Q&A: Banner Ads and New Website Revenue Models

Its been forever since I’ve written, but that’s how it goes. Here’s another Q&A from an email I got today:


Jon –

I found your site from a general search of website developers. I am helping my wife build a rough pro-forma for a potential business. What I am curious about, and hopefully you might be able to share some insight with me, is an expected revenue target from advertising on a site (money made from a firm to post banner/ad on her site). Is there a rough ‘guesstimate’ on what “X” traffic would yield in terms of monthly or annual revenue from an advertiser? Can such a thing be a assumed?

Thanks in advance for your time.

My Reply:

Hi ____,

That type of thing is extremely variable. Depends on the traffic levels, market/topic of the website, etc. Most large sites tend to sell this space to firms like DoubleClick or Advertising.com who then resell it. Most smaller sites either sell banner ads individually either on a per-click basis, per-impression basis or flat monthly rate – or they participate in programs like Googe AdSense which essentially serves as a distributor or middleman much like DoubleClick or Advertising.com, but for text ads and for smaller sites.
What type of market are you talking about? What are your traffic expectations? Are there other revenue models in addition to simply selling ad space?
The model of creating a website and generating revenue via advertising is an extremely difficult one. Banner ads, in particular, are really a dying thing. Advertisers are starting to realize they produce rather poor ROI and are shifting funds elsewhere to media like PPC search (thus try monetizing via Google AdSense). Its also very difficult for small sites to find advertisers, thus creating the demand for the middleman/distributor market.