The cost of advertising for website publishers

Advertising is often considered to bring in money for magazine, newspaper or website publishers. That is indeed its objective. In return for conveying its advertising message, a publisher is paid by the advertiser. But we forget that the publisher, in addition to the costs of managing his website, also has to face the costs related to the insertion of these ads within his website. Today, I propose that you study the cost to the publisher of choosing advertising banners in a popular advertising network that serves as a market place.

Introduction

If Google AdWord for publishers is so successful with publishers, it is also because they offer automatic contextual ads. On the other hand, as soon as you want to get off the beaten track of these few big names in advertising and take an interest in advertising and affiliation agencies offering à la carte campaigns, you need to spend time looking at advertisers, campaigns and banners in order to choose those that best match the content of your site, or those that will bring you the most revenue.

The purpose of this study is to quantify the cost of inserting new advertising on a website with the help of an existing third-party advertising agency and a functional ad server integrated into the publisher’s website.

Publisher and website

The publisher, in this case, is me. And the website on which I want to insert ads is Les perles du chat which is a blog dedicated to chatting, dating and sexuality.

This website has already been previously configured to display banners via the OpenAds 2.3 beta ad server that I have already mentioned here. To display new banners on the site, it will therefore be sufficient to fill the ad server database with ads proposed by advertisers, either via an intermediate advertising agency or by direct affiliation.

Governance and advertisers

One of the most popular advertising and affiliate agencies is TradeDoubler, which acts as a marketplace between advertisers and publishers. The principle is simple: each publisher submits its site to the advertiser for approval. If the advertiser accepts this new site, it is authorized to convey the advertiser’s campaigns, and thus draw from its banners.

Compensation models include CPM (Cost Per Thousand), CPC (Cost Per Click), CPA (Cost Per Action), etc. Publishers are generally remunerated on the basis of a CPA linked to the completion of a form, or the completion of a purchase, remunerated on a fixed basis or as a percentage of sales.

Another advantage of managing your own ad server is that you are not dependent on a particular ad network. Also, the publisher site dealing here with dating and sexuality, it is a site of libertine dating that will be promoted in direct affiliation. This one proposes a sufficiently interesting remuneration to justify the effort of opening a specific affiliate account.

Implementation of the project

In total, five advertisers were selected for a promotion on the website. It does not matter, moreover, whether or not this choice is relevant from the point of view of the turnover generated. Indeed, what interests us here is the cost of installing advertising campaigns on the ad server, not the revenue generated.

The study of this cost consists here in timing the time spent at, on the management or affiliate site side:

  • choose an advertiser from a predefined list (we will not count this initial choice in the cost of inserting a banner, even if it is not zero);
  • choose from the advertiser’s banners proposed those that will appear on the publisher’s website conveying the promotional campaign

as well as to, on the ad server side:

  • create the profile of the new advertiser;
  • create campaigns associated with this advertiser;
  • associate the selected advertising banners (on the advertising network or affiliate site side) with the campaigns and their specific parameters (size, capping, keywords, display times, display frequency, etc.)

Cost of setting up advertising

After having set up the chosen advertisements, we establish the following summary, carried out thanks to a timing of the maneovre:

This indicates, for each advertiser:

  • the number of campaigns relayed and/or defined;
  • the number of banners used;
  • the time spent, in minutes, inserting these ads on the ad server.

It can be seen that a publisher represents, on average:

  • 1.6 different campaigns;
  • 11.8 different banners (per advertiser);
  • 37 minutes of choice and insertion of these elements on the ad server.

In addition, it should be noted that:

  • the insertion of each campaign (composed of an average of 7,375 banners) costs about 23.13 minutes (23 minutes and 7.8 seconds);
  • inserting a banner costs about 3.14 minutes (3 minutes and 8.4 seconds).

To be able to express this cost in euros, it would still be necessary to assign a cost to working time. Let us consider that an employee at the SMIC performs this task of entering advertising campaigns in a company of less than ten people (i.e. a traditional web agency size), i.e. a cost of €1,445 per month for the employer. The Syntec Informatique collective agreement (frequently applied in IT companies) defines the annual working time at 1610 hours. This situation allows us to estimate the cost of one minute of work at about 17.95 cents. In other words, the minimum labour cost for inserting an advertising banner on a website is about €0.56. This does not include costs related to other costs of this item, such as depreciation of computer hardware or software, office furniture, Internet connection, or management costs of this item.

Profitability

With a labour cost of at least €0.56 for inserting an advertising banner on a website, the publisher’s site carrying this banner must first of all reimburse itself for this expense before generating profits. Assuming a click rate of 1% (number of clicks divided by the number of banners displayed) and an average remuneration of €0.10 per click (or an equivalent average remuneration), this implies 560 displays to refund the cost of inserting the banner.

Another way of seeing what this cost represents is to consider that a full-time entry operator position consisting of inserting new banners implies that the publisher’s site displays at least 17,228,025 pages per year. In other words, publishers with a full-time ad entry position are non-existent!

In other words, to ensure the profitability of its site, given the costs of adding new ads to a publisher’s site, it is prudent not to multiply advertisers, but rather to focus on a small but profitable number of advertisers and campaigns.