Many people launch a website with the idea of making money from advertisements. While it’s possible to make money – even a great deal of money – it’s not easy. It requires careful planning and an efficient operation.

As a website operator, you will be considered a publisher, and just like a newspaper or magazine publisher, your business if selling ad space to advertisers, and then attracting an audience to see the ads.

Ad Formats and Placement

There are standard sizes for web ads. If you stick with the standard sizes, it’s easier to sell your ad space. The most popular format, as defined by the Interactive Advertising Bureau (IAB), are:

  • Medium Rectangle (300×250)
  • Rectangle (180×150)
  • Leaderboard (728×90)
  • Wide Skyscraper (160×600)

The most valuable space is in the center of the page, embedded in the content.

You should design your web pages to accommodate these standard units!

Ad Management

If you’re not going to change ads often, we could “hard code” the ad placements. However, if you want the ability to change ads fairly frequently, to run ads in rotation, to track impressions, etc, then you need ad management software. The ad management software has a GUI that allows you to log in and manage your ads.

One of the most popular ad managers is the . You can download and install an “open source” version on your own server, use a hosted version for a small transaction fee, or license a fully supported enterprise version.

A somewhat newer alternative is DoubleClick For Publishers (DFP). DoubleClick was one of the largest companies in the online ad market, until they were purchased by Google. Now Google makes two versions of DFP available: the full version, for which they charge fees, and DFP Small Business.

DFP for Small Business is a hosted service, so you don’t need to install it on your server, it meets the needs of most websites, and best of all it’s free. It still needs to be integrated into your site, but it’s a lot less work to set up and run than a stand-alone ad manager.

Here’s an example of a site managed with DFP Small Business:  New York Chinatown Info.

Ad Options

The simplest option for ads in Google AdSense. It takes almost no effort to set up and manage, it pays pretty well relative to other options, and almost any site can use it. It’s a good way to get some fast ad revenue when you are starting, and it can be your default whenever you have unsold ad space on your site.

Another option is to join an ad network. Ad networks match advertisers with web publishers; that’s how ads from big nation brands sometimes show up on relatively small sites. However, your site needs to generate a lot of traffic before ad networks will consider it, so it’s not a good solution when you’re just getting started.

There are also affiliate programs, which typically pay you when a site visitor clicks through and makes a purchase. You can sign up for an affiliate network, such as or ClickBank, which then allows you to select from a wide range of affiliate programs to run on your website. The largest independent affiliate program is Amazon.com, which now offers a wide range of general merchandise in addition to books and music.

The key to making money with affiliate programs is to carefully match affiliate offers with your audience.

Finally, the holy grail of advertising is direct ad placements. With direct ad placements, you sell ad space directly to the advertiser. A big advantage is that you can often charge a premium rate if you’ve identified a good advertiser for your site. The disadvantage is that selling ad space takes a lot of work and skill.

Ad Models

Ad space is sold in several different ways:

CPM – CPM stands for Cost-Per-Mille (thousand) impressions. It’s the simplest ad model, and often favored by website operators because it gives you a predictable cash flow.

CPC – With the Cost-Per-Click model, the advertiser pays the publisher each time a visitor clicks the ad.

CPA – With the Cost-Per-Action model, the advertiser pays the publisher when the visitor goes to the advertiser’s site and performs an action (such as making a purchase). Affiliate programs are almost always CPA. The website publisher gets a small percentage of each sale when a site visitor goes to the advertiser’s site.

For the beginning publisher, it’s best to think of everything in terms of CPM. Over a period of time, you can figure out the “CPM equivalent” for your CPC and CPA ads. For example, if you show an affiliate ad 10,000 times, and the affiliate pays you $57, then the CPM equivalent rate is $57 / 10, or $5.70.

Typical Ad Rates

Some types of sites generate more revenue than others. A general audience website earns the least; more specialized sites earn more, especially if they target a high value market such as legal or medical services.

Depending on your market, you can expect your website to generate anywhere from $2 to $10 CPM. Remember, CPM stands for the cost per one thousand ad impressions. You can see that you’ll need to get a lot of traffic to make much money.

As we mentioned previously, you can often charge higher rates if you sell your ad space directly to advertisers that fit your site very well. Direct sales ad rates usually run three to five times the site’s ad rate for generic ad programs.

Conclusions

To generate the traffic you’ll need for an ad-supported website, you’ll need strong content and a geed SEO/SEM strategy.

Although few websites make enough money to be a full-time business, it’s fairly easy to generate a nice side income, especially if you operate multiple sites and learn the ins-and-outs of the major ad programs.

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