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Placing an overall value on the traffic you send

Placing an overall value on the traffic you send

August 23, 2006
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After numerous discussions with adult portal site operators and large private affiliates about this topic, I can’t help but to bring the issue out into the open. If you were an investor, thinking about buying an adult portal site that makes its living from the push or sales of traffic to other people’s web sites, you would want to know what the average overall value is for each unit (click through or block of impressions) of traffic delivered. Call it establishing a base line.

This may seem like a common sense approach, but it is not shared by all. There are several high traffic destination sites in the industry that send traffic to dozens, even hundreds of affiliate programs, paid advertisers, PPC listings, etc. without using a common delivery system in order to generate a fixed or average value within a certain time frame for the traffic in question. In most cases, these folks wind up using a combination of methods to determine what each unit of traffic they send to other parties is worth, which means inconsistent data.

I believe that as companies in our industry mature and look at valuations on their assets, the issue of knowing what your aggregate traffic is worth at any given time becomes that much more important. Pay site networks equipped with affiliate traffic and revenue management systems have a standard. Many sites that make their living sending traffic to pay sites, regardless of how they are paid, rely on stats provided by the recipients of their ad inventory, which are unique to each affiliate program they send to. Since affiliate programs tend to count traffic differently from one another, first page versus second page uniques, frequency of an IP to count as a unique, raw versus unique, etc., having your own traffic counting platform that administers delivery of your inventory with a single standard is definitely to your advantage.

Where you are being paid for sales/revenue generated and not for the traffic sent, you can easily divide impressions or clicks you send to each program you support by the revenue generated to come up with the ‘effective’ cost per click (eCPC) or cost per thousand impressions (eCPM) for your traffic. This is the means by which ad networks and large scale agencies place a value both on what they sell as well as major elements of their companies overall. You can use ad serving systems to do this or similar traffic management tools. The end goal is that all traffic you send off your site should be delivered through a single ad serving mechanism, which counts impressions, click throughs and other measurement standards the same, regardless of who is buying or receiving the ad inventory.

If you know you send an average of 800,000 click throughs a month overall to the full range of sponsor sites and advertisers you support and you average $40,000 a month in income across all the programs receiving your traffic, you could reasonably assume that the average value of each click through sent is $.04. Once you have a set standard in place for determining this average traffic value, the process of evaluating new sponsors or paid advertisers for their economic value is simplified. Unless you have ulterior motivations for sending traffic to a particular advertiser or sponsor, you should be able to test and then weed out campaigns that generate less than your established eCPC.

If you have ever wondered how successful and well established ad sales companies come up with rates to charge or even the justification to charge on a per click basis for traffic versus just sending to sponsor program offers, it is by following the practice for traffic valuation noted in this commentary. Virtually all companies in this category use a similar standard for determining how much traffic is worth on their sites/networks.

As a passing thought, do not assume that you don’t need a traffic counting and delivery system based upon having only a certain volume of traffic for sale! There are too many traffic sources that may only generate hundreds or even tens of outbound clicks per day that once properly valued on a per click or per block of impressions basis, find out that their traffic is worth many times what the norm might be for your niches or specialty areas. Once you know, you can ultimately deicide whether to charge for measured advertising aka click and impression deals or to send to sponsors that convert well enough to allow you to meet or exceed your average eCPC or eCPM. This is actually a very involved topic. We are talking about empowering average webmasters to assert the value of their traffic based upon measurements that the webmaster/affiliate/publisher controls, not the sponsor program. More to follow soon.


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