I think the best way to earn the most money from advertisements on your website, is to use a mixture of CPC and CPM based campaigns.

Specifically, I like to run AdSense for my CPC stuff, and a banner network for my CPM stuff. For banner networks, I'll look for a small network so that my site has a greater chance of getting targeted ads. There's lots of them on the Adify system. Otherwise, I'll default to using ValueClick.

The idea behind the CPC/CPM combo is that a smaller percentage of your visitors are willing to click on an ad. But the larger percentage is not, yet you can still monetize them through the CPM.

Also, as your audience increases, you'll discover that the click through rate decreases. This is because your audience has become more diverse. CPM ads are great way to resolve audience diversification.

Problems with the CPC/CPM Combo

You may find that the click through rate on your CPC ads will drop as a result of competition with your CPM ads. This is to be expected. However, the goal is to make up that difference, and exceed that difference, with CPM ads.

Therefore, you don't want your visitors clicking on CPM ads. It's imperative to keep monitoring your CPM ad statistics to see if any banners are attracting a large number of clicks. Turn off any specific CPM banner that's attracting clicks. Since CPM ads don't pay you for clicks, you're losing money.

That's part of the irony of CPM ads. Since advertisers are paying for impressions, they tend to design ads that attract a lot of clicks, like interactive ads, or ads that look like a Windows error message.

Final Results

The bottom line is that you want the combination of CPC and CPM ads to be higher than if you just ran CPC ads.  

Labels: Monetization