Three Considerations in Pricing Local Advertising

For niche magazines and hyperlocal publishers to successfully build a revenue model that lasts, pricing needs to be implemented that is flexible, easy to understand, and targeted to the types of businesses that are most likely to engage with the content on their websites. 

But there is no hard and fast rule to pricing – for new publishers, in particular, it can be difficult to pinpoint what works and what doesn’t when the rules are often opaque. So how do you establish a sound pricing model to grow your publication? Let’s look at the best pricing models and monetization options for online Local advertising .  

Flat Pricing vs. CPM Pricing

Because many publishers have spent an inordinate amount of time working with large ad networks that don’t offer the kind of flexibility needed to keep up with the rapid changes of search algorithms and Facebook news feeds, many assume CPM is the only way to go. 

The CPM model is variable, with advertisers paying based only on the impressions generated for their ads. So for every 1,000 ad impressions gained by a publisher’s site, the advertiser will pay the agreed-upon rate. The problem with CPM pricing is that it’s not consistent. While large publishers can live and die by the flow of traffic – they’re dealing in the tens of millions after all – smaller publishers don’t have that luxury. They need a consistent, reliable revenue stream every month, and CPM doesn’t offer that. 

Flat rate pricing addresses this issue by setting prices for individual ad slots for specific periods of time – usually per month. There’s no formula to calculate and no guessing on revenue every month. Each ad slot has a value and the website has a set inventory. So there is a maximum ad value that can be adjusted in the future based on the total traffic generated by the site. And because the ad slots are sold on a monthly basis, the value of those slots can increase over time. 

Flat rate advertising is more effective for hyperlocal and regional publishers because it is much simpler for advertisers to understand, it shifts the conversation away from price and towards the value of that super-targeted traffic, and it is far more reliable for publishers attempting to project revenue more than a month or two at a time. 

Pricing Sponsored Content 

Another common revenue stream for hyperlocal and regional publishers is sponsored content. Rather than a display ad banner located above, aside, or below the content, the ad is the content itself. These articles are sometimes written by the advertiser, though, some publishers offer article writing services as well. While the content is generally designed to be useful to the publisher’s audience, it is catered toward the strengths of the advertiser and can include links to their products or services. 

But what is the value of such a post? If you’re going to sell valuable space on the front page of your publication, how much should it cost? Pricing for sponsored content varies based on traffic, readership, demographics of those readers, and what else comes with the sponsored content purchase. For example, some sites offer sponsored content along with banner ad placements. 

Many publishers will sell sponsored content in bundles as well, offering multiple slots over the course of several months for a flat fee. So an advertiser might get a premium article placement on the publisher’s website every month for six months at a flat rate of $1,000 per article. There’s no hard and fast rule for how much a sponsored post should cost. Buzzfeed at one point was charging $100,000 for a package of four posts on its site. Others have charged even more. If the audience is sizable, the promotion is ample, and the demographics right, the price will be entirely dependent on how much relevant traffic you feel you can drive for your advertisers. 

Building a Strong Revenue Model for Your Publication

If you are a small hyperlocal publisher with less than 500,000 impressions per month, flat rate pricing combined with sponsored content offerings can be an effective way to build a recurring revenue model that helps you grow your efforts. 

For much larger publications, CPM pricing may start to make sense, but it’s important to evaluate not only the difference in potential revenue, but the added work required to close new deals with advertisers with a variable model. 

Evaluate your own site, your revenue goals, and the reach you have with your target audience. It will help to determine what works best in building a strong, recurring revenue model.

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