Online Advertising for Indie Publishers: Banners Alone Won’t Pay the Bills

Online Advertising for Indie Publishers: Banners Alone Won’t Pay the Bills

Yes, I know the title of this post is a big duh for many of you. But this epic post has been in the hopper for a very long time. Warning: marketing-speak ahead.

I haven’t really gone into this much in the past on because it’s loaded as hell and to get the research right takes a very long time. There are many sources, many false avenues and many nuggets of lovely and painful truths. I recognize that many of you may already know far more than I do about these topics and I’m hoping that you’ll opt to share what you know and correct any of my errors. Thanks in advance for your patience and any help you give.

TL;DR: Content is undervalued. Online advertising needs an overhaul. Numbers are good to know whether you are a marketer, brand or publisher. Indie publishers will have to start to embrace big brands with deep pockets and big brands with deep pockets will need to embrace smaller sites.

Onward (I’m excerpting this on the homepage because it is brutally long. BRUTALLY. Sorry. I had a lot to say, apparently).


Online ad spending is up year over year!

Chart from the Pew Research Center. Money money money.

This is something that has been shouted out nearly every year since online advertising has been around. The problem? Facebook, Google and the rest of the top five sites[1. Google, Microsoft, Facebook, Yahoo, AOL. See linked eMarketer slideshare presentation in footnote 2. This does not match the top 5 according to Quantcast.] account for “about” 50% of the $12.4 billion (in 2011) spent advertising online.[2. Online advertising over all shot up 23% in 2011 compared to 2010. While search continues to grow and will remain the largest kind of online advertising for the foreseeable future, display ad revenue is growing as well. Display ads generated $12.4 billion in 2011, up 24% from the year before, according to eMarketer:

Much of the growth in display advertising came from banner ads, the largest segment of ads within display, which grew 22% in 2011. But this isn’t all good for news. Five of the big tech companies now account for about half of all display ad revenue, with Facebook one of the big news players. These same companies account for 68% of all online advertising. Source: The Pew Research Center’s Project for Excellence in Journalism, The State of the News Media 2012] The most lucrative for publishers to run on their sites, if lucrative can be used without laughing, are display ads. These are graphic ads that appear on just about every site on the internet. These are the ads that can slow a site down and the ads that in order to avoid, people install ad blocking software in their browser. These are the kinds of ads that I run here as an exercise in very meager revenue generation.

Exercise: Using Wolfram Alpha, I was able to show how much a site like mine might make in a year using only ad banners as a source of revenue with the going CPM (Cost per thousand impressions) rate of $0.50/CPM. That’s 50 cents for every 1,000 times an ad is shown. You can see the extended numbers by clicking here. Some more popular sites can command a higher CPM, but for most sites without a dedicated sales force or a site that is not partnered with a publisher-centric ad network, $0.50 – $1.00 CPM is the going rate. If you click the link above, you can enter in different CPM values and impression rates and see what it would take to make bank using only ad banners as a revenue source. NOTE: In the existing link, if a site gets one impression a second, that’s 86,400 impressions a day. With that many impressions, a site owner would likely attract an ad partner and the CPM rates would rise. Let’s do a more realistic calculation of a campaign might be measured and paid. Let’s cut the impression rate to 1 impression every two seconds. That’s still not shabby traffic at 43,200 impressions a day. But at a $0.50 CPM rate? Revenue would be under the poverty level in the US. It’s sobering. To be realistic, here’s the same impression rate, but with a $1.00 CPM ($15,768 a year, $1.80/hour), $2.00 CPM ($31,536 a year $3.60/hour) and $3.00 CPM ($47,304, $5.40/hour). Bear in mind that those hourly rates are for all 24 hours, so you have to look at the yearly number to get close to a comparable value to a traditional job salary. I haven’t factored in other costs like a computer or hosting just to demonstrate my point. Now ask yourself why you are seeing so many sponsored posts on blogs. Ask yourself why sites like eHow, About, Huffington Post and others seem so insane with their content strategies. Ask yourself how much you value the content you get for free every day. I do this just about every time I click a link or type a URL. Free is awesome. But free doesn’t pay the bills.

My answer to the above questions: Online display advertising and the content it runs next to is and has been, for the entire life of the world wide web, horribly under valued. The blame can be spread across a number of strategies, processes and ways in which display ads are sold, trafficked and paid. There is not a single point in the process that can be faulted. It’s a giant mess.

There’s a big part of me that feels like when the first banner ads started running, the wrong marketing model was chosen. The one that was chosen is called direct response. This is the same category of marketing where anything with an offer is grouped. Here are the other ways to define direct response. Smarter people than I have written about this. This is not good for content creators. Direct response is typically considered a lower tiered and lower priced type of marketing activity. So the high value ads that you see on TV (think Super Bowl ads, every ad you’ve ever seen that you thought was funny or interesting or controversial) are very rare on the internet. These higher valued marketing activities are typical referred to as brand advertising where the ads are about the emotional relationship you have with a brand/product or product line. These are higher concept in execution and creatives at agencies vie to land brand work based on this fact. I say this generally; there are some very creative direct response creative executions out there. I won a local Addy in Salt Lake City in the late 90s for some direct B2B work I did as a freelancer. My relationship with direct response is personal on the creative side. It’s also personal based on my experience in online publishing.

My feeling that the wrong model was chosen is due to the emphasis on the technical aspect of online display ads. You can track all kinds of analytics about what happened to that banner, where it ran, who clicked it, where they clicked on the banner, etc. I think it was over then; that the whole notion of online advertising was doomed from that moment. It’s interesting to see this played out not just in terms of independent publishing but serious news organizations who at one time were profitable and have millions of pageviews, but are struggling to make money online. To be fair, people are giving content away for free. That is a losing proposition ultimately. It is a sad truth, but the longer I’m in this space the more I feel that if you want to make money doing things online you have to charge a subscription or you have to partner with people who have deep pockets and come up with interesting marketing ideas as a publisher and find a partner to help you sell those ideas to potential advertisers. Both are fraught with pitfalls and terrors. There’s no easy way for independent publisher to offer subscriptions or to do something similar to what the New York Times has recently done with their digital content. I’ve watched that experiment and have been heartened by the reports of how many people are subscribing digitally as well as what that is meant to the Times’ income. I think it also speaks well to how they treat their readers and how they value their content.

As a comparison, The Wall Street Journal has, from way back, charged is a subscription fee to access their content online. I believe they do something similar to the New York Times regarding inbound links. If you click a WSJ link from somewhere else into in to one of their stories, you’re able to read that story but if you view links in more than a few times over a set period of time, you are encouraged to become a subscriber and blocked from viewing the article.

The technology, as of this writing, to offer subscriptions and have semi-walled gardens of content is complex and too involved for a single person entity to offer to readers. So there are really only a couple of ways to make money by publishing content onine; generate millions of pageviews and run low CPM ads or come up with interesting sponsorship ideas and pitch them to brands or ad firms and hope they sell. The latter is next to impossible without some major traffic or affiliating yourself with a group of sites or an ad network/partner to help you sell.

There’s a lot of grief right now towards independent publishers who partner with brands. Particularly midsize publishers. Midsize publishers have a good pageview counts. But the declining CPM for banners means that relying on the banner ad for all revenue is not sustainable. Income has to come from somewhere else. That means sponsored content, that means sponsored sections, sponsored subsites and/or many sponsored sites around an editorial topic. It also means aggressive SEO, link bait headlines and multi-page slideshows and stories.

Which brings us, at long last, to the panel I was on three weeks ago at Dad 2.0. This post from Just Add Father is a good start. This is going to be long and circuitous, so bear with me.


On the panel and at the conference, there was a lot of talk around numbers and what those numbers mean. I brought up that publisher tools are lacking in terms of providing meaningful numbers to publishers. By that I mean numbers which are not just rudimentary analytics; not only pageviews and referrers that tell a publisher where people are coming from, but analytics that give more immediate insight into kinds of content that resonates with my audience. I want to know the answer to these questions:

  • Over time, what does my audience respond to in a measurable way?
  • Is there a set time of day that site visitors arrive?
  • A best time to publish content?
  • Do my readers have interests that I may not be aware of, but I could lend my voice in a compelling way?

We discussed comment counts, Facebook likes, re-tweets, reputation scoring (Klout, Disqus) or shares might give some indication but those are crude measurements of intent. Most site visitors do not leave comments. Most site visitors do not click social or share buttons (Likes, etc.). Maybe publishers need something like a private, content score that lives behind the admin wall and allows a publisher at a glance to see what people are responding to today, this week, etc.

And this one of the indicators of where we are in the digital marketing space—we are trying to measure intent. We want to know who clicked what when but we also want to know why and what happened next. How engaged are people? Did they do something we hoped they would do? It’s difficult to put meaning behind those clicks.

It always will be. From a publisher standpoint, if enough one-off clicks start to aggregate around particular pieces of content, then we, as publishers, can begin to see what resonates with our readers. We can then have a conversation with brands, advertisers, agencies and media buyers around this data. While the social & share buttons are crude measures of intent, they are a first mass step toward understanding what kind of content site visitors respond.

The other side of this conversation is that from a brand perspective how do you engage people in a meaningful way that isn’t crass or cloying or seen as too controlling? If you’re in charge of a very large brand with a good brand reputation, it’s much more difficult to find quality content that you want your brand to be associated with. The larger you are, the more difficult it becomes. As part of this problem, many big brands become publishers themselves. There are pitfalls in that approach. From the panel and the conference in general I think the blogging space, in terms of sites published by women, has matured in that regard. We men have a way to go. I should add that if online ad rates don’t climb up for all publishers, the idea of a blog as business becomes less tenable.

Specific to the Dad 2.0 Summit: the online space for male independent publishers who write about fatherhood is not mature enough yet to give them real money. By real money, I mean make-this-my-job money. I mean real money that can make me an entrepreneur and not just publish what I want to publish about myself or topic areas that interest me, but also to enable one to become self-sufficient and have it be considered a viable endeavor.

I always like talking with numbers people because so much of what is done online is based around numbers. I’m coming at it from the opposite angle and their insights, observations and activities around selling based on these numbers is fascinating to me.

A lot of the issues around publisher perspectives and the problems therein are that there is a persistence in the digital and online space of the magazine model where when you subscribe to a magazine you give publishers some information and then the magazine amassed this subscriber data to give them insight to then sell to marketers and advertisers about who reads their pubilcation(s). So subscriber base information sales is a third revenue stream for magazine publishers that is lost online. Advertisers themselves can get that information without the publisher.

During the panel, it became clear to me that there is a continuum of data between advertisers, publishers and readers. Where the balance is of what kinds of data, how it is used and how it is given will be a hot topic for years to come. Retailers want to provide you an experience that is more personal, e.g. But in order for the personalization to happen, as readers we have to surrender some information. Some of us are more comfortable with this than others.

One thing I always note when talking with analytics/numbers people is that there is a clinical detachment around the numbers. Which is where publishers have an extra duty to their readers. I don’t want to sell out my readers to make a buck. That’s a doomed strategy. And I believe it’s one of the reasons that so many browser extensions exist to nuke Flash, hide ads and allow people to get to the content they want without interference.

I can’t remember if I brought up The Deck on my panel, but this network runs small ads that are tasteful, unintrusive and are less about pageviews than about influence. The Deck is all about engagement. It’s flat pricing, sales language—”Cost Per Influence”, relevant placement of targeted ads seems to be a great value for advertisers. Yes, they count impressions, but the critical difference is that they don’t sell based on impressions. I think this controlled distribution model of vetted sites and advertisers is one of the best things to happen to online advertising. I don’t know how people feel about this network from the media & agency side, or if agencies and media buyers are even involved in negotiations. Massive brands like to feel good about their media placements. I don’t think that’s necessarily where The Deck lives, getting massive brands to advertise and I don’t think it has to. Sure, some of P&Gs billions would be great to have, but what products would fit the specialized audience? My answer: everybody does laundry. Everybody poops. More specifically, creatives use cameras, trackpads, mice that require batteries. Why isn’t Duracell on The Deck? They should be.

To be fair, large brands usually have insane levels of advertising red tape just to get pitched. It can be a huge process just to get in the door at one of the brands. Which is another area for discussion for another day.

In short: The Deck is a great example of advertising done with finesse and consideration of all parties. I’m not saying this for any reason other than I love the approach, the model and I think there is a big future for these specialized, independent networks.

* * *

My key learnings and take away points from the panel:

  • I learned a lot about how the analytics folks think of numbers and how they pitch and talk to their clients based on numbers.
  • Many people erroneously believe that a high page count is the only factor in how brands want to engage with an audience.
  • There is a kind of paradox, though. Most media buyers and campaign planners are looking for influencers. Yet it’s not necessarily about audience size. It’s more about what that influencer says and does it move people to act? That’s the most important thing.
  • Things start to unravel a bit as the social campaigns (blogs, YouTube, Facebook, Twitter, etc.) need to be sold up the management chain. This is changing, but traditional terms and metrics are still reported, even though the idea was pitched and sold as more of an engagement campaign[3. Rather than looking at consumers as passive receivers of messages, engagement marketers believe that consumers should be actively involved in the production and co-creation of marketing programs, developing a relationship with the brand. — source, Wikipedia].
  • Big Numbers are not going away.
  • Publisher tools will make a dramatic step forward. This was welcome news, as most indie publishers don’t have access to the kind of analytics that would help them better understand and engage their audience.
  • While brands want to make a connection with people, they are using data to drive things like real-time delivery, proper contextual placement (both site and content) and of ads.


It was good to see some very large brands at the Dad 2.0 Summit. I wished I’d taken a lot more time to interact with folks. I tried to find quiet times to talk (Honda, LEGO, XBox), but I’m still in ramp up mode for blurbomat, so I’m a tad reticent to reach out. While my traffic has increased over the past few months, it’s not enough for ads alone. I’ll need to look at sponsored activities and when I feel I’m delivering solidly on regular content—I think I’m getting there with photos, but I need to post a lot more writing—I’ll start talking with brands.

The early promise of the Internet was that it would be democratizing institution. You just need to have a computer that way to get online. Ubiquitous and free blogging software has made it so that virtually anybody can publish. Advertising tools exist so that anybody can put ads on a site and not have to worry about any of the stuff I’m talking about in terms of providing advertisers with analytics or having to sell ads. However that ease comes at a cost. Rates for advertising online have had a downward trajectory from day one. There has been certain periods of time, across the continuum, where ad rates for new ad products start high but over time, diminish. This is not good for online publishing. I would argue that it’s not good for the brands because of the perceived lower value of display ads on websites. I think the brands have clearly noticed, and this is why there’s a push by brands into the independent and personal publishing to provide sponsored content and more unique marketing opportunities.

Thanks for reading and if you’ve made it this far, you are a saint.


I dictated most of this into Day One using my iPhone. If there are strange usage patterns and odd sentence constructions, let me know. I’ve tried to proof this the best I could, but I’m not used to proofing a 3,500 word post. I know that sounds like a cop out. It is.