So you want to make

money from online

advertising…
Updated: Late 2008
 Background
Prepared by a concerned citizen.

One that is concerned that he may

lose it if he sees yet another web
business that plans to hit it big by
selling ads on their website with no
other business model to speak of.
Is this presentation for you?
Yes. If you you’re thinking of raising capital
and hiring employees, or have these
things and expect your annual online ad
revenue in the high six figures or more,
and expect to cash out with an IPO, etc,
etc.

No. If you want to make the typical thousand

dollars or two a year using AdSense, or
really spend time on you site and are
shooting for a few tens of thousands of
revenue per year. Go for it, Google
 What you may be thinking
• I have the best damn idea, and I
know users will love it, but I don’t
think they’ll pay for it, it’s the web,
everything is free. I know I’ll stick an
ad on every page
• I get <insert large number of page views here> page
views a month I should be able to
make some good money off that!
• I am different than the other guys
because I have <insert thing that
What you should be thinking
• How can I get more and more unique
users to my site and continue to
grow this over time
• Which category of advertiser does
my site appeal to, and what can I
offer them on my site that they can’t
get everywhere else.
• Is this a place where advertisers
would be excited to see their
precious brands represented, if not
 What advertisers want
• Genuinely interested and engaged
users and their attention
• Users that fit the types of folks they
want to be talking to.. so the more
you know about your users the
better.
HOW TO ESTIMATE MY
DISPLAY AD REVENUE
POTENTIAL
AMU: The Only Site Stat You
Need
The only number you’ll need is
average monthly uniques
(annualized) :
• Average monthly unique (AMU) users
visiting
Jan: 11M a site over an
July: 8M annual period
Feb: 11M Aug: 7M
Mar: 12M Sept: 10M
Apr: 13M Oct: 11M
May: 12M Nov: 12M
June: 8M Dec: 13M
Avg Monthly Uniques 10.6M
(annual)
 The Only Math You Need
AMU X multiplier = Annual
Display Ad Revenue

Where multiplier ranges from 0 to $5

(or maybe $6 if you’re really, really
good). See next page to see which
multiplier you should use:
Content Very Low Low Medium High Very
Nicheness High

Sites $1 $2 $3 $4 $5
Revenue
Per AMU
Rule of
Thumb
Examples
Chain General Food Restauran Italian Italian
Italian content Content t Content Restauran Restauran
Restaurant with t Content ts in price
Advertiser reference range and
Values to food zip code
Domestic General General Family OR Family Family
Family Car content content Car AND Car AND Car
Manufactur with with related Related related
er reference reference content Content content
Advertiser to to specific to
Values families families that
OR cars AND cars family or
mfg
 Example
• For example a site, dogcentral.com
which averages 2 million average
monthly uniques and contains
content about family pets,
specifically dogs.

2 million AMU x $3.50 multiplier= $7

million in annual display ad revenue
 Online Advertising -- Yearly Revenue Estimate
Multiple X Average Monthly Unique Users Rev per
AMU

$10

Search
$5

Niche Content
UGC General/News
$0
Low Fit with advertiser product High
Match Match
 Ad Targeting
Annualized Ad Revenue Per Average Monthly Unique
Source: Morgan Stanley, Nothing but Net Report

Search – Market Share

1.7% 9.1% 17% 68.1%

n er
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. 3 2 3 .25 .4 $8 $1
$ 1 $ 1 $ $ $5

Display ads endemic/niche-ness

As degree of match between the advertisers product and the reason the
ad impression was generated increases, so does revenue per user
 Monetization Via an
Advertising Model
Google and Yahoo! are the market leaders, bringing
in 3-4x more revenue per user than other market
participants
Company Total Ad Avg Ad Product Source
Revenue Monthly Offerings
Per AMU Uniques
Google $12.28 (Millions)
107 Search MS 10/06
Yahoo $8.65 130 Search, MS 10/06
(Total) Display,
Microsoft $3.25 119 Classified
Search, MS 10/06
Sites
C/net $2.48 136 Display
Display 10K (3/07)
Time $1.62 120 Search, MS 10/06
Warner Display
Network
MySpace $1.32 55 Display MS 10/06
 Premium Display Rule Of
Thumb
The logic behind the premium display ad revenue
rule of thumb is
• The more closely related the content is to the
advertisers product the more value that content
will have to the advertiser
• By definition general content has more
widespread appeal and therefore there is more
of it. The opposite for highly niche content.
Economic laws regarding supply and demand
apply.
• By its nature search is able to make very high
niche matches to capture very high premiums
perceived by advertisers, so similar revenue per
unique multiples should not be expected
without search abilities
 Average Google AdSense
Account Revenue
Ok it’s a rough, rough estimate but
here goes
• 110 million websites
• Est. 6% of sites have advertising
• Est. number of AdSense publishers:
6.6 million
• Google AdSense Annual TAC paid:
~$6B
• Average Google Ad Sense Account