Ask HN: Estimating Ad Revenue
Hey guys, I'm currently in the process of doing some revenue estimates and I was wondering if there are an good resources I could leverage?
Thanks!
Thanks!
Are you planning on direct sales or remnant advertising? Early on you'll likely be only leveraging remnant advertising since direct sales requires a large sales team or sales rep firms.
The next question is how much of your traffic is expected to be US vs international. US traffic still has some value, versus most international countries (outside of a few top markets like UK, Canada, etc) have very little online ad spend. Take a look at the following data of internet ad spend per capita in top countries to help scale revenue projections depending on expected country traffic:
http://spreadsheets.google.com/pub?key=pGQagieY9vfGVnTGpCmbg...
You'll next want to calculate number of impressions you expect on a daily or monthly basis. Just take expected growth rates for unique visitors and come up with some realistic estimates of page views per visit and number of ads per page.
Then take a look at this recent PubMatic report to get some estimates on average remnant advertising CPMs for multiple verticals:
Just learn these key phrases (CPM, CPC, eCPM) and then, do google searches from there. You would want to do a bottoms up analysis (for every one active user, I get 12 pageviews, each 1K pageviews serves 50 cents). Then you just graph it out.
Your best bet would be to find out how much traffic you're getting each month and attempt to privately sell ads. You can get much higher CPM if you sell private ads versus going through Google.
So, basically you go, sign up (best spent 15 bucks, ever), start a new compaign, and type in a web site with similar content to the one you're about to build; select all collected keywords, which are related to your venture, and behold the traffic estimator. Two points of data are of interest for you here: estimated avg CPC, and estimated clicks/ day; the first one will tell you how much you would earn _relatively_ to other keywords (remember, G takes a cut); the other will tell you how much of a niche you are.
#2: fail fast: you actually go out, and build a stub of your grand vision, stick up the ad network of your choice (it's always best to shop around), and measure it. You'll get much better data, than any other method -both from ad networks, and as market research (whether people would actually use your stuff) Good luck.
Number of users * avg page views a day = total page views/1000 = inventory. Then do a % of your inventory of sold as CPM * a CPM rate. Next do a % of your inventory sold as CPC * a CPM rate. Then can ad affiliate marketing % and so on.
Build all that as a spreadsheet and you can play with all the numbers with all the numbers as you do research in your space as mentioned on previous comments.
1. The market you're in 2. The profile of your visitors 3. The degree to which you're engaging them 4. The kinds of products/services being advertised
CPM rates vary massively with sector. Try it out and see what sort of rates you get, I don't think you can estimate these sorts of things well.
I run a 'free stuff and competition' website, and that typically gets $5-$10cpm. For a finance or gambling site, probably multiply that by 10. For a social network site probably divide by 10-20.
Also remember adsense is only one form of advertising, which works well on some sites, not so well on others. You can often get better payouts going for per lead or per sale affiliate programs.
I agree, the original question is extremely vague, and hints at some naivety... If the revenue estimates are for a business plan, or to show investors, may be best for him to step away from the computer and stop now.