Startup Advertising: From CPMs to Brand Sales

This article delves into the crucial stages of building a successful advertising strategy for startups. It covers the key aspects of maximizing ad revenue from initial CPMs to securing brand deals, all while navigating the challenges of social network monetization.

Stage 1: Getting Started with AdSense

The initial phase of your advertising journey often involves leveraging self-serve platforms like Google AdSense. This provides a streamlined way to generate ad revenue, offering basic insights into your CPMs and earnings.

• Focus on understanding your CPMs, which represent the cost per mille or cost per thousand impressions.
• Gain a basic understanding of factors influencing your CPMs, such as site category, international advertising, and pageview frequency.
• Utilize rules of thumb for estimating CPMs based on site characteristics:
  • Social sites without direct ad sales: <$0.25 CPM
  • International sites: <$0.50 CPM
  • Medium-sized sites using banner ad networks: <$1 CPM
  • Reference sites in specific categories: >$5 CPM or higher, depending on the category.

Stage 2: Granularity and Inventory Breakdown

As your site grows, it becomes essential to adopt a more granular approach to advertising management. Break down your site into sections and analyze their performance to optimize ad inventory.

• Divide your site into distinct sections, such as Homepage, Profile, Media, Inbox, etc.
• Consider ad unit size, like 300×250 or 468×60, and leverage the full range of IAB ad units.
• Track the types of ads, targeting strategies, and other relevant factors.
• Gain a clear understanding of where your ad units are placed, the impressions they receive, and how revenue aligns with this distribution.
• Utilize tables to visualize your inventory breakdown, similar to the example provided:

Stage 3: Scaling Up and Managing Growth

As your site scales and attracts increased traffic, you need to anticipate and manage the impact of growth on your advertising strategy. Social areas are likely to experience accelerated growth, potentially influencing your CPMs.

• Anticipate non-linear growth in areas like forums, profiles, and other social sections.
• Recognize that increased traffic in social areas may lead to lower CPMs due to the higher-traffic, lower-value nature of these sections.
• Understand the concept of frequency caps imposed by ad networks, which can affect CPMs as user engagement increases.
• Track how traffic growth translates into revenue and identify any disparities due to changes in CPMs.
• Continue using tables to analyze the impact of growth on your ad inventory, similar to the example provided:

Stage 4: Optimizing with Multiple Ad Networks

Integrating multiple ad networks can significantly enhance your CPM rates by diversifying your inventory and mitigating frequency cap limitations. However, this requires careful optimization to maximize returns.

• Leverage the benefits of multiple ad networks to access high-CPM opportunities.
• Implement strategies to balance user frequency across different networks, ensuring efficient monetization.
• Utilize platforms or tools that facilitate ad network optimization, such as those offered by RightMedia or Revenue Science.
• Consider the example of Mike On Ads, who illustrates the benefits of using multiple networks based on user frequency.

Stage 5: Building Up Brand Sales

Reaching a certain level of ad inventory, often exceeding 50 million pageviews per month, creates an opportunity to pursue brand dollars. This can significantly boost revenue beyond remnant ad networks.

• Understand the transition from remnant ad networks to brand sales, which typically generate higher CPMs.
• Familiarize yourself with the process of brand ad sales, which often involves more customized and relationship-driven approaches.
• Explore common options for attracting brand dollars:
  • Old School Ad Networks: Leverage existing ad networks that offer brand advertising within specific categories.
  • Vertical Ad Networks: Partner with specialized networks catering to your site's niche, such as Glam.com for women or Jumpstart for cars.
  • Direct Sales Teams: Develop a dedicated sales team or engage ad reps with established brand relationships.
• Establish a dedicated team to manage active brand campaigns, ensuring timely delivery, proper placement, and performance monitoring.
• Recognize that a small percentage of ad impressions can generate a significant portion of revenue from brand deals, resulting in a pyramid-like structure for ad inventory.

Conclusion

Building a successful advertising strategy for startups requires careful planning, ongoing optimization, and a deep understanding of the evolving landscape of advertising. This article has provided a roadmap for navigating key stages, from initial CPMs to securing brand deals, while addressing the complexities of social network monetization.

• Focus on gradual implementation, addressing challenges as they emerge and aligning your advertising approach with your business model.
• Continuously analyze your data, track your performance, and adapt your strategy to optimize revenue generation.
• Utilize resources and insights from industry experts to enhance your understanding of advertising trends and best practices.