When starting a new website, it is good to have an idea of the potential income you can get from the website (well, if you’re going to invite investors you actually need financial projections when writing a business plan).
But how can you estimate how much income you can get, especially for an advertising-based website? What kind of income can you get from the site that will allow you to make a living off your website?
It’s not easy to determine potential income, but here are the variables you need to consider:
- What is the traffic potential of your site given its topic?
- What are your goals for the site: are you thinking of turning your website into a 800-lb. gorilla or just one of the small sites in your niche?
- What kind of revenue model are you planning to use — purely cost per impression (CPM), or purely cost per click (CPC), purely pay for action (CPA) or a combination of all three?
- What ad types are you going to offer — e.g. image ads, text link, newsletter advertising, etc?
- What kind of ad formats are you going to sell particularly for image ads — banner ads, leaderboard, skyscrapers, rectangle boxes, etc?
- What is the average CPM being charged by your competitors?
- What marketing strategies are you planning to implement, and how aggressive these are, to get traffic to the site?
- Are you going to use third party providers such as banner or contextual advertising networks (e.g Google Adsense) or will you sell all advertising yourself? Or are you going to use a combination of both?
