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  1. #1
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    Banner Farms Revisited. What's Your Take?
    Long ago in the dark ages of the internet, the concept of banner farm was born to describe a website that consisted of multiple banners for multiple merchants or offers. It was often disparaged. And so for the most part it died a slow death, slaugthered by 'text link' farms, 'content' and the promise of mega riches doing CPA thru commissioned sales and pay-per-click.

    Let us fast forward from those thrilling days of yesteryear to now.

    I was checking thru a site which has listing for ad space on a variety of websites ... it seems that the going rate for CPM on high traffic sites is somewhere in the $10 CPM range depending on size of the banner and placement. As the traffic quotient drops the rates drop but the floor for
    CPM looks to be in the $3 CPM range.

    Seems to me, CPM is way more profitable than CPA, especially if you have
    a solid generic listing on one or more highly searched pages in the big G. You plug 4 CPM banners at $3 CPM on a page, with some content and a CPA link and on a single page, you are golden.

    The aggregate return is $12 CPM. With 1,000 visitors per day to this one page, you make $360 per month plus any commissions you make from CPA. At 5,000 visitors per day, you have a solid part-time income.

    On the other hand, isn't Google just a huge 'text link' farm. We used to call these 'classified ads' in the advertising business. And isn't Adsense, just a way to display 'classified ads' for free with the hook being, if someone clicks on one of the ads, Google will pay you something for your trouble.

    Kind of reminds you of CPA doesn't it. So isn't CPA, just a banner farm in which the affiliate pays for the visitors and HOPES to make a profit from a
    sale or a click.

    When you do the math ... you find out some interesting things. $1/click is the same amount as $1,000 CPM in actual number of visitors to any of your webpages. That the actual cost per click is a function of the total number of impressions displaying your banner or text link.

    For example: If you pay $1/click and your ad is displayed 1,000 times and you get 5 click thrus, you are paying $5 CPM, if you get 10 click thrus you are paying $10 CPM.

    On the other hand if you reverse the numbers and you pay $10 CPM, and get 10 click thrus, you are also paying $1/clickthru. However, if you get 100 click thrus, you are only paying TEN CENTS per click thru.

    So it seems to me, that what matters is the ability of your ad to generate a click, not what you pay for the click or for impressions. If you generate a 5% CTR for an ad and you display it 1,000 times, you get 50 click thrus.

    And the REAL BIG question is how much revenue do you make from 50 click thrus versus how much does it cost you in total per click you get.

    Seems to me, this whole exercise of affiliate marketing is a game of smoke and mirrors, in which the real way you score is arbitrage traffic, no matter how you describe it.

    If you go check out the mega traffic sites you find that if you want to buy an ad, you have to pay a high CPM rate. And if you are not Google, it is highly unlikely you can buy a per click deal. And if you want to get laughed at, ask about CPA rates.

    And you will even get a bigger laugh, if you talk about quality of traffic.

    Okay so what's your take. Do you think there is a way to compete with Google but without using a search engine model? Got any ideas? Inquiring minds want to know.

  2. #2
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Easy. Just consider any scheme for paid traffic will never equal the profits of natural SERP or direct type in traffic if your product converts. The most important fact to know about your web site over time is it's NATURAL CONVERSION RATIO. The average number of clicks from ALL traffic sources to produce one sale.

    If that natural conversion ratio is 1/100 or better... then you have an ebusiness. If it's 1/50 then you have both a ebusiness and great product ecatlog. If it's 1/20, or better, then kiss your webmaster monthly with constant raises as you don't have to buy any traffic to profit from the growth of the internet.
    Webmaster's... Mike and Charlie

    "What have you done today to put real value into a referral click...from a shoppers viewpoint!"

  3. #3
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    Druid wrote: > . . . it seems that the going rate for CPM on high traffic sites is somewhere in the $10 CPM range . . . the floor for
    CPM looks to be in the $3 CPM range. . . . You plug 4 CPM banners at $3 CPM on a page, with some content and a CPA link . . . . The aggregate return is $12 CPM.
    " <

    The flaw in your logic is the assumption that there is a "floor" for banner CPM rates; there is not. If you knock out the top 50 web portal sites, I'd estimate that the overall average CPM rate for banners is closer to $0.10 (yes, that's ten cents per 1,000 adviews -- and that is an aggregation of ALL earning sources for a page, not per banner shown).

    Sites that demand $5 or $10 CPM often have substantial amounts of unsold inventory, which they fill with CPC-based ads, house ads, and sometimes unpaid ads promoting top-tier advertisers (to create the false impression that those top-tier advertisers are paying the site for advertising).

    Your other math confuses me, because you seem to be intermingling money "paid" with money "earned." A CPC rate of $1 per click is NOT the same as $1,000 CPM -- a CPC ad paying $1 per click with a 2% clickthrough rate would earn $20 CPM. If you pay $1 per click for traffic to your site, you would indeed pay $1,000 per 1,000 visitors to your site; if you charged $5 CPC for advertising on your site, and you netted an incredible 10% clickthrough ratio, you'd still earn only $500 in revenue, meaning you'd lose $500 net for every 1,000 visitors.

    In 1999, I operated a content site that was able to earn more than $10,000 per month from about ~3,000 unique visitors per day, and for some pages I had advertisers fighting each other for the right to pay me $110 CPM. That was a solid content site with highly-focused visitors. If I could replicate that today, I would -- but I don't think I can do so.

  4. #4
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    Those Were The Days My Friend.
    We Thought They'd Never End ... but they did.

    I doubt the floor is anywhere near $.10 CPM if you factor in REAL
    websites and factor out sites with minimal interest in anything but
    bad business opportunities And there are many more than 50 sites
    with what is basically mega traffic.

    How much you bring in, how much you spend and how much you
    actually get to keep are always floating numbers depending on the
    times and the competition.

    The math is about cost per visitor ... if it costs you $1 for the visitor,
    it also costs you $1,000 CPM when rendered in actual visitors.

    On the other hand would you buy TEN CENT CPM? And the answer
    depends on what you make in return. Would you sell TEN CENT CPM?
    Same answer. It depends. The only problem with the low priced CPM
    is the buyers are all pretty much broke to begin with and can't come
    up with the money to buy 10 million impressions and pay upfront.

    But that is why they have eBay. Post a Dutch auction for 1 million impressions and see what people will actually pay for the traffic to be
    one of the four highest bidders.

    Another thing people always forget is that if you count the ads on a
    single screen when you call up a search, you usually find 8 sponsored
    links and 8 generic links. So each Google page generates 16 impression
    per actual page view and the natural odds of your ad getting a click
    thru is 1/17 ... got to count the back button as it is in play.

    So if the minimum cost of a click on Google is 5 cents, then based on
    the 1 in 17 click options per page, Google is selling CPM for about $3 per page. As the click values go up so too does the CPM across the page.

    If the actual click thru generates $1 to Google because only $1 and above
    ads are shown then the aggregate, natrual CPM for that page is $58.82.
    In reality it could be more or it could be less, but that number is base valuation number.

  5. #5
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    Did You Get That Insight From Charlie?
    Mike,

    Absolutely true, but that assumes that there is something called a search engine to make it possible for you to get SERP traffic or someplace where people can learn what your URL actually is, so they can type it in.

    So why should a search engine make it possible for you to get free traffic or advertise your site?

    I want some FREE lunch too.

  6. #6
    MasterMike HardwareGeek's Avatar
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    10 buck CPM is kind of low, I have seen for my site CPM rates as high as 200 dollars. WOOHOOO

    I never seen a .10 CPM. but who knows maybe thats the going rate for a banner farm or a low traffic site.

    What idiot would accept that, I just looked at tribal fusion and there isn't even anything under .50 and those aren't even the high priority ads just the fillers as they call them.
    Last edited by HardwareGeek; July 4th, 2008 at 04:55 PM.

  7. #7
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Quote Originally Posted by Druid
    Mike,

    Absolutely true, but that assumes that there is something called a search engine to make it possible for you to get SERP traffic or someplace where people can learn what your URL actually is, so they can type it in.

    So why should a search engine make it possible for you to get free traffic or advertise your site?

    I want some FREE lunch too.
    9 years of stats show that regardless of traffic source the site converts at a steady 1 sale per 20 visitors come hell or high water. Just eliminate all junk traffic sources and smart sell some sites, whose base traffic is a good match for your products, and plant a CPM or slotting fee Ad or full promo page right there on a pre-pay basis. I've done it for 120.00 per year slotting fee and place a great SERP friendly page on the publishers site and draw in targeted traffic converting at 1 sale per every 12 clicks all year long.

    Reality bites when the site Stats, cart software and Google Analytics all show the absolute worse converting traffic to the site comes from Adwords clicks. Damn banner Ads get such a high CTR I just convience the merchant the whole "content campaigns" are just branding exercises. ( average Adwords content conversion ratio is a pathetic 1 sale per 200+ clicks ) The buyers exposed there just type in the URL to return and buy when ready so direct type in traffic converts at a 1 sale per every 4 visit basis. Smart merchant just limits monthly Adwords spend to around 400.00 except at Christmas and just before Fathers Day.

    Natural SERPs when placed opposite the Adwords sponsor text Ad generate 10 times more sales then the paid Ad. This rings true for any advertiser/merchant. Searchers trust the natural SERP way more then the paid sponsor link. Unique product, not diluted by a bunch of price or incent hawking resellers or competitors, helps a bunch too.

    A few Naked slotted Ad spaces on buyer traffic related sites, jumps starts the PR and link pop without hurting the almighty conversion ratio. Then build some unique merchant satellite sites to both protect trademark domain names and cross linking or generating common cart sales.

    It's what I was forced to do as 17,000+ posts, bloody battles for ABW best practices, and being an Adwhore gunslinger with lot's of kills, has never netted me more then a handful of affiliates for my managed programs. So I do for the merchant just what I'd expect the affiliates recruits would do.... generate new business and double total sales every year.

    When done right Druid you can trick Super Affiliates, like Amazon or EBay, into spending their quarters to advertise your store with Adwords. Next thing you know the best buyer focusing Keywords show you have 4-7 of the top non-sponsor SERPs of the top 4 SE's page one. Then who cares if the searcher just sees the URL and direct types it to go to the site rather then click the SERP.
    Last edited by ecomcity; July 4th, 2008 at 06:20 PM.
    Webmaster's... Mike and Charlie

    "What have you done today to put real value into a referral click...from a shoppers viewpoint!"

  8. #8
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    Charlie Is Right Again, Except ...
    All the money on the net is generated in the second click from somewhere or from a typein where the URL was found somewhere before.

    It's the somewhere that you leave out of your equation

    So while natural SERPS rule ... you assume that they are FREE ... Getting on the first page of any Google page is not easy and what works today might not work tomorrow.

    There are two major problems that everyone on the net needs to overcome to do business.

    1.) You have to find a way to tell people you exist and what your URL is, so they can click on it or save it for later to be clicked on.

    2.) You have to get them to actually make the click or write in the URL.

    I agree 100% that all content, context ads, text ads are just branding exercises. But they can also generate incoming traffic too. Banner ads actually generate BETTER quality clicks for sure ... which is why display ads cost more in every media publication on the planet.

    The problem is they are usually incidental to the content. And there are too many of them since, the majority are just affiliate types shotgunning a bunch of merchants hoping for a sale.

    Slotting fees are a good idea but most people have to sell them and most affiliates are not good at selling much. The other thing, is what do you do with the slotting fee money you get ... do you buy more traffic or what. On the other hand, paying a slotting fee is usually an out of pocket expense, so most affiliates NEVER buy one.

    Here's a real world example before I got booted out of Adsense for some reason they would never tell me. I made niche pages ... with some lead in
    content copy about the niche. Then I put two 300x250 sized ad blocks right
    in the center of the page - making sure they were fully displayed above the fold and in the first screen. Then I put in some text with an inbedded link for one of the merchants I was affiliated with that was related to the page title. At the bottom of the page, I put a standard banner or leaderboard for a big name merchant as a possible out link. If it was a leaderboard, I put an Adsense standard banner beneath that one. If it was standard banner I put a Adsense leaderboard ad beneath that.

    My click thru rate to Adsense was somewhere in the 20% plus range to close to 50% for some categories. I was averaging $300 in profit plus per day and I was spending about $100 per day on secondary sources to get the traffic to all the pages. Page design was the key.

    But the pages with the longest history and the most bookmarks made the most profit. And they still do.

    But what is really strange is without Adsense on the pages, the two longest running pages, make more profit as a percentage of traffic. The total revenue is less, but the profit percentage is higher.

    In general, I think Leader said it best years ago. Content sucks, if you are trying to sell something. Find the people ready to buy now. They are interested in buying, not content.

    And the corrolary is this: get them to buy one time from you, provide a postive experience and you don't need no content other than telling them what the thing is, how much it costs and they will get it as fast as UPS can get it to them.

  9. #9
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Wow Druid you get it from an affiliate standpoint. Pick on a merchant who has a great product but no time, web space or product passion to showcase it. Make a promo page and funnel the targeted focused traffic to the merchants "add to cart" page.

    Rinse and repeat. If I wanted "lookie loo" traffic I'd make a banner that generates a 25% CTR and pay a flat fee to stick it somewhere that gets general traffic. Problem then is that dilutes the merchant's site conversion ratio sucking up the content wiht little chance of a sale.

    SAMPLE high CTR banner:
    Webmaster's... Mike and Charlie

    "What have you done today to put real value into a referral click...from a shoppers viewpoint!"

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