Our Hometown Blog

There are two methods for pricing online advertising, CPM (cost per thousand exposures) and CPC (cost per click). This paper assumes only display ads from the print edition are run on the website; banner and tile ads can also be run but their value is excluded from this analysis.

CPM Valuation

To calculate the CPM value of your website you need to know how many exposures you have available.

The first step is to figure the number of times a page that contains ads is displayed to a reader. To find this number use your Webtrends reports to determine the number of “Document Views”^[1] your site gets each month. The average number of document views for Our-Hometown.com websites is just over 75,000 per month ^[2].

The next step is to figure how many ads are on a page. Although both display ads from the print edition, banner ads and tile ads can be displayed on your site, we are just counting display ads from the print edition here and each site will run six display ads per webpage.

Therefore the average display ad exposures per month are:

75,000 x 6 = 450,000 exposures per month

The average Our-Hometown.com newspaper provides 450,000 exposures for display ads per month.

How much is a CPM worth?

CPM prices vary greatly, from $1 CPM for ad networks that run ads on any site that sign up including high traffic directory websites that contain little useful content and are made for the sole purpose of advertising, to over $50 CPM for specialized sites in niche markets.

The size of the ad, ad placement within the page, if they are placed on a specific page/section, or allowed to appear on any page also impacts CPM rates.

A study of over $7 billion in advertising spent on 641 billion exposures over a 10 month period indicates an average CPM of $10.91. The chart to the right shows the CPM value by the top selling categories.

We know from competitive research that the CPM rate suggested to small dailies and weekly newspapers is $10 to $17 CPM. However, an argument for a higher CPM could be made based on the fact that for local advertisers the best Internet media for reaching the local population is newspaper websites. But to be conservative we use the $10 CPM

Therefore the monthly value is calculated as follows:

450 K exposures x $10 CPM = $4,500/month

The value of print display ads run on the average Our-Hometown.com website is $4,500 per month.

What should I charge per ad?

The average Our-Hometown.com newspaper that runs all their print display ads online has 81 ads. To calculate the weekly charge per ad we divide the monthly value by the number of ads then divide that by the average number of weeks in a month which is 4.3:

$4,500 per month ÷ 81 ads ÷ 4.3 weeks/month = $12.91 per week

For Our-Hometown.com newspaper websites that run all their print display ads online the value per week is $12.91 per ad based on the CPM pricing model.

CPC Valuation

The CPC or cost per click pricing model charges each time a user clicks on an ad. Search engines are the primary websites that charge by the click; the advertiser chooses when to display their ads based on the keywords entered by the user of the search engine. Only if the user clicks the ads are they charged. A report on average CPC rates for the major search engines showed Google is getting $1.61 per click and Yahoo is getting $1.34.

Print display ads run on Our-Hometown.com newspaper websites are clicked at least .8% of exposures. Using the 450K exposure rate and the lower Yahoo CPC rate the value of the average Our-Hometown.com newspaper website is:

450,000 exposures x .8% x $1.34 CPC = $4,824/month

The calculation of what to charge per ad using this valuation would be:

$4,824 per month ÷ 81 ads ÷ 4.3 weeks/month = $13.85 per week

One could argue that clicks on search engines are more valuable, because the keywords selected by the advertiser target buyers better than clicks on a website based on the content of an ad. On the other hand, to target local advertisers the local newspaper website represents the best targeting available.

Valuation Conclusion

The display ads from the print edition run on an average Our-Hometown.com newspaper website are worth between $4,500 and $4,824 per month and the ads are worth between $12.91 and $13.85 per week based on the CPM and CPC pricing models. The formulas described, require your document views from your Webtrends reports and the number of ads you run each week to calculate the specific value of your print display advertising run on your website.

Case Studies

The following case studies are what Our-Hometown.com newspapers are using to sell their online version of the display ads from the print edition. All have used the method suggested in our “Billing Insert Method” (PDF) that up sells the ads in one shot, allowing the advertiser to pay an additional percentage to their advertising costs in the print edition or to opt-out entirely. Some publishers have chosen to use a forced buy method, where the cost of the online advertising is automatically included in their billing statements for their print advertising; this method has shown to have little resistance if any with participating advertisers.

Note: At the time these ads were sold only 4 display ads were shown per page.

Group of 12 weekly suburban community newspapers

They could have charged more but they up sold every ad in one step with a forced buy and two days of effort. “The program has been received well and there has been very little if any resistance.”.

Group of 3 suburban weekly community newspapers and a monthly magazine

They do allow advertisers to “opt-out” and participation has been “probably at least 95%.”

Single rural weekly community newspaper

The publisher sent out notices to his advertisers of a 3% increases over print rates with a $1 minimum. “The only feedback I have gotten from advertisers is positive.”.

Case Study Conclusion

We suggest a $10 CPM be used in calculating what to charge for print edition display ads up sold to the web. Some of the case studies have sold for less but by doing so in one shot have saved significantly on cost of sales. Plus they have all or most advertisers online and room for increases in the future is supported by this analysis. We’re all still learning the value of what we have.

Updated calculations 9/6/2007 to reflect changes to number of ads per page. Updated competitive CPM figures 3/1/2008 based on new information

^[1] Document views are used instead of page views because the Webtrends report we use count some files as a Page View that don’t represent pages with advertisements.

^[2] The factors that influence the number of document views is length of time online, size of market served and in paper promotion of the website.

Share this Post: