Katie Cleary ⋅ Austin , TX Camino Real Ventures ⋅ 20 years experience

I cannot speak to the radio advertising, but can give some advice about online advertising. I used to own a website for 7 years that had an advertising business model.

First, Google AdSense. You probably already know about this, but you would become a publisher and post a variety of ad sizes, both text and display, on your site as part of the Google Content Network. You can get a vague sense of current ad prices in your industry by linking your gmail account to AdWords (the site for Google advertisers) and entering keywords that might appear on your site. You can see the estimated CPC prices, of which you would get a cut of that, roughly 68% (http://adsense.blogspot.com/2010/05/adsense-revenue-share.html). Note that users have to click on the ad first before the advertiser pays, and Google usually waits to cut you a check until you hit $100 in revenue share with them. Also note that the Content Network runs lower CPCs than Google Network (google.com) because conversions tend to be lower via the Content Network; I think the difference depends on the industry.

That said, AdWords can help you with "market prices" because advertisers are likely considering advertising on Google, as well as advertising with individual websites. So depending on how much inventory you can offer them, driven by your website traffic, and whether you are charging CPM or CPC, they can compare your rates to what they would pay on Google AdWords, where they would appear possibly on your site and others like it to reach the same audience.

We did a lot of negotiating with individual advertisers, using AdWords prices as a base with a slight mark-up (say 10-25%), which works if you feel you can justify a higher price to the advertiser because you have a particular niche they would have trouble accessing elsewhere, or if you are able to offer a custom integration package, such as where the advertising is unique (not something they could get on Google or through an ad network), or where a pitch for their product is included in a blog post (advertorial), or you give them their own "sponsorship" page if the product is helpful to your users, and as long as you are comfortable endorsing the product/tying it to your brand.

Once we found the right price with potential advertisers, we created contracts with 30 days cancellation notice, to lock the advertiser into the price we set (this may be harder to get now, but I recommend not less than 2 weeks; with large ad networks, 24 hour cancellation is common, but you are a smaller site so they should not expect that). They may still try to negotiate their way out if the ad buy wasn't working, but they did make that commitment and we would try to work with them to give extra gratis impressions, agree that they could change the creative, or give an extra placement, rather than letting them walk away. There's nothing worse than devoting inventory/website space to an advertiser who then tries to bail out, when you turned others away. I recommend getting a credit card upfront, or requesting a deposit upfront, because collections from small advertisers can be very time-consuming (another reason why becoming a publisher through AdSense or affiliate networks, such as Commission Junction, can start to look attractive despite the lower revenue).

I would also recommend not posting a rate card on your site, but asking interested advertisers to contact you via email. That way you can adjust prices as your site grows and not need to constantly update your rate card on your site. Advertisers always assume rate card is much higher than they will pay anyway, so they will use that as a starting point and want a better deal - so, better not to help them by giving them that starting point; you might get a higher CPM or CPC that way.

Good luck! It's not an easy business, but it's a fun one. Hope this helps.

Sander R. ⋅ New York , NY HS + Co ⋅ 20 years experience

eMarketer has nice (and expensive) reports (*) but it seems CPM rates are both converging and trending downward. Where a couple of years ago one might get $18 for a narrowly targeted site, this has declined to roughly $3-5. (*)

Even if you are not planing on getting revenue from Google Adsense, checking out the rates they would charge prospective advertisers to find a site like yours is very insightful:
http://searchengineland.com/google-tweaks-competition-rank-in-adwords-keyword-tool-98510

(*) links
http://www.emarketer.com/Products/Explore/Search.aspx?xsrc=TopicsPanel&dsNav=Rpp:25,N:785

2009 http://www.labnol.org/internet/average-cpm-rates/11315/
2010 http://techcrunch.com/2010/01/04/jpmorgan-advertising-2010/
2011 a recent WSJ article seems to imply they're still going down (~ $2-$9 CPM these days) http://online.wsj.com/article/SB10001424053111903285704576556973446155098.html

Finally, this page may have decent resources too:
http://guides.newman.baruch.cuny.edu/content.php?pid=113673&sid=983769

Lynette Jones ⋅ Gardena , CA ⋅ 3 years experience

Paul

Do your research and find out what other businesses are charging and ask yourself can I afford this service, would I buy this service and that will give you a good idea as to what you should charge. Think about what you would pay for a service and is it to much. What audience are you trying to attract? Research and shop around. I run a radio station and I base my prices on long term affordability. The key ingredient is research, research and research. www.newdaytalkradio.com

Hope this helps