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Forecasting advertising revenues for a website

Discussion in 'General Marketing' started by Lotfus, Nov 17, 2013.

  1. #1
    Hello all,

    I am thinking of creating a website with some content. A primary option for the revenue model would be based solely on advertising. Something like a news website.

    After reading a bit about this type of revenue model, I understood it is not straightforward to estimate. Nevertheless, I would like to have some idea to be able to have a rough idea what elements are determinant for the revenue.

    Based on what I have read, I tried to build a model, by fixing some parameters and giving the target revenue, we would have the required traffic.

    It would be great to have a feedback regarding this model. What did I miss, what is not reasonable, what else could I consider, etc. Let's suppose for the moment that is just based on RPM.

    Parameters that determine a website revenue:
    - Number of slots per page: how many ads I put on every page
    - RPM for on advertisement: what an advertiser would pay me every time one of his ads has been viewed 1000 times (whatever if it is seen twice by the same visitor). I know that this RPM can vary depending on factors like the type of content, how much we have a targeted audience, etc...
    - visit: any page impression, whatever if it is a visit from the same visitor
    Estimating traffic required for a target revenue

    Revenue = visits * RPM * Number of slots per page
    =>
    Visits = Revenue / Number of slots per page * RPM

    If we take an example:
    - let's say I want to achieve 5000$ revenue
    - I have 2 slots per page
    - the RPM is 1.5$

    Traffic required = 5000 / (2*(1.5/1000)) = 1'666'666 visits.

    What about these parameters?

    I am wondering if these parameters have any influence on the revenue model?
    - Number of page views per visit: the number of pages a visitor visits while navigating the website.
    - Percentage of inventory filled: the percentage of ads slots that I sold, i.e. the percentage of slots that are used by advertisers.
    - Number of pages in the website: or the number of articles that I have on my website

    I would be very grateful if I have any feedback on this model.

    Best
    Lotfus, Nov 17, 2013 IP