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The ads they want to put are graphic banner ads. Would having their ads on our site be a conflict with our AdSense TOS?
If its NOT contextual in any way, then no, you're clear with AdSense.
But is it worth it? When they approached me with a banner CPM, it was something ridiculously low like $0.16 per 1,000 people.
There's tons of better programs out there. What are they offering you?
You say that you were "approached with a banner CPM, it was something ridiculously low like $0.16 per 1,000 people." I thought CPM ment that you are paid X dollar amount per thousand page impressions, but $0.16 per 1,000 people sounds like CPC talk. Am I confused?
Also, what other programs do you feel are better?
Are you confused? Don't set me up like that, I'm only human...
Yes, they were willing to pay me the overwhelming sum of $0.16 for every 1,000 page views of their banner. 10,000 page views = $1.60, not even enough for a Starbucks latte. It was all I could do to write back a civil reply, given that even a handful of low AdSense clicks out of 100 impressions would surpass that meager amount.
As for other systems - Burst media? AdSonar? Those are two names kicked around here on occasion. I don't like graphical banners. Never have, never will, and will definitely never run them. So my exposure to them is pretty limited.
I think most pay more like $0.50 - $2 CPM's, but this is just a guess from memory. I think I read last year at Burst that if you allow them to run an interstitial ad on your site (the kind that shows up as the surfer moves from one page to another... extremely annoying for your visitors), they might pay as much as $8. But they've removed all that data from their site, so you'd have to contact them.
AdBrite might be another solution that could work for you.
Whatever it is, make sure that they DON'T do any "contextual" placements, keyword or banner, and then you're safe with AdSense.