These online advertising pay-per-click numbers can not be right....?

by **vicseo4484** » Fri Jan 23, 2009 11:52 am

Ok so say you have a big social network website, which we'll say gets a measly 20,000,000 hits per day. (sites like digg.com get something like 800,000,000) and only .07% of those views are going to click on an ad (i think .7% is the avergae), and you only get 5 cents per click (pretty much industry minimum).

that means:

20,000,000 x .07 x .05 = $70,000

youre still making $70,000 a day, or about $25 million a year..

now think what sites like digg would make with average rates and higher click revenues?

there has to be something wrong with my numbers....?

by **AzizS** » Fri Jan 23, 2009 11:53 am

Correct -- you are wrong.
You should have figured as follows:
20,000,000 x .0007 x .05 = $700 per day

Your error? .07% is stated as .0007

by **mahog2002mahog** » Fri Jan 23, 2009 11:54 am

With the assumption that you are trying to figure what you would potentially earn. Remove the .07 that is merely the statistical representation of the possibility

by **KennedyS** » Fri Jan 23, 2009 11:55 am

YOUR NUMBERS ARE CORRECT: You are applying it to the wrong thing. The pay-per-click site charges for advertisement. If 100,000 advertisers want their ads seen by the 20,000,000 viewers per day, they have to pay, $1000 per day minimum per advertisement ran. How many ads does one concern want to run?

The amount of revenue from advertisement is greater than the pay-out at $0.05 per click.

by **dumbenuf** » Fri Jan 23, 2009 11:55 am

iryhmebetter, I think you are definitely on the right track.

Check the decimal on the CTR muliplier: .7% = .007

20,000,000 * .007 * .05 = $7,000

Besides that, the way you are arriving at the final $ looks right to me.

Just an added confirmaiton, my CTR is in line with your estimates, 0.786% and while I can't exactly disclose my exact RPC, I agree 5 cents is a good (albeit conservative) amt as well.

Either way.... not bad at all to have $2.5 MM on the books.