Does Size Really Matter To An Advertiser?

Does it really matter to an advertiser whether your web site has 500,000 page views per month (PVPM) or 5 million PVPM? From a perception standpoint it may, but when it comes to quantifiable ROI it shouldn’t matter at all. Why? Because unlike in print where an advertiser pays to reach your entire circulation in the month they advertise, on a web site an advertiser usually doesn’t reach your entire web “circulation” or reach each month. To reach your entire site’s audience in a given month, they would have to exclusively own an ad position for the entire month … every impression served to that ad position would have to be their creative. That ad position also would have to appear on every page of your site. Then and only then would the advertiser reach every person that came to your site that month.

In larger markets (mass market, IT, etc) advertisers typically buy on a CPM basis where they purchase a specific amount of inventory for a campaign … say, 100,000 impressions … and the duration of the campaign may or may not coincide with a calendar month. In niche markets or perhaps less emedia-savvy markets, advertisers may pay a flat rate per month to rotate with a couple other companies in the same ad position (more on the pitfalls of this in a future entry). Regardless, an advertiser is rarely reaching your entire site audience.

Want proof? Let’s look at an example.

XYZ Corp wants to buy 100,000 impressions and are comparing Site A with 500,000 PVPM and Site B with 5 million PVPM. For sake of argument let’s assume that the type of content, audience demographics, and ad size and location are relatively the same on the two sites. The only difference is that Site B has 10 times the total reach of Site A … and you can be darn sure that they’re touting that in their media kit and to XYZ Corp! But in reality, what difference does it make to XYZ Corp? None. In fact, if I was the sales rep for the smaller Site A, I could even argue that XYZ Corp is better off advertising with me. Check out this chart:

No matter which site the advertiser chooses, they are only buying 100,000 ad impressions. The ad cost, CPM, CTR, clicks, and CPC all stay the same. It dosn’t matter if the site on which they are advertising has 500,000 or 5 million page views per month. The ROI is the same for the advertiser because their ad will be seen 100,000 times and they will get 500 clicks. From a share of voice perspective, however, XYZ Corp will have 20% presence in that ad position on Site A while they’ll only have 2% presence on Site B. Again, if I were a rep for Site A I would drive this home and show how XYZ Corp the advantages of being a big fish on my site, or just one of a potential 50 advertisers on Site B. The metrics remain the same, but the art of the sale is in driving home the perception differences. In fact, I’m making the assumption that the CTR would be the same on both site, but I’ve often seen where the smaller site has a better CTR than the big site because the readers on the small site don’t have as much banner burnout.

As a publisher, I still would rather own the 5 million PVPM Site B because I would have more inventory available and could generate a lot more revenue. But even if I owned Site A, I would know that I could compete with the big dogs because I can offer comparable value (impressions and clicks) for an advertiser’s campaign.