal for the advertiser. An example of this would be the user buying a product from the advertiser or filling out a lead form – otherwise known as a conversion event. CPA can also be referred to as cost per lead, cost per sale, cost per engagement and cost per conversion. All of those terms mean pretty much the same thing.
Finally, CPC is the abbreviation for cost per click and, quite simply, it means that you are paid each time a visitor clicks on an advertisement.
To sell ads, you have to have inventory. You need to decide what ad sizes you will serve, how many ads you should have on specific pages and where they should be placed.
The real challenge and the art of this task is in toeing the line between revenue growth and visitor experience. You must respect the need for both. Money is great, but making money at the cost of creating a poor visitor experience will cost you. On the other hand, if you aren’t able to pay bills and have to close the community because of a lack of resources, there is no visitor experience anyway. It is all about balance.
Without a doubt, your best bet is to always stick to standard sizes for the majority of your ad zones. Standards scale much more easily than custom sizes. The Internet Advertising Bureau has created a handy guide for display ad standards, the Display Advertising Creative Format Guidelines. Within those guidelines, the 728x90, 300x250 and 160x600 sizes are by far the most common amongst ad networks and advertisers. When selecting the ad sizes to use on your forum, keep in mind that selecting a size that is inconvenient for an advertiser could mean they won’t advertise with you.
The only time it makes sense to use a custom size is if you are doing something special for a direct advertiser. Part of the value in selling ads directly to advertisers is that you can do special things for them and help them create a unique advertising experience that will potentially perform better or provide more brand value than standard ad sizes. We will be discussing various types of custom advertising throughout this book.
The reason why custom ads can be powerful is that they can help make advertising more interesting – not just for your bank account, but also for your advertisers and your visitors. When it comes to advertising, there can be a good way to surprise people, if you execute it properly. Not all ads are created equal – some feel less like advertising because they are actually useful. Custom ads don’t scale well, in the sense that you aren’t backfilling your unsold custom ad spots with a third party ad network. That is a good thing: they are meant to be special and deliver a non-standard advertising experience.
Also, don’t forget that you can sell and display advertising on more than just your forums. If you offer RSS feeds of your content, you can display advertising within your feed (Pheedo and Google AdSense for Feeds work in that area). You can do the same with email newsletters. It’s not just the forums themselves, but also how people connect to them and subscribe to them. That isn’t to say that you should have advertising on every outlet – just that it is a possibility. And if you offer it, you can bundle it with the ad campaigns that you sell to offer more value and make them juicier prospects for advertisers.
When it comes to the three most common ad sizes (728x90, 300x250 and 160x600), it is often a good idea not to have more than 3 per page. Maybe this is two 728x90s and one 160x600, or maybe it is two 300x250s and one 728x90. It will depend on your layout. There is a good chance that you will have more than 3 ads on the page once you consider additional sizes, but for the three main sizes, 3 (or sometimes 4) will probably work. It’s always a fine line between what is too much and what is too little. If you have too many, each additional ad may start to cannibalize the effectiveness of the others.
It’s very hard to say specifically what the right balance of ads is for any given website or forum. There isn’t a magic formula or hard stop at a certain number of ads per page. This is really a decision that is in the hands of the forum owner. It’s also a supply and demand issue: by adding more units, you’re increasing the supply. If you don’t have demand for those additional spaces, it probably doesn’t make sense to add them, because it dilutes the value of the other placements, dilutes the perceived value of your forum and doesn’t make it easy for you to sell the other ad spots that are suffering from a lack of demand. Adding new ad locations without proper demand adds an additional option for a prospective advertiser, but it has been proven many times that too many options will paralyze a buyer, making it harder to close a sale.
So, does this mean that having fewer ads can make you more money? Potentially, yes. Selling ads is one of the biggest tests of not succumbing to temptation. You see, the cost of adding one more ad unit to a page is not directly tangible. For example, when you are adding one more ad to your forum, do you think about what this will cost you? Doubtful. You think about how much it will make you. The true cost of “one more ad” is hard to put a number on.
As a publisher, you have the ability to create an endless amount of supply. You can continue to add more and more ad units to your forum. That also means you have the ability to limit the amount of supply that can help create more demand for your ad units and raise the effective CPM you can charge for your ads. If you are the only quality forum about blue widgets, it will be easier to create more advertising demand and raise your rates by shrinking the supply. If you are one of 20 forums about blue widgets, it will be harder to raise the demand by shrinking the supply. This all comes back to building a quality community with a high level of engagement, which will help you to stand out from the crowd.
Forums pose an interesting challenge for managers and advertisers alike. On a blog, it’s common to find the content together, on one page, each piece of content written by a specific author and everything appearing within a fixed layout. On a forum, however, it’s quite the opposite. Each article (or thread) is on multiple pages, written by multiple authors, and most forums tend to have a fluid (or very wide) layout. Forums that have a fixed layout tend to not have a sidebar, which can be the most valuable ad location on a blog.
Forums, in general, are also more complicated systems than your typical blog. As such, they are harder to design for and, sometimes, ad placements are added via plugins for the given forum software. Most forum software is also not designed around monetization; it is designed around features that help build community. Some blogs, on the other hand, tend to be specifically designed with monetization in mind. These factors will naturally limit the forum owner’s creativity in designing ads into the layout.
Let’s run through some thought processes and strategies for ad placement to help you develop your own ideas.
You can start with a 728x90 leaderboard at the top of the page. This is a standard ad size that generally works well. You could then put 1 or 2 sponsor spots after the 728x90, but not directly below it. There should be some content or navigation between the 728x90 and these sponsor spots. (“Sponsor” meaning that they will most likely be smaller spots that are not sold on a CPM basis.)
Next, you could put a 300x250 inside the first post. Placing this on the left side will be more valuable, but also more intrusive for your users. Aligning it to the right will reduce the feeling of intrusiveness. This ad may be a good candidate for display only to visitors who are not logged in (we’ll discuss this more in a moment), making it disappear for logged in members.
It is possible that the 300x250 may not work in any context alongside the actual thread content. If this is the case, you could try placing a 728x90 after the first post, which is generally a friendlier placement. If the 300x250 does work, however, you could then look to place a 728x90 farther down in the thread or at the bottom of the thread, following the last post.
If you don’t place ads between the posts and you have a sidebar, you would then have the ability to serve a 160x600 in that sidebar, which gives you additional flexibility. The same would apply if you have the sidebar throughout the entire community and not just on threads.
On non-thread pages, you can attempt similar formatting. For example, on your index, you could put a 728x90 after the first or second category of forums. In an individual forum, you could do the same after a certain number of threads or at the bottom of the list of threads.
At this point, we have reached the theoretical limit of 3 premium sizes on any given page and you will probably only want to add other sizes and sponsorship placements in the footer or sidebar.
In general, the closer that ads are to content, the better they will perform. That doesn’t mean you should dump them next to your posted content and call it a day. Again, you need to find the balance of what will work for you and your community and that comes through testing.
A high impact placement might mean a 728x90 in the header, a 300x250 in the first post and a 160x600 in the sidebar. A low impact placement (meaning less ad exposure and revenue, but an improved experience for some audiences) may mean a 728x90 in the header and either a 728x90 in the footer and a 160x600 in the sidebar or two 300x250s in the footer. At the end of the day, you will have to decide what is best for your own forum.
You don’t have to display every ad to every person who visits your forums. You can show different ads to guests who are not logged in and to visitors who come from search engines than you show to members who are logged in.
For example, you may want to serve more advertisements to guests who are not logged in than you do once a person has signed in. This can create a better experience for your registered members and can provide an incentive to register and login.
It is generally accepted that visitors coming from search engines are more likely to click ads than direct visitors. Because of this, even if you display ads to everyone, the lion’s share of your revenue may still be coming from visitors who are not logged in. Some will argue that your regular visitors may develop blindness to your ads. For some, that may be true. For others, it won’t be. This point also ignores the fact that some ads are CPM based and you will be paid for views – not for clicks.
That said, selective ad display can be a great strategy for some communities and can help you maintain the balance between wanting to grow your revenue and also needing to maintain a good user experience for your loyal members.
Forums, by their very nature, tend to have a specific content focus and are a great way for advertisers to reach very specific and engaged audiences.
When we talk about selling ads directly to advertisers, we are looking for the “premium” sale. This means that your aim should be to earn the highest CPM from these direct advertisers, since they are the most targeted advertisers you will have on the forum and they should therefore pay a premium for the exclusive, guaranteed access to your ad inventory.
There are a lot of great third parties that you can work with to sell ads on your behalf or fill your inventory. But, don’t forget that these services also have to survive and make a profit. This means that they are taking a cut. In many cases, working with them will lead to an increase in your revenue. However, for many forums that sell advertising, the true power and the biggest strides in revenue growth come from taking control, direct selling to advertisers and having as few middlemen as possible, allowing you to keep more of the money.
There are many factors you need to take into account when pricing your ads. This includes the size of your ads, where they are located on your forums, the subject matter of your community, how the ads are targeted and more. We are going to discuss each of these factors.
Generally speaking, the larger the ad, the higher you can set the price. A larger ad is worth more to an advertiser because they will have a larger area to brand their product or service and a better chance of being noticed by visitors. One way to sanitize your ad pricing is to break your rates down to the effective price per pixel. This may sound crazy, but here is a quick example:
Your website has 500,000 impressions per month. You have a 300x250 ad that you price at a $5 CPM. You have a 728x90 ad that you price at a $5 CPM. Both ads are above the fold and in a similar location on the page and have total potential earnings of $2,500 each per month.
Which ad is more expensive? Let’s break this down to an effective price per pixel.
The 300x250 has a total of 75,000 pixels (300 multiplied by 250 equals 75,000) and, for the month, an effective price per pixel of $0.033.
The 728x90 has a total of 65,520 pixels (728 multiplied by 90 equals 65,520) and an effective price per pixel of $0.038.
So, as you can see, the 728x90 is actually more expensive than the 300x250. It should probably be the other way around. The point I’m trying to illustrate here is that the ad size is very important when setting pricing. While it might be hard to tell the difference in surface area between a 728x90 and a 300x250, there is a difference and it is important.
Let’s look at the difference between a 300x250 and a 125x125. We already know that a 300x250 has a total of 75,000 pixels. A 125x125 has a total of 15,625 pixels. The 125x125 is roughly 21% the size of a 300x250. As such, all else being equal, you should price the difference between these two ad sizes accordingly.
Where is the ad located on the page? Is it at the top, above the fold? Is it on the left side or on the right side? Is it below the fold above the second or third post in the forum? Is it in the footer? Each location on the page will have different implications for how the ad should be priced. It should be clear from the clickthrough rate of different ad placements on your site as to which the most valuable placement is. Naturally, an ad in the footer isn’t going to be worth the same as an ad at the top of the page.
What about the difference between an advertisement that is between the second and third post on your forum, as opposed to one in the right sidebar in a similar vertical location on the page? Good question. Intuition would suggest that the ad that appears within the context of the content, between the second and third post on your forum, will be the more valuable of the two. It’s more in the flow of what the reader is looking at. This is an example of something you will need to take into account when pricing your ads.
Do the ads have a chance to “pop” within your layout? It’s important to let the ads breathe. Leave enough white space around them and give them some separation from content (or other ads). Is the ad squished between two other ads or is it surrounded by content the user is reading? Thinking about all of these questions is important when trying to determine fair pricing for your ads.
Typically, the more ads you have on the page, the less valuable each ad will become. Does this mean that if you only have one ad on the page, it’s going to be as valuable as the sum of, say, three ads on the same page? Not necessarily. The number of ads on the same page and their value isn’t a linear equation. There are cases where a site produces worse results per ad with one ad on the page than it does with 5–6 on the same page.
What is most crucial when it comes to quantity is that you find a good balance between the amount of content and the number of ads on your forum. The quantity of ads on the page affects pricing. As you increase the number of ads on your forum, keep in mind how it will affect the performance and, ultimately, the pricing of the other ads.
Not all topics are created equal, financially speaking. In order to illustrate this, take a look at an infographic produced by internet marketing software firm WordStream, titled “Where Google Makes Its Money: The 20 Most Expensive Keywords in Google AdWords.” As you can see, different subjects command higher advertising rates and more overall ad spend by advertisers. If you have a forum about car insurance, chances are that you’re going to set your rates higher than a forum that is about geckos. There’s more demand from advertisers and more ad dollars flowing through that subject.
When it comes to subject matter, the differences can be startling. That said, as you might imagine, the subjects with more advertising dollars at stake will also be more competitive.
If you are selling a targeted ad to an advertiser, it’s worth more than an untargeted ad. For example, let’s say you have an advertiser who only wants their ad to be displayed to users who are on a Mac and who are from the United States. They are more qualified customers for that particular advertiser and therefore more valuable to them.
Different segments of your audience are more valuable to certain advertisers. For example, a visitor from the United States is typically more valuable for most advertisers than a visitor from Antarctica.
If an ad has an interactive component to it, such as sound, video, motion, animation or if it breaks out of its size and takes over the screen, you should be charging more for it. It is more obtrusive to your users, more interactive and therefore worth more money. Though remember, if the ad is too obtrusive, as we discussed earlier in this chapter, it may not be worth selling at all.
Now that you know some of the factors that determine how you price your advertising, you may want to come out and ask: specifically, what should my rates be? The quick answer to this question is that it will take some patience and experimentation until you find the right prices.
It all starts with doing your research. Many publishers actually show their pricing publicly. Find forums that are similar to your own in traffic, subject matter and overall quality. See what they are selling and how much they are charging for it.
Browse ad marketplaces like BuySellAds.com, BuyAds.com and AdEngage (disclosure: Todd Garland, the CEO of BuySellAds.com, contributed a substantial portion of this chapter). Pricing in these directories is even more helpful than checking similar forums, because you will also be able to see what is sold versus what is left unsold. Granted, you won’t have perfect context on the prices and fill rates, but you will still be able to get a general feeling for which placements and prices are selling well and which aren’t.
Keep an open line of communication with your advertisers. Some advertisers are always in negotiation mode and will always tell you their ads are performing horribly in hopes of you giving them a discount. Others are more than happy to tell you how the ads are performing and will share valuable insights with you. See what they have to say and take that into account when trying to set your pricing. Keep in mind that some advertisers will be able to justify higher prices more easily than others depending on their cost of customer acquisition and the lifetime value of each customer.
Finally, Google AdSense can be a great benchmarking tool. Install AdSense and see how it performs. Granted, AdSense is never going to make you as much as direct ad sales will, but it’s still a great way to set a benchmark. Let’s say you find that one of your premium ad spots will earn you a $3.50 CPM through AdSense. That means that you can probably sell that same space directly to an advertiser for at least $4.50-$5.00. The reason for this is that the $3.50 figure represents a blended CPM – some advertisers are paying more and others are paying less. We also make the assumption that a direct advertiser is going to be a better qualified advertiser for your audience.
Just as you can use AdSense as a measuring stick, you can also take into account what other advertising networks are paying you.
The line between being too greedy and leaving money on the table is a fine one. There are publishers so loyal to their advertisers that they refuse to raise the price on them for years on end, despite huge increases in traffic. There are also publishers who shoot themselves in the foot through carelessness when dealing with advertisers and by making hasty pricing decisions and reckless demands.
Changing the price of your ads creates friction. There’s no such thing as “good” friction when dealing with advertisers, not even when lowering prices. The best advice here is to make sure that you put a lot of thought into your pricing changes before you put them into place. Communicate with your advertisers about the change and explain to them why you making it. Are you raising prices because you are moving their ad up on the page? Are you raising prices because your traffic has doubled over the last few months? Are you raising prices because you are changing the size of the ad? Are you lowering prices because you have had other advertisers cancel and you want to make sure they stick around? Think through your price changes carefully and make good decisions.
Your media kit is a document that helps explain the value of your forums to potential advertisers and provides them with other relevant information, including details about the ad placements that you have available. It can also include pricing, but sometimes that information is kept separate and included in a rate card, a simpler document that serves as little more than a list of prices. Some publishers don’t mind the general ad details being in public, but want to keep the pricing details more private and discuss them only with seriously interested parties. Of course, there is a downside to this, as some advertisers may not even want to take the time to ask for them and may simply move on.
A media kit can take many forms. It could be a PDF, a PowerPoint presentation, an HTML webpage or some other document format. Creating a media kit means that you have one more thing to keep up to date, so you will want to choose a format that is easy for you to keep current.
When it comes down to what your media kit should include, there is a virtually limitless list of things that you can add to the document. That said, you don’t want it to be so long that people get bored and lose interest. Instead, be brief and focus on the most meaningful and important information.
You will want to include all relevant details about your advertising placements, including the sizes, locations and when they will be served. For example, are they flat-rate ads where someone will pay you a set amount and then their ad will be displayed in a given location for every pageview during a specific period of time? Or is it a CPM based ad where they will buy a set number of impressions? It can also be helpful to include screenshots that indicate where on the page an advertisement will be displayed.
Do you have any limitations on the ads themselves? Examples would be file types and maximum file sizes. What about rich media ads? Do you allow ads that play audio automatically or expand on their own, without any user-initiated action? While those ads work for some, others will find them annoying, so serving them can come at a cost. Including information about what you allow and don’t allow can be a great way to save time and make sure that you and your advertisers are on the same page.
Audience data is another important part of the package. This data comes from surveys that you conduct or from your website analytics software. Google Analytics is a common, widely used application that can give you information about your audience, including their geographic location, the devices they use to visit your forums, their web browser, connection speed and more. And there are many other services that do similar things.
But, in order to get more information, including demographic data that some advertisers will find useful, you will need to dig deeper. In addition to member surveys, you can also gather this data through audience measurement services, such as Quantcast, which is a great, free tool that provides you with background data on your visitors. This includes their age, gender, income range, level of education and more.
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