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Our traffic is about 240,000 uniques with 2.6 million page views a month. Their traffic is a little greater, but their pages views are considerably less. They are the #1 site for our general category.
They offered a flat rate of $2400.00 per month to buy out our entire ad inventory over a two or three month span. When we agreed, they requested that we run their ad on our 136 page site for two days and then negotiate a price based on CTR instead of CPM.
Any advice on the topic would be deeply appreciated.
Assume a 1% CTR that's 10 clicks/1000, or about 11 cents a click at their current rate. Do you think that's a reasonable price for them?
When you have the stats back you'll know what your CPC will have to be to make this worthwhile. Build a spreadsheet to figure out at what CPC you're better off telling them to get lost.
Another couple of things to think about:
Are they designing the creative? If they're looking for branding you might see dismal CTRs and you're giving away a lot of impressions you could be otherwise selling on a CPM basis. You may want to negotiate in a minimum charge, or at least an out clause if this isn't working out.
The clicks you're sending are to your competitor. You help build them up, your other advertisers might follow your readers.
Every 4 or 5 months he emails us and goes on about how we should work on a project together that will benefit both of us. If we say okay, that sounds good let us know what you have in mind... then we don't hear from him for months. If we ignore him, he throws another half-baked idea at us. Either there is something deceptive going on here, or I'm just paranoid.
You have helped me make up my mind. I think getting involved with him financially would be a mistake. At a gut level, I feel like I'm being stalked and played with by a hungry lion. It just bugs me that I can't figure out what his true motives are. Thanks again, I feel better now about walking away. The money just ain't worth getting eaten! I'm curious about your take on him...
And you also say that this isn't the first time you've had strange dealings with these folks.
(1) Cash up front. They WILL default on payment promises if you deliver first. If they pay half up front, they won't pay the other half.
(2) Do NOT sell them "all" of your available ad inventory; no matter what happens, include some other advertising in the "mix" on your site.
(3) Why not put Google AdSense ads on your site and tell them that if they want to buy inventory, they can do it through Google AdWords, unless they're willing to pay you $XX CPM.
I don't agree with basing the deal on CTR if you don't have creative control over the ads. But maybe it would build trust if you would guarantee delivery of the quoted number of impressions.
Just make sure he knows it is on a month to month basis and that you have the right to cancel him or raise rates as you see fit.
$80/day is better than zero.
CTR - that's his problem - you give him the real estate; it's his job to convert; if he is nice and you see long term potential and you dont want to lose him,, add a text box beneath the banners to enhance click through or you can spam your own site to boost clicks.