On my sites video advertising revenue is the big growth area. The following graph shows how my advertising revenue sources (% wise) have changed over the past two years (yellow – video, reddish purple – adsense, blue – cpm ads). I have made no changes to my use of “display” or CPM advertising (the blue area) but I have added adsense and video in completely new placements on my sites.
You can see an almost perfect inverted ‘S’ curve as the revenue driven by display advertising has fallen as a proportion of my site revenue to only 20% from 100% in under a year. Video is now showing similar growth to Adsense and the overall pie is continuing to grow very nicely (up ~300% since Jan ’05). The question that comes to me now is… how worthwhile is it to show video ads, contextual ads AND banner ads?
Digging a little deeper the average click on a CPM banner effectively earns me 1/3 of the average click on a contextual ad and something like 1/30 of a video ad plus I get approx 50% of the clicks I get on contextual ads on my CPM ads. So if these users were to click on adsense (at only the CPM click through rate) instead I could make 3x more revenue from those same impressions. It isn’t likely to be that great but even if they were 1/2 as likely to click on the adsense ads as the CPM ads the revenue would be 50% higher for those same visitors.
A final point is this. Taxes are getting very important to my little business now that it’s getting to be a large chunk of my income and having a multitude of advertising partners is becoming painful on my tax returns so I want to consolidate my revenue streams and hence minimize my accounting costs. Things are looking bad for the lifespan of CPM ads on my site. With a bit of luck they will be gone completely by April and I will let you know the results of banishing them.
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