How to Price Native Advertising and Sponsored Content On Your Website
Even if native advertising isn’t your publication’s biggest advertising product, it can still be a real revenue generator — especially for digital publishers who aren’t afraid to get creative. Publishers who seamlessly integrate sponsored content into editorial content are charging clients a premium. According to estimates by eMarketer, native advertising is expected to account for 64% of total U.S. display ad spending by the end of 2020.
Unlike calculating costs with CPM advertising, making a decision about how to price native advertising and sponsored content is much less straightforward. You don’t want to scare off potential advertisers by setting a price that’s too high, and you don’t want to under-value your publication by setting a price that’s too low. There is no magic formula that can help you decide how to price native advertising and sponsored content packages, but there are some general guidelines that you can follow.
Pricing Models for Native Advertising
Before you price native advertising on your website, you’ll want to pick a pricing model. Choosing a model will help you justify the price you set to potential advertisers. It will also put you in a better position if advertisers try to negotiate on your pricing or other terms during the sales process.
One pricing model for native ads that’s been adopted by large publishers like Buzzfeed is the freemium model. Publishers who opt for this model will throw in a certain number of native ads for free when advertisers purchase larger display ad packages. The downside here is that this model can devalue your native advertising and sponsored content programs. However, for publishers who are just getting these programs off the ground, offering freebies to paying clients is an effective way to slowly add the option into the mix.
Once you’ve started running native ads on your website, you’ll be able to collect data on the views for each piece of native content, as well as audience demographics. You’ll want to monitor these metrics closely since they will eventually become the basis for future pricing decisions.
The second model is the display ad pricing model. You could choose the cost-per-view (CPV) model, the cost-per-thousand (CPM) impressions model, or the cost-per-day (CPD) model. With the CPM model, the advertiser is charged a CPM based on the promotional impressions served. Over time, you can start increasing your CPV, CPM, or CPD prices. Find what’s right for you and your publication, and let data be your guide. If you choose to base your pricing model off of cost-per-engagement (CPE), then you’ll need to track page views to the native content.
The final pricing model is the time-based model. With the time-based model, you’re charging advertisers based on how long their ads are posted on your website. Of all the pricing models, the time-based model is the hardest to scale.
Other factors will also play a role in determining how much you charge for native advertising, like whether the creative is being developed by your team or the advertiser’s. Publishers can charge a premium when they develop native advertising and sponsored content in-house, however, there is an additional cost with that strategy. Publishers who handle the development of sponsored content typically charge a separate production fee, or they bake the cost into the media spend. Finding the right balance here is key, and having some flexibility to work with advertisers in different ways is helpful.
Where do your native ads appear? Digital publishers that offer cross-platform content can justify a higher rate than more traditional news websites. Native operations with millions of fans across multiple social media channels are also at an advantage here. However, it’s important to remember that native advertising isn’t something that’s being offered exclusively by the largest publishers. Publishers of all sizes, including local news sites, can sell native advertising as long as they price their packages appropriately.
Pricing for native advertising and sponsored content is based on a combination of creation and distribution. Who is creating the content and how is it being distributed? The larger your distribution network, the higher the premium you can charge.