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While the idea of advertising is pretty simple, and the idea of making money from ads on your blog even simpler, actually understanding the complexities of affiliate marketing is more – well – complex.
In order to optimize the ads on your blog and increase your ROI, let’s take a moment to nail down the basics.
When an advertiser pays you to place her ads on your blog.
In affiliate marketing, the advertiser is a website owner, brand, or business who pays you, the blogger, for sending traffic to their site.
In fancy affiliate marketing lingo, you, the blogger, are an affiliate marketing publisher. Don’t you just want to put on a suit now? The publisher earns revenue shares for referring traffic to the advertiser’s site via links, images, banners, and other ads.
The easiest way for advertisers to connect with publishers is via an advertising network. An ad network is a company that gathers up ad spaces available from blogs and other sites and distributes them to advertisers for an agreed upon rate. This means that the advertisers don’t have to run around looking for bloggers who want to host ads, and bloggers don’t have to drum up ad sales.
Dozens of different ad networks exist from Google AdSense to GumGum. AdSense is a free network, which is perfect for smaller advertisers with limited budgets. Premium networks like GumGum are not only costlier for the advertiser but more selective when it comes to the bloggers they work with.
First, you need to understand how advertisers pay for ads. In most cases, businesses will pay per thousand impressions, and this is measured using CPMs, or cost per mille. A good starting rate might be $1.50 CPM. For every 1000 views an ad receives, the advertiser is willing to pay $1.50.
The publisher – that’s you – receives a percentage of that $1.50. Let’s say your network offers you 60% on every 1000 views. You’re making .90 per mille. If your blog welcomes 20,000 readers per day, and you’ve got one ad space constantly filled, you’ll make about $18/day. Not bad for a passive income.
Yes and no. The good thing about premium networks is that advertisers will pay upwards of $5/CPM. Clearly, 60% of $5 is better than 60% of $1.50.
However, because these high dollar advertisers are investing more, they expect higher quality ad displays. In other words, they don’t want to be on just any site. They want to be on sites that are complementary to their own. That means that they’ll wait around for the right side, which could leave your ad space empty until a good match comes along.
This is where fill rates come in. The fill rate of your ad space is the percentage of the time that the space shows an ad. While Google AdSense is going to drop an ad in 100% of the time, a premium site might only show an ad 40% of the time.
By creating what’s called a waterfall chain, bloggers can lead with premium advertisers but fill in gaps with other ad networks.
To do this, you set a base rate for your premium network. This base rate tells your primary network to pass back the ad space to the secondary network if the primary network doesn’t have an ad to deliver above that rate.
- Premium Network has an ad with a rate of $1.50 or more. The ad is displayed.
- Premium Network has no ad with a rate of $1.50 or more. Secondary network displays ad.
Using this method, you’re leading with your premium ad network, but your ad space doesn’t stop making money for you if the premium network doesn’t have an ad to deliver.
All good things require elbow grease, even easy money, apparently. Fortunately for you, affiliate marketing has reached a level of maturity that means more tools are being provided to help bloggers make the most of the strategy. Look into services like AdThrive and Blogger Network that will manage ads for you, so you can achieve the (really) passive income you’re looking for.
This stuff can be a lot to think about, but we’ve been working with food bloggers for years, and we’re here to help when you run up against a wall. Get in touch.