What Are Typical Ad Rates?

By | March 9, 2016
 

Short answer: $1.80 per 1,000 views if you don’t care who will be seeing the ad.

Better answer: There are several ways any online channel or service can make revenue, but advertising – placing client messaging in and around site content – is pretty standard. There are many flavors of such ads, ranging from obvious display units (most commonly unseen due to adblockers), to advertorial and native advertising (brand-targeted paid messages mixed into site content); contextual links and “elsewhere on the web” recommandations (more ads posing as site content); and so forth and so on.

Ads may be sold directly by an online publisher (either as specific targeted placements, section sponsorships or custom solutions), but most ads come through ad networks that bid on publishers’ open inventory (unsold ad space) and essentially resell those ad positions to businesses and agencies. The network offering the highest bid to the publisher gets the space for certain hours of the day, or to users in specific geographical locations, or users matching some other sort of traceable criteria (ages, gender, past browsing habits all held in tracking cookies).

Doubleclick, Ad Exchange, Tribal Fusion, OpenX, Sharethrough, Komoona and Google AdSense are among the better known ad networks around these days.

More info:
https://en.wikipedia.org/wiki/Advertising_network#Types_of_ad_networks
https://en.wikipedia.org/wiki/List_of_advertising_networks

OK, so… What kind of money are we talking about here? Rates are measured by CPM, which stands for “cost per impression” — how much an advertiser is charged each time a specific ad message appears to a user, or put more mathematically, cost per 1,000 users. (The “M” in “CPM” is the Roman numeral for 1,000.)

Click to watch a video that has a 15-second commercial run before the clip plays? That’s one impression.

Visit a webpage has three display ads show off to the side of the content text and photos? That’s three impressions.

AllBusiness.com has a nice summary at https://www.allbusiness.com/web-advertising-and-cpm-a-quick-guide-for-small-businesses-2646-1.html regarding CPC versus CPA versus CPM…

CPC refers to “cost per click” and means you pay for each click your ad receives. If you are spending $1 for each click, then 10 clicks will cost you $10.

CPA refers to “cost per acquisition” and means you pay only when the click actually turns into a sale. This form of measurement is most commonly used in affiliate marketing.

CPM refers to “cost per thousand impressions.” An impression is a single instance of an ad appearing on a website.

You can calculate CPC fairly easily: If you spend $1 to get 1,000 impressions ($1 CPM) and you get 10 clicks (effective 1 percent CTR), then you paid $1 CPM and received a $0.10 CPC.

According to http://monetizepros.com/display-advertising/average-cpm-rates/ and other sites, estimates on the average CPM in 2015 for U.S.-based online properties look like this:

  • Site Display Ads (300×250) … $2.80
  • Site Banner Ads … $0.30
  • Facebook Banners … $2.00
  • Site Video Ads … $3.00 to $24.60 (depending on target)
  • Site Interstitial Ads … $1.80
  • Mobile Video Ads … $6.30
  • Mobile Interstitials … $5.00
  • Mobile Banners … $1.00
  • Email Ads … $5.00
  • Search Engine keyword text ads … $4.00 to $20.00

In comparison to traditional broadcast property ad commercial rates (varies by size of market, reach and ratings of station)…

  • Local radio spot (targeting adult age 25-54) … $50.00 to $100.00
  • Local TV station spot (outside primetime) … $10.00 to $30.00
  • Local TV station spot (popular primetime) … $35.00 to $50.00
  • National network TV 30-second spot … $2.6 million
  • National TV 30-second spot during CBS broadcast of Super Bowl 50 … $5 million

Other media (varies A LOT by brand and target)…

  • Direct mail … $26.50
  • Print magazine … $8.00 to $20.00
  • Billboards … $4.00 to $20.00

Newspapers vary by several factors (size and shape of ad, zone of distribution, color versus no color, weekday versus Sunday/holiday). Here’s a copy of the rate card used by the Minneapolis Star Tribune for basic retail rates:

StarTribuneRetail.pdf (March 2016)

Comparing CPMs between online buys, broadcast and print is a bit murky, but this Demand Media piece (via Houston Chronicle website at http://smallbusiness.chron.com/calculate-cpm-television-63243.html) is a good summary:

Ratings Are Everything

The best way to get an accurate CPM for a television advertisement is to know how good the ratings are of the television show with which your ad plays. Nielsen ratings are the golden standard for estimating the popularity of a television show. The average for a network series is 11 percent of the television-owning American population, which is estimated to be 94 million households, according to the Museum of Broadcast Communications. That means a show with ratings of 11 percent reaches 10.3 million people. The more popular a show is, the more expensive advertising around it will be. A less-expensive example would be a show that is seen by 5 million people.

The Equation

If your ad is featured next to an average television show that garners 5 million viewers, then you can use that figure to determine your CPM when you compare it to the price of advertising. First, divide the viewer number by 1,000, since you are calculating the cost of one thousand viewers. The amount you are working with now is 5,000. If you buy a single thirty-second advertising slot for $10,000, then divide that price by 5,000 for a CPM of $2. This is the cost per 1,000 people if you buy $10,000 of ad time during a show that gets 5 million viewers.

Sources:
http://monetizepros.com/display-advertising/average-cpm-rates/
http://smallbusiness.chron.com/calculate-cpm-television-63243.html
http://smallbusiness.chron.com/typical-cpm-74763.html


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