There are countless promises of easy money and passive income within the online advertising ecosystem. The real story is a lot different. Most businesses that try to make money with advertising do so just barely or ultimately give up. The businesses that actually succeed get one of the most important things right. Where you advertise and who you advertise with is equally important to how much traffic you have.
Making money with online advertisement does not happen by accident. It comes down to the economics of the advertising marketplace and positioning a business well enough to make every click or impression worth it. Most of the key differences that separate profitably businesses from those that make next to nothing come down to a few key decisions.
The Platform Economics That Most Businesses Miss
Not all advertising revenue is created equally. Two businesses with the same volume of traffic can earn shockingly different amounts of money. This is based only on the advertising platforms they choose to work with. The reason these businesses can earn such different sums is the economics of the advertising platforms they work with differ significantly.
Some platforms have a numbers game in mind, paying very low rates but accepting almost any traffic. Others focus on high-quality placements, high-value advertisers and create better business outcomes but require more from their customers. The businesses that actually succeed at making money with ads all find themselves gravitating towards platforms that fit within the latter category.
When considering how much money businesses can actually make, checking out the highest paying ad networks can shed some light on the subject. The networks with high payouts do so because they draw in and accommodate high-quality clients. That, in turn, elevates the playing field for all the other players in the ecosystem.
A business’s selection of ad formats goes a long way in determining if they will actually make any money at all. Regular banner ads tend to pay the least. While things like interstitials, native ads, and video formats pay much higher rates. Businesses that use ads as an income source do not rely on a single format to pay the bills. They ensure that they are well stocked on several types of formats to meet various demands and get the most that they can out of their traffic. Mixing up format styles also helps businesses recover in case one type of format is not in demand, or one type of advertiser does not want to work with them.
The challenge lies in avoiding revenue formats that ruin the experience for users. Formats that make businesses money but provide terrible experiences drive users away, costing businesses more than they earn. The most successful players in the advertising economy find a way to balance the need to make money with the need to create a good experience.
Traffic Quality Matters More Than Traffic Volume
One million low-quality visitors will never make as much money as 10,000 high-value visitors. This is the aspect most businesses ignore when trying to get as much traffic as they can without caring about who their audience is.
High-value advertisers care about the source of traffic because their clients do. Traffic from bots, freak occurrences and unengaged users does not do anything for advertisers. As such, networks either reject it or offer exceptionally low rates for it. Businesses that create real revenue opportunities seek genuine audiences rather than scraping by with a focus on numbers.
Geographic regions make a world of difference when it comes to traffic earnings. Traffic from value regions such as North America or Western Europe will always make more money compared to other regions. A business that draws 70% of its traffic from these regions will always outpace a business that draws an equal amount from any other regions.
The Business Model That Actually Scales
The business models that successfully scale ad revenue sources do not rely on ads to generate income. The best players in the advertising marketplace usually feature a combination of advertising revenue models with other models. Other sources of income can come from a business’s own products or services, affiliations, or subscriptions.
By featuring a combination of sources, businesses can help protect themselves against the capriciousness of advertising networks and market conditions. Models that rely on ads for their very existence end up getting into severe trouble whenever market conditions change and force them to start giving out low payouts.
Scaling businesses also care about every aspect of their operation. They invest in features and strategies to improve load times so more ads can be viewed. They also explore different ad placements and strategies to find out which works best. Studying their metrics and data for insights into what type of content draws in the most traffic value. Its in focusing on the ins and outs of their operations that these businesses are able to separate themselves from businesses that scrape together a few cents here and there.
What Separates Profitable From Struggling
The businesses that succeed in generating high profits by using ads almost all look the same. They treat making money with ads as a serious revenue source, rather than as a passive income stream that comes to them effortlessly. Additionally, they understand their audience well enough to attract value by connecting with networks that pay high regard to quality.
They also have realistic expectations around what it takes to develop significant value over time using ads. There is nothing instant about their success, as opposed to what the myths of successful outlier stories many users present as facts assume. Most businesses that use ads successfully to generate income create these streams over time, by working through challenges, figuring things out and rebuilding their audience.
The path to success when it comes to making money using online advertising is not paved with mistakes. However, it is a path that requires business owners to consider more than just shallow strategies for exploiting the system for value. Just having traffic is not enough to create a business or income generation stream. Values such as making wise platform decisions and focusing on quality can help ensure that businesses make significant profits for their labor.
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*This is a contributed post. As ever, all opinions are my own.
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