Forums: Discussions for entrepreneurs and small business.

You also have CPM - cost per thousand impressions, unless you are working on strictly a click through basis.

I can`t really help you with your end calculation because I think there are too many variables, but there may be something I`m not seeing. The amount of revenue you earn could very well pay for that give-away, but it depends on how much you are getting for your clicks (some people might pay a nickel, others high $$), and how much traffic you get that will actually  be interested in clicking . You are going to have to generate traffic through some other type of advertisement, which you will need to deduct from your revenue, and you are also going to have to convince people to pay you to advertise on your site. You will find that many places will not advertise unless they can see documentation of your site traffic - so I would expect to foot the $$ for the giveaways for a while. That may work fine with your comic books, but I`d also rotate what you are giving away, otherwise you will pigeonhole yourself as a comic book giveaway site.

If you are joining an advertising service, like Share-a-sale or CJ, you need to carefully check the fine print. In any advertising campaign that I have been a part of, it is against the rules to ask or encourage any subscriber to click on a banner for any reason. Some companies won`t even let you say `support our advertisers`.  They are paying per click, or transaction. These people want to know they are paying for legitimate, organic leads - but I think you are going to do direct advertising? If so, you can make your own rules.

 I`d be happy to try and help if you calculate numbers if you could give me a working example. Use me - I sell specialty food online (imported, artisan, gourmet, etc) as a retailer. What would your pitch be to me as an advertiser on your site? Feel free to draw blanks for numbers since that is what you`re trying to calculate.

Jennifer




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http://www.ifancyfood.com

Jennifer,

Thanks for the reply and I apologize for not getting back sooner (vacation and summer camps).  Here are the pseudo-pitches to the three main players:

Advertiser:

Advertise your products or services with [site] and target your offering to potential clients based on the giveaways in which they participate.  If you offer a gardening widget, target your ads to participants of lawn implement or gardening giveaways.  You can also boost your conversions by offering additional chances towards the targeted giveaway (the number of chances you may offer is determined by a couple variables as outlined _here_).   There are no costs to offering these incentives. 

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As the premiere giveaway market on the internet we see [X`s] of participants every day.  Our ad rate is $_____ CPM and $____/____% per transaction conversion.
**************

[The above section is where I need help fleshing out details and obviously it is contingent on a number of variables including traffic and conversion rates.  Are rates strictly CPM or per conversion, or can they be mixed?  Can the conversion rate be advertiser-determined with the stipulation that advertisement preference/order is determined from highest payout to lowest payout?  Higher payouts getting higher preference.  Bottom line, assuming high traffic (approaching eBay levels), could the ad revenues generated from a giveaway be incentive enough for a participant to "give" their offering away as opposed to auctioning it off or selling it?  Bigger giveaways will generate more traffic and more revenue.  Participants get [90]% and the giveaway site would get their portion [10]%.]

Provider-Participant:

Upload a description of your item and give it away!  You get 90% of the ad revenue your giveaway generates over a week-long period.  The more interest and traffic your giveaway can generate, the more ad revenue you bring in.  Maximize the interest your giveaway generate with tips located _here_, but be honest!  You will receive feedback that can impact interest levels in future giveaways.  Giveaway policies and regulations can be found _here_.

Giveaway-Participant:

If you haven`t already, sign up today and start entering yourself in our giveaways.  One lucky entrant in each giveaway wins the giveaway item.  It could be you.  Find the giveaways in which you are interested and click the Enter Giveaway button for that giveaway.  Fill out the required information and you are entered.

These are very basic pitches at this time and I am sure there is a plethora of legalities I would need to consider, but at this point I am  just interested in viability of the idea, which is contingent on the ad revenue portion of the equation.  I.e. could the ad revenue from a giveaway equal or surpass the money raised from auctioning/selling the item? 

Wow, this is a very detailed idea! This could have a lot of potential, but I see some problems. In my opinion, this is really going to be expensive to pull off. The startup is going to be very high, because you need a LOT of traffic for this to make it worth somebody`s money to be a provider. I wish I could help you calculate a # but it is beyond me. Running a regular ad banner on one of my websites versus one that has incentives are so different, I don`t think I could give you an educated calculation.

But I do have some things for you to think about:

The revenue sharing from the clicks to the provider is subject to abuse. It`s like the vote for the prettiest puppy contests. The mamas go to their favorite forum and says please vote for my dog, and then 500 of their closest friends go click as much as they can get away with. Your idea would/could be worse, because actual $$ are involved. So holding a carrot out for people to click doesn`t give much faith to the advertiser, because they are going to risk paying in vain. You`ll need a process in place to prevent that, but even if you had an IP blocker in place, there would still be the problem of everybody`s buddies helping them out, once each. You might even get a pact from the participants, to all click on each others ads `for the good of the community`. Some forums now are doing revenue sharing with adsense - they share with moderators or members, which is giving them incentive to click themselves, in hopes of making some money. That is instant disqualification from Google, but impossible to track if it is planned off site. It leads to a lot of abuse, and advertisers are paying 10 cents to 5 bucks a click for nothing.

Next - there isn`t a single advertising company that I know of that will put banners on your site for this purpose. Asking visitors to click is against all the rules of every company that I know of, because the advertiser wants people to click that are really interested. They don`t want a click and run on their tab. You will most likely have to generate this banner system yourself, which means you will need an accounting method, a validated system, a programmer, a lawyer and an accountant to sign off on everything, and you will assume liability for inaccuracies. You will also need to be insured in case you are sued by somebody who feels they are not paid correctly, or at the very least, pay for auditing, legal and accounting expenses for when these things do arise. These are probably not going to be brought forth by the little guy that puts up one item, or buys one ad, but instead from somebody that has paid a lot of money and feels they have lost a legitimate amount of money.

Lastly, I think you will have a hard time making enough money from the advertisers to make this profitable enough for provider to participate. If you look at your main traffic, you have freebie seekers. They are there because they want to win something for free, and that is the mindset they are in. They aren`t there to look for the best deal on an MP3 player from an electronic store, they are there to spend time clicking to win one for free. So getting them in the mood to spend money is something that may not happen, making the advertising more risky.
Also, ad revenue can be pretty cheap. Until you are really big, you might get pennies to a dollar per 1000 clicks. You`re going to need a lot more people than that to go around, because they may not click on every single giveaway, and it takes a while to build traffic. You can charge per conversion, but that would need further development in the banner system to know if the customer converted or not, and again, that might be low because people are there to win something for free, and not buy something. I help run a free support site, and we run in to the same thing with conversion rates. People are with us because it is free, and they`re not looking to buy the cow.

I wish I could help you more! Hopefully there is somebody here that may know more about liabilities and other legalities about running something like this. I think that is your biggest hurdle. If you can make it through that, my best suggestion would be to try and streamline the types of ads/giveaways. I said earlier to be careful so you don`t pigeonhole yourself as a comic book giveaway site, but that may be the smartest way to try this. If you appeal to a certain target group, it may be easier to get advertisers. I would be MUCH more inclined to advertise with you if I knew that you were a popular (or at least rising) site for kitchen gadget giveaways. That tells me that my target group will be foodies, or at least people that could be interested in buying some of my food. But if I`m going to be one of a kind, paired up with lawnmower salesmen and car detailers, then this may do nothing for me. All advertising is a risk, so do what you can to make it possible that they get a good conversion rate.

Hopefully somebody else comes along that knows just how to pull this off. :)

Jennifer







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http://www.ifancyfood.com

Thanks Foodie.  I appreciate your thoughts on that.  I am mainly fleshing out the viability of the idea.  I`m not a big fan of keeping ideas to myself out of fear someone will steal it.  I generally find that the feedback received outweighs the risk and that it nearly impossible to get someone to take your idea despite your best efforts even when you are trying to encourage it.  I think for a large scale incarnation as I discussed, you raise some valid points.  I am working with with another SUNer on a smaller scale version of the idea that should be more feasible, reasonable and an easier starting point.  I think we can scale up from there.  I may experiment with cost per conversion ads (to sidestep the cheating issue) that cater to the market I target in my giveaways and then develop the site to build a sense of community that extends beyond just the giveaway.  I think there`s enough of an idea to build a site for a proof-of-concept run that won`t bust the bank if it fails, but has the potential to become an actual venture.  I appreciate all the feedback.

wow  sounds like Jennifer has  some experience  on the matter.

Well good luck with it, and I`ll look forward to seeing it in action. It sounds really intriguing!


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http://www.ifancyfood.com