How Display Ad CPM Rates are measured

Introduction

Display ads are a primary source of revenue for many websites, including both very large and very small properties. Because it’s so easy to activate, this revenue stream is one of the most popular options for smaller sites looking to gain traction. And because it’s so easy to scale, it’s used widely by sites with millions of monthly unique visitors as well. This page presents data on the average CPMs that can be expected from running display ads on a site. For reasons we will discuss below, determining the average CPM (or RPM) for display ads is incredibly challenging. Performance depends on a number of different factors, including the niche of the site and the specifics of the ad units employed. Despite these challenges, we’ve scoured the Web for reliable sources for benchmark figures on display ad CPMs. These sources, which were used to compile the data in the above table, are highlighted in detail below.

RPM vs. CPM

The distinction is pretty straightforward: CPM refers to the cost of purchasing 1,000 ad impressions, while RPM refers to the revenue generated from serving 1,000 ad units (or from serving 1,000 pages–more on this distinction below). In many cases, these metrics will be almost identical; what the advertiser pays is what the publisher gets. But in many instances, there’s a very large discrepancy between the two for a number of reasons. The largest (and most obvious) is networks. For publishers who don’t sell their ads directly but instead use a third party such as Google AdSense to monetize, the fee paid by the advertiser (CPM) gets split into two parts: publisher revenue (RPM) and the network fee.

Display Ads 101

Determining an average CPM for display ads is challenging in part because of the large number of terms that fall under this term. “Display advertising” is a very broad umbrella, covering a number of different types, sizes, and styles of online advertisements.

• Different Types. There are very different types of display ads. Many averages include text ads, which tend to cost less than traditional banner ads. There are also different types of image-based ads, including rich media ads and ads that show video.
• Different Sizes. Even among the “traditional” banner display ads, there are a number of options. For example, the CPM earned for a 300×250 rectangle may be different than the CPM earned by a 728×90 leaderboard.
• Different Locations. The position of an ad on the page will have a major impact on CPM, and make it difficult to determine an average. For example, a 300×250 ad placed above the fold will have a much higher CPM than an identical ad placed near the bottom of a page.
• Different Audiences. Most Internet traffic is relatively worthless; if your site has an extremely broad audience, it will be tough for networks to serve up relevant advertisements, which results in low click rates and low CPMs. But if you have a valuable, targeted audience–for example, if your site has a high concentration of new mothers–it becomes possible for advertisers to serve much more targeted and effective messaging.

It’s also important to distinguish between ad unit RPM and page RPM. The relationship is very simple: the RPM for a page is simply the sum of the RPMs for the individual ads on that page. But confusing the two can lead to a major misunderstanding of the revenue opportunity. If an average ad unit RPM is $2.00, a Web page that incorporates three ad units would have an overall RPM of $6.00. The law of diminishing returns obviously comes in to play here; the average RPM for an ad unit can’t stay constant as more and more units are added to a page.

Source #1: Quarterly Turn Report

• Source: Turn Global Audience Report, Q3 2013
• Referenced Average CPM Rate: $1.28
• Used in MonetizePros Aggregation Calculations: Yes

In a data-filled quarterly report, Turn indicated an average CPM of  $1.28 for display ads, up from $1.22 in the second quarter of the year. It is interesting to note that CPMs tend to be concentrated towards the lower end of the range; more than half of ads have CPMs of less than $0.80 and close to 20% fetch less than $0.10:The CPMs referenced here reflect the cost paid by advertisers to run a single ad unit. In other words, these figures do not take into account any cut taken by networks.

Source #2: Forrester Report

• Source: Forrester Digital Media Buying Forecast 2012-2017
• Referenced Average CPM Rate: $2.66
• Used in MonetizePros Aggregation Calculations: Yes

In its annual Digital Media Buying forecast for 2012, Forrester compiled survey results from more than 200 professionals to conclude that CPMs would rise from $2.66 in 2012 to $4.68 by 2017. This figure includes text ads, as well as banners, rich media, and video. Although this eCPM estimate is a bit dated and includes various types of media, we did include it in our estimate.

Source #3: Hochman Consultants

• Source: Hochman Consultants Data, through 2013
• Referenced Average CPM Rate: $4.70
• Used in MonetizePros Aggregation Calculations: Yes

This piece of data comes from Hochman Consultants, a search and Internet marketing firm that helps clients buy media online. They’ve aggregated data from about 50 clients for the past nine years. Though it’s a small sample size, it’s very interesting and valuable data:

The most relevant piece of data here is the average CPM; this reflects what the clients paid during the year. While a group of 50 or so advertisers is relatively small, over the course of a full year even modest budgets would buy hundreds of millions of ad impressions. There are a few items to note:

• This data includes both ads placed in search results and those placed on the Google Content Network (i.e., on publisher sites). The cost of ads on search results page can vary significantly, and can be very high for certain valuable keywords.
• This data reflects the CPM paid by the advertisers. AdSense takes a 32% cut for ads served through AdSense, meaning that this translates into about $3.20 for the publishers of the sites where these ads appeared.

Source #4: BuySellAds

• Source: BuySellAds, as of May 2014
• Referenced Average CPM Rate: $2.58
• Used in MonetizePros Aggregation Calculations: Yes

BuySellAds is a marketplace where advertisers and publishers can come together to create display ad campaigns. Publishers can list their inventory on this site, creating a centralized location for advertisers to browse available inventory. In order to come up with an estimate of an average rate, we examined the “top performing” ad units on the site, including those that were sold out. We compiled a list of ad units that were both:

• An IAB standard unit (i.e., 728×90, 300×250, 160×600, or 300×600); and
• Positioned above the fold.

We reviewed the 50 highest rated ad units that met these criteria and came up with the following metrics:

• Low: $0.30
• Average: $2.58
• Median: $2.00
• High: $10.00

These figures represent single ad unit RPMs; they do not take into account the cut taken by the marketplace in exchange for their services. In other words, the net amount earned by the publishers will be quite a bit lower. It’s also worth noting that the huge range present in CPMs exists here as well; even among the very top performers on this site, the highest CPM was more than 30x the lowest. A partial list of ad options considered is presented below:

Methodology

Since the sources above do not use a consistent methodology, date range, or system, please note that the MonetizePros aggregated values are calculated via an inexact science. I.e., there is some napkin math here; we do however make an effort to be as transparent as possible, and thus our methodology notes are listed below.

• We considered all of the sources above in our estimation of an average CPM. Though there are limitations to each of these data points, there is a scarcity of accurate data related to average display ad RPMs.
• We calculated the CPM referenced above ($2.80) as a simple average of the data points collected here.
• This figure reflects the CPMs paid by advertisers for 1,000 ad impressions. The RPM realized by many publishers will be lower after considering the cut taken by ad networks.

Top 5 CPM Networks

A CPM Ad Network allows an advertiser to advertise to their network on a CPM (cost per mille) basis. From an advertiser’s perspective, this equates to how much you pay per 1000 impressions of your advertisement. The M stands for mille which is the latin word for thousand, not to be confused with million (although that would be nice for advertiser’s huh?)

CPM is great for branding and really getting your message out there. It is a campaign optimized for impressions as opposed to clicks. The same user may see your “message” multiple times. They may end up visiting (or revisiting) your site through the address bar (rather than by click) when your ad is properly branded using the optimized for CPM method of advertising. When someone converts into a sale or lead (etc) from just “viewing” an ad in this way, it is often referred to as a “view through” conversion.

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Most retargeting/remarketing ad agencies offer CPM pricing, but really any network that offers CPM pricing qualifies as a CPM Network. This includes Google and Facebook.

Below is a list of some of the most popular and top rated networks that offer CPM advertising.

1. Google AdWords

Yes, the PPC (pay per click) giant Google offers advertising on a CPM basis. Mostly this is used for running ads on Google’s Content (or Display) Network, and in some cases it is used for retargeting or remarketing.

Their Content Network could be looked at as simply: the sites that run Google AdSense ads.

2. Facebook Advertising

Facebook is a very popular ad network that lets you really pinpoint your audience.

With the expansion of the Facebook Power Editor you can really fine tune your ads and make massive changes quickly. You can convert 150 ads in a campaign, for example, to use the CPM advertising model rather than CPC in a matter of minutes. The time involved really is a matter of how fast your computer is because you download your campaigns to your computer with the Power Editor plugin, make mass edits quickly, wait for your PC to process them, then re-upload to make them live.

And with tools like Social Lead Freak you can grab all the Facebook users in specific groups and make custom audiences in the Power Editor to advertise to them. Plus if you want to split test CPC and CPM, you can duplicate an entire campaign and all its ads very quickly.

3. BuyAds

Buy Ads was put in place to avoid having to negotiate direct media buys manually. Sites will list their advertising slots, and advertisers will fill them, and BuyAds handles the “middle steps.”

As an advertiser, you start by typing in a keyword that relates to your niche, or you can pick from a list of categories, or featured ad opportunities.

For example, after typing in “raw food” I am given a list of sites that I can advertise on like: AllRecipes.com, iFoodTV, SeriousEats, and so on.

I am presented with the monthly uniques for the sites, and the starting CPM rate. At that point I can expand the details which defines the placements and rates with an “add to cart” button. Simple!

4. BuySellAds

Buy Sell Ads is very similar to BuyAds in that you fill pre-existing advertising slots.

This prevents the need to go to a web site directly to negotiate advertising. It’s easier and there’s much less “paperwork.”

But keep in mind that in some cases you can get cheaper rates going direct, but often it isn’t worth the extra hassle. The reason it might be cheaper is because some sites will jack up the CPM rate because they are losing a cut to the network. But they clearly don’t realize the benefit of having a built in advertiser traffic source, and plus it’s less paperwork for them as well.

So, rather than increase the CPM rates, they really should keep them the same and take the loss instead of making advertisers pay more. IMHO. I tend to boycott the sites that increase rates on networks.

I digress.

Buy Sell Ads has lots of options for any niche advertiser, including the ability to buy Tweets. So, if you want to send a Tweet out to Paris Hilton’s Twitter followers, you may, but be prepared to pay $4,600 per Tweet to her 11 million some odd followers. But don’t worry, most are much much cheaper. I found a couple in the $10 and $15 range with a quick glance.

With that said, while I like BuySellAds, BuyAds is much simpler to navigate and use, and has a much cleaner layout.

5. AdRoll

AdRoll is one of the more popular, and simple to use networks in the retargeting space. My past experience with them wasn’t the best but their platform has improved significantly in just the past year alone, and I am now a customer once again.

They allow you to advertise on their network of sites, which includes the Facebook Ad Exchange, on a CPM basis. This network is strictly for banner advertising, no text ads allowed. Since they are dealing with a large network, they are restricted on what you are allowed to advertise. Everything from the creative to the landing page will be scrutinized.

But you can cookie your audience along the sales funnel and remarket to them appropriately wherever they go, including back to Facebook.

The best Ad Network right now is Adstargets

Are Ad Servers Dedicated Only for Publisher or Advertiser Still Necessary?

Publisher ad server. Advertiser ad server. Does it really matter anymore?

As ad servers on both sides of the digital media aisle look to buy and sell, ad serving capabilities would, in theory, appear to be on the verge of merging - especially as demand-side platforms, sell-side platforms, and exchanges take over the delivery of real-time biddable ad impressions.

AdExchanger reached out to executives in the data-driven ad ecosystem and asked the following:

"Are Ad Servers Dedicated Only for Publisher or Advertiser Still Necessary?"

James Avery, CEO, Adzerk

"No. As a product guy it baffles me that they have continued as separate products for so long. The difference between a publisher side ad server and an advertiser side ad server is small enough that many small and medium size advertisers currently use publisher ad servers (especially the free ones). Adding to the pressure for these products to combine is that the modern ad network tends to be a half publisher and half advertiser - on any given day they might be optimizing the traffic that comes from their publishers or placing ad buys through the exchanges or through other publisher side ad servers. As publisher side ad servers continue to add the features that these networks and small advertisers are looking for the feature gap will close and advertiser side ad servers will start to see more and more competition from the publisher side ad servers."

Watch Our Story 

Sebastiaan Schepers, COO, BannerConnect

Today, yes. In the future… probably not. The rise of RTB changed the landscape; people now talk about “bidders” instead of ad servers. Many seem to forget about challenges like: scale, learning and prediction. The RTB landscape is also relatively young and it will take a while for it to mature and to have all the necessary tools to suit both buyers and sellers.

There are a couple of challenges, though:

• Premium: integrating features like mobile, video and rich media
• Data: managing data and making it ‘exchangeable’ should be as easy as managing campaigns
• Hands-on tech: many agencies and web publishers just don’t have the resources to spend on today’s hands-on tech marketplace. Outsourcing is still a big reason why for example SSP’s are successful.
• Attribution: many have tried, but few are successful when it comes to multi-channel attribution. We need to be able to account for all digital channels, not just display and search.

It's very likely that ultimately we'll serve ads dynamically across multiple screens (think of TV, outdoor, tablets) from just one platform. The term ad server will no longer do, so let’s give the investment firms a new acronym to jump onto."

Dean McRobie, CTO, annalect (Omnicom)

"Despite the current emergence of 'full stack' players (a la Google and Adobe) I believe publisher side ad servers are still incredibly relevant. I firmly believe that the best ad tech architecture, has to be open source, pluggable, and ideally best of breed. If the software world has taught us anything it's that open ecosystems innovate faster than big stacks."

Ben Kneen, Director of Ad Products, WebMD

"Maybe the same companies provide ad serving to both sides, but in terms of a dedicated product offering and client service organization, my answer is most definitely, yes. In my opinion, publishers and advertisers have fundamentally different requirements when it comes to ad serving, and will for the foreseeable future. Publishers have complex needs, for example, when it comes to targeting ads, reporting, and forecasting by their own inventory segments, usually at a much more granular level than they actually sell. Publishers are also much more focused on latency, since so many assets today are ad served on their pages, beyond just your standard display units. The advertiser challenge on the other hand seems more focused on creative and campaign performance measurements.

To me, these seem like very different needs, even if both sides rely on some of the same technical processes to make an ad show up on a page. I can see a time in a few years where many services converge to support a cross-channel RTB environment, allowing advertisers take a more active role in directly controlling their own targeting, or want to use one tag for mobile and desktop placements, for example, but that won’t cover all the bases for the digital ad business, there will always be different needs."

Eric Simon, VP Business Operations, [x+1]

"Ad servers are still critical components of the ad-tech stack on both the buy and sell side. Media buyers still need an ad server to buy media in the digital space. And Ad Serving companies are in a great position to add value to their current offerings. Yes, core ad serving is commoditized, but this represents an opportunity for ad serving companies to evolve and add more features and functionality. MediaMind seemingly came out of left field over the past year for agency buys. Why? They added analytics and dynamic creative optimization functionality as part of their suite of tools. For publishers, it’s less clear. So far, the ad serving companies on the sell side are not evolving to address real publisher needs. Long tail pubs could join an exchange, SSP, or network, but if they have a direct sales force, they also need an ad server as no exchange, SSP, or Network is going to help manage multiple sources of demand. For example, I met with a publisher recently who is using DFP to serve, DemDex to manage their Data, Right Media and ADX for exchange demand, Metamarkets for analytics, and two engineers try to make sense of it all."

Brian Tomasette, VP Media Products, DoublePositive Marketing Group

"Adserving has become a tricky messy segment of the industry where most players in the game have packed up and quit, been acquired or have become satisfied with good enough. I'm not too familiar with the publisher side but many companies focusing on the advertiser side are marketing themselves as tag management, attribution modeling, landing page optimization tools, or even DSP's. The truth is each of them are fundamentally an adserver or ad tracking device. The differences are that they either dip further into the publisher side of the equation or dip further into the conversion funnel side of the equation.

De-duplication and ad control are becoming less important as people wake up to the fact of imperfection in cookie distribution, big data aggregation, and the shear volume of impressions it takes to get a conversion and are starting to focus on effectiveness which lends to linking the adserving deeper into the conversion funnel and the advertisers customer analytics. So my thoughts are that the common adserver is a waste of money, but the evolution of the adserver which links ad serving and interaction with site analytics and consumer analytics, then yes, they are more relevant than ever."

Larry Allen, SVP Business Development, 24/7 Real Media

"Hell yes! Ad Server requirements differ significantly for buyers and sellers who evaluate inventory and manage it from different vantage points.

Buyers have very focused campaign goals that they track across each media partner. They look to the buy-side ad server to make the deployment of each creative ad unit, and the reporting, more efficient. Most of the buy-side servers are integrated with agency media planning tools to help automate the trafficking process. Attribution and downstream performance tracking are also an integral part of the ad server that helps buyers with creative and media optimizations.

The publisher (sell-side) ad server is more complicated. The seller needs many more advanced controls over inventory, placement, targeting criteria, pacing etc. and must optimize the delivery of creative units across numerous connected devices. The seller needs detailed information, about which advertisements are delivered where, and must show detailed inventory forecasts based on target audiences, performance and placement. Additionally, with the move to greater automation (RTB) publishers need to have the ability to segment inventory based on price, content and audience. They need to allocate it either to all buyers or specific private buyers and yield optimize inventory based on price, relationship and target."

By John Ebbert

Effective and Cheap Advertising

Effective and Cheap Advertising is possible and great for start-ups to take their business to the next level. As most people believe in traditional advertising companies such as Facebook and Google, AdServers that seek to connect Advertisers with Publishers directly are making the advertising business more effective and satisfying for all parties.

Our AdServer connects advertisers and Publishers directly and worldwide. This makes advertising cheap and targets. Advertisers pay 125% less the cost they pay on the same keywords on Google. on the other hand, Publishers get 85% commission from the Advertising income which makes them more revenue compared to Adsense.

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A guide to Cheap Advertising for StartUp

The following is a guest post by Rob Walling.  Rob Walling has been an entrepreneur for most of his life and is author of the book Start Small, Stay Small: A Developer's Guide to Launching a Startup.  He also authors the top 20 startup blog Software By Rob, that's read by tens of thousands of startup entrepreneurs every month and he owns the leading ASP.NET invoicing software on the market in addition to a handful of profitable web properties.

Imagine that you've just completed version 1 of your product and you're preparing for launch. You’ve greased the wheels with a few bloggers, targeted some keywords with SEO, created a bit of link bait, and scheduled the press release to launch in the morning. At this point, your co-founder turns to you and says: “What are we going to do with the $300 we have stashed away for advertising?” Consider this your lucky day. The goal of this article is to provide you with the core of what you need to know about cheap startup advertising as quickly as possible so you can start spending that ad budget wisely. Let's get started.

Two Key Advertising Strategies

The half-life of advertising traffic is zero. This means that the moment you stop shelling out cash, the traffic stops. The problem is that with typical conversion rates of 1-2% you're paying for 98 or 99 out of every 100 people to walk away and never come back to your site. To combat this inherent wastefulness of advertising, I have two key strategies I recommend no matter which method of advertising you use.

Strategy #1: Try to Get Permission

Seriously consider offering something in exchange for a visitor's email address. It can be a free trial, a free report, or maybe even a free book. But gaining the means and permission to contact that customer again will increase your conversion rate over time in most cases. There is great power in an email list.

Strategy #2: Use Advertising to Test

Use advertising as a testing tool rather than a long-term stream of customers. Very few startups can withstand the cash outlay required to turn advertising into a marketing activity with positive ROI. Even if you figure it out, advertising is a volatile marketing medium. Prices increase rapidly in online advertising as new competition crops up or prospects grow bored of your ad and your click through rate drops. When this happens, all of the time you invested in optimizing your ad campaign is *poof*...gone. So instead of relying on ad traffic as an ongoing stream, use it for what it's best at: the ability to generate a slew of visitors very quickly, and to be turned off just as quickly. This kind of traffic source makes it great for split testing and user behavior testing using tools like Clicktale and Crazyegg. It also gives you insight into how certain traffic converts for you. With properly tracked conversions and an ad on Facebook, you can determine that men from 35-45 convert at a rate 15% lower than women of the same age. This is valuable information, especially early in your marketing effort when you're still trying to figure out the ideal market for your application. Often this is not the largest market; it's the one to whom you can market for the lowest cost. As another example, with AdWords you can learn in a hurry which keywords convert for you, and which don't. This is insanely valuable as you invest the time and money on the long-haul of search engine optimization. Knowing the keywords that really convert for your business, as opposed to the ones that you think will convert, can save you piles of cash and many months of SEO effort.

The "First Five" Advertising Options

With the above strategies in mind, let's look at the first five advertising options you should consider.

Option #1: Niche Advertising

As a startup, there are hundreds of general advertising options available and thousands of more niche opportunities. Depending on the niche you're catering to you should be able to find a forum, blog, magazine or website in which to spend some ad dollars. The tighter the niche the better. Remember that niche sites tend to be cheaper to advertise on and drive more targeted traffic, which makes a huge difference in your conversion rate. (And if you're not targeting a niche because you want your audience to be the "whole world," you're going to need a lot more than $300 in your ad budget). In general, if you are marketing to a niche you will know the sites to target. If you don't it's time to pound the pavement and find out what they are. By "pound the pavement" I mean search on Google and contact people in the niche to find out where they hang out online. Two reputable niche ad networks I've worked with in the past are:

• InfluAds - With an increasing number of advertising "communities" covering design & UX, startups and entrepreneurs, work & productivity and web development, InfluAds can work with budgets as small as the $300-400 range. They sell a minimum set of granted impressions, and if more traffic is available during a month then existing advertisers receive it for free. Image ads only.
• - Though they've traditionally focused on the design & UX space, BuySellAds is in the process of branching into many other niches. This image-only ad network was the primary source of traffic for a design-oriented website I owned, and made the difference between a few hundred dollars a month in sales, and a few thousand. Advertising is purchased by impression or on a monthly basis from individual advertisers, meaning each offers different pricing. But the minimum buy is very cheap - in the $10-$20/month range.

Option #2: Google AdWords

• Ad Format: Text or image
• Ad Components (for text ads): 25-character deadline, 2 lines of body copy @ 35 characters each, 35-character display URL
• Approval Process: Automated, with manual review if you trip a filter

A few years ago, Google AdWords was great for startups. Many niches were untouched, and 5 and 10 cent clicks were commonplace. But these days, the vast majority of niches worth pursuing have ever-escalating click prices as more advertising dollars move online, including dollars from large corporations that don't blink an eye about spending $5 to produce a single visitor to their website. With a 1% conversion rate you need a $500 lifetime customer value to break even. This is more than a stretch for most startups who are scraping by on 0.5% conversion rates and sub-$100 lifetime customer values (at least to start with). But with Google carpet-bombing $75 AdWords coupons to every business in the civilized world, the number of advertisers, and thus the competition, is increasing. For the most part, the days of cheap clicks are over. The $1-2 per click I used to pay to advertise my invoicing software has become a negative ROI for me at $4-5 per click. But all is not lost. There is still a place in the backwoods of AdWords where the wild-west mentality (and cheap clicks) reign. That place is the content network. People traditionally think of Google AdWords as the ads that appear to the right of the search results. But the lesser known cousin of search ads are the ads that appear in every AdSense block you see around the web. These are ads placed through the Google AdWords content network. The content network is less targeted, higher volume, and typically much cheaper to advertise on, than the search results. While we don't have time here to delve into specifics of how to place ads on the content network, the most consistent approach I've seen that works over the long-term is to use their cost-per-action tool called the Conversion Optimizer. There's a great write-up of how it works from Patrick McKenzie of Bingo Card Creator fame, here. There are also some helpful tips on advertising on the content network here. And if you're willing to drop a few bucks, by far the best AdWords book available is the Ultimate Guide to Google AdWords, which includes a section on using the content network.

Option #3: Facebook

• Ad Format: Text with required image
• Ad Components: 110x80 image, 25 character headline, 135 characters of body copy
• Approval Process: Manual (sometimes slow)

Facebook is still viable for startups with its ability to deliver 10-15 cent clicks under the right circumstances. But it's a bit like the Wild West: if you approach Facebook advertising incorrectly you will pay a premium, around 75-90 cents per click. The value of Facebook is its ability to show your ads to exactly who you want to see it based on information in a user's profile. You can easily segment on gender, age, location, relationship status and a number of other fixed parameters, along with thousands of interests and occupations you can target using keywords. The key to low cost Facebook clicks is having a high click through rate (CTR). The key to a high CTR is a combination of a powerful image, an engaging headline, and laser-focused targeting. Due to space constraints we're not going to cover the basics of choosing a powerful image or writing an engaging headline. Not when there are perfectly good articles already written on the subject for those who would like to know more: choosing an image / writing a headline. But once your ad is written, there is a trick to achieving those 10 cent clicks. Based on a tip from my friend JD, I now use the following method with Facebook ads:

1. Target your demographic information so tightly that you can write a headline that addresses them specifically. Example: if you are selling shoes online to the U.S. market, create 10 different versions of the ad, one for each of the major metro areas in the U.S. Also include the qualifying "interests" keyword: shoes. Now make each ad headline address its group specifically, using a formula like "Need Shoes in [city name]?"
2. Start the ads with a modest budget of, say, $5-10 per ad per day.
3. After 12-24 hours review the ads. Some will have high CTRs and costs per click around 10-15 cents. Others will have low CTRs and clicks in the 80-90 cent range.
4. Pause the higher cost ads and increase the budget for the low cost ads to whatever you can afford; $100 per day or more per ad.
5. For a few days you will receive extremely low-cost, targeted traffic. But since you've chosen a small group of people, they will start to tune out the ad rather quickly. At this point your CTR will drop and your cost will climb. Pause the ad, and start over with new cities, new images or new headlines.

This approach requires ongoing maintenance but if you can generate targeted, 10-cent clicks it's worth the effort.

Option #4: StumbleUpon

• Ad Format: not applicable
• Ad Components: just your URL
• Approval Process: Manual

I recently advertised my developer's guide to launching a startup on StumbleUpon. The plus side of StumbleUpon is that all clicks are 5 cents. The downside is the bounce rate is high since people are basically channel surfing. I achieved a 96.88% bounce rate in my experiment, with an average stay of 2 seconds. I wonder if it was something I said? In my test, only 25 visitors stayed longer than 5 seconds. I paid $50 for 1000 clicks, but since only 25 of them stayed long enough to read anything, I effectively paid $2 per click. Your mileage may vary, but through this and other experiments I've gathered the following tips for advertising on StumbleUpon:

• Your #1 goal is to get stumblers to stay longer than 5 seconds. Your #2 goal is to get them to up-vote your page. Paying $50 for 1000 clicks is one thing. Having it go viral and receiving 10,000 clicks for the same price is another.
• Don't send StumbleUpon traffic to a landing page that asks for an email address. StumbleUpon users are notoriously fickle about providing their email.
• People stumble to be entertained, so if your page doesn't have the potential to go viral or turn into link bait, you will not likely fare well.
• Blog-like content and videos seem to work best. Anything that resembles a traditional landing page will bomb.

Option #5: Reddit

• Ad Format: Text with optional image
• Ad Components: 70x70 image, title, URL
• Approval Process: Manual (two-day lead time)

Reddit uses an interesting approach for their ad pricing: advertisers bid a certain amount per day, all of the money goes into one big pot, and each advertiser receives their share of the impressions based on the percentage of funds they contributed. It's a simple system, but it means there's a bit of uncertainty about what you're going to get for your money. However, Reddit has the potential to provide some very cheap clicks - I've seen as low as 3 cents - if you play your card right. Similar to StumbleUpon, Reddit provides your ad with the potential to go viral. Gabriel Weinberg has a great write-up of the 20,700 clicks he scored for 3.14 cents each for his new search engine Duck Duck Go. His eye-catching image and tech-focused startup served him well with the audience. As he says:

First, a search engine ad is a good fit for reddit ads in general. It has broad market appeal and redditters in general like trying out new technology. Second, I think the ad is particularly well structured. The circular duck icon draws your attention, is contrasting to site colors, and sticks out because it is a circle (as most images are square). I believe the title also has appeal.

Gyutae Park also has a nice write-up of the 434 clicks he purchased for 9 cents each here. One of my recent experiments was a bit more pricey: 187 clicks at 40 cents each. My lackluster performance was a combination of landing on a competitive advertising day, and using a poor-quality header image. In retrospect, I have no idea what I was thinking using this unreadable

Reddit ads are so simple (just two visible components) that the only tip I have is self-evident: your image has to rock and so does your title. It's all about choosing an image and headline that makes people click.

Conclusion

To conclude, I want to reiterate what I said early in this article: unless you have deep pockets think of advertising not as a long-term traffic strategy, but as a testing tool to improve your website and find out more about your ideal visitor. Few bootstrapped startups can withstand the cash outlay required to turn advertising into a marketing activity with a positive ROI, but that shouldn't keep you from testing the waters to find out for yourself. I look forward to hearing about your advertising experience and recommendations in the comments.

Written by Dharmesh Shah

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