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A Transparent Attempt to Explain the Economics Behind Running a Pop-Culture Website and the Need to Run Intrusive Advertising

By Dustin Rowles | Think Pieces | April 19, 2012 | Comments ()


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A few days ago, I received this email:

I've been a fan of Pajiba for years ... and I know you need the revenue from the ads and that you have a limited amount of control over what goes on the site. But the loud Olay pop up commercial is particularly irritating, and the "Break Media" ad that interferes about 50% of the time you click on a link is very irksome to deal with on a mobile phone. I hate to be one of those "You used to be cool, man" people- just wanted to let you know that you're losing a regular reader due to the intrusive ads.

This, unfortunately, is not an uncommon email (or comment) in my line of business, and they often begin with the statement, "I know you need to pay the bills, but ..." Internet ads are annoying, and the more intrusive they are, the more annoying they get. So why do we run them? Why aren't the non-intrusive ads on the sidebar enough? Do we really need the money that badly?

I've wanted to write this post for years, but I've always been afraid of being too transparent. Other pop-culture websites are not as forthcoming about the financial aspects of running an Internet business, so I long believed that there might be some unspoken rule about keeping the business side of a website to ourselves. Webmasters do not sit around at large round tables and discuss the way in which we can best exploit our readership for financial gain. It is, after all, gauche to brag about traffic numbers, and talking about money is crass, so we each exist in our own cone of ignorant silence. (Or maybe it's just me and I haven't been invited to these meetings. If so, fuck you guys.)

However, in order to explain why we run intrusive ads, it's important to break down the numbers, which requires that we get a little gauche on your asses. Hopefully, this post will not only serve as an explanation for why Pajiba -- and other sites -- run obnoxious ads, but perhaps it will be of some benefit to others who run their own websites and the business behind monetization.

It should be noted, upfront, that I'm lousy at this. I don't have an ad salesman; we don't have close relationships with advertisers; and I don't know what the hell I'm doing most of time. It's a one-person operation, and I'm doing it in addition to running the content side. Through eight years, monetizing Pajiba has been done on a strictly trial and error basis. It's like the blind leading the ignorant, and I have no sense for business, so other site runners are likely much, much better at this and may even know how best to monetize without the need for intrusive advertising.

So, how does it work? First of all, contrary to popular opinion, clicking on ads arbitrarily does not benefit the site financially. That may work on some sites, niche ones in particular (like our old site, Quizlaw.com), but most entertainment sites run on a per impression basis, which means: We are paid based on the number of page views. The more traffic we generate, the better we do. But because we do not operate within large networks with corporate sales teams, we use ad networks, which are businesses set up to impersonally run ads across a large series of websites. It differs from network to network, but typically, the website receives around 40 to 50 percent of the revenue generated from the ads, while ad networks receive 50 to 60 percent of the revenue. We have no control over what ads appear. In fact, we have almost no communication with the people who run these ad networks. (However, all things equal, I am more inclined to run ads from networks where ad reps occasionally send nice emails or are friendly to us.)

How much do they pay? A typical display ad, like the one you see on top of this page, or in the top right-hand corner, pays somewhere on the scale of $.30 (30 cents) per 1,000 impressions on a typical month. If you run three ads on a page, you might receive around $1 per 1,000 page impressions. So, it would take approximately 100,000 page impressions to make $100. That's approximately how many page impressions Pajiba generates per day, maybe a little more (3.2 - 3.3 million page views per month).

Do the math on that. Sounds OK, right? Sure, if paying server costs were the only cost of running a site. But $3,000 a month to fund an entity that posts close to 250 entries a month with more than 15 writers who contribute frequently is not sustainable. Typically, revenue from Pajiba after expenses, which includes server, server security, statistic companies, franchise taxes, movie tickets, etc., is split evenly between myself and the staff. It is also my understanding that that is the case in most web businesses where the site owners often do not contribute; it happens that I also contribute approximately half of the content (or attempt to). I should also mention that Seth owns half of Pajiba, but he only receives income if we meet a certain yearly profit threshold, which is about what a toll worker in Maine earns per year. We have never hit that mark.

Theoretically, that should come to around $1,500 a month each for myself and the writers. But it doesn't actually work that way because ad inventory is not 100 percent. On an average month, it generally runs around 60 - 65 percent, which means that we're only paid for 60 to 65 percent of the page impressions. Moreover, page impressions generated outside of the United States pay closer $.03 per 1,000 impressions instead of $.30 per 1,000 impressions. That's about 20 percent of our traffic. Plus, there's another 10 percent of our visitors who use ad-blocking software. So, after you take all of that into account, that's about $1,800) a month in revenue from three display ads, $900 for myself and $900 for the writers.

That doesn't even begin to pay for the amazingly talented and already terribly underpaid contributors we have on Pajiba. So, how do you make up the very large difference?

Intrusive ads, of course. The thing about display ads is that you are paid for about what they are worth, which is to say: $.30 per 1,000 impressions. Most people barely even notice them, so advertisers are not willing to pay you very much to run them. They're not dumb. Bigger sites with a sales team and a little know-how are probably capable of selling branded ads at $20 or $30 per 1,000 impressions and splash 3 ads all from the same product across the page at once so that you better notice, but we do not fit into that category. (We had big branded ad campaign last November that lasted for one week. It was the most glorious week of Pajiba's life. It hasn't happened before or since.) Instead, we have to use intrusive ads which are paid on a much larger scale, approximately $7.00 per 1,000 impressions. So, if a site like ours generates 100,000 impressions, that should be $700 a day. Awesome. We should be rich, right?

Not so much. Again, take away international traffic, mobile traffic (where intrusive ads are not supposed to run), and ad-blocker traffic and you're really only looking at maybe 60,000 impressions per day. However, those intrusive ads -- theoretically -- only run once per visitor per day. Even still, that would be great if that ad fired off 20,000 or 30,000 times per day. Again, however, inventory varies. That ad may run on certain days of the month or only certain times of the day, and not come around again for days or weeks. Plus, it's very often capped to a certain number of times per day because the ad network has to spread those ads around to ALL its sites.

So, after taking all of those caveats into account, how much does a site like Pajiba that generates 3.2 million page views per month (which I believe is "average" for a site in our field) reap from those intrusive ads per day? Well, I'll give you an exact number: Yesterday, from those prestitial ads and the Olay ads, we earned $42.

RICH!

So, in total, for all the intrusive ads, if we round up, and if we're lucky to run them every day, we earn $1,500 a month, split between the writers and myself. Add that to the $1,800 per month -- $900 for writers and $900 for myself -- and you're looking at around $1,600 per month for the writers and $1,600 for myself. How do you survive on $1,600 per month? How do you pay writers on $1,600 a month? You don't. You just don't. You add more ads into the rotation so you can afford more contributors. You work as many hours as your life will allow to generate more traffic, and you try and find the best possible happy medium between revenue and pissing off readers. And then you write for another site on the side to cover the cost of paying for more awesome writers (and most of the writers here also have regular day jobs or side jobs. Nobody but myself earns a living from Pajiba).

Those obnoxious intrusive ads that pay $42 a day are the only way a site like ours stays afloat. The day that we were accepted us into an intrusive ad network was one of the best days of my life, because it meant we could keep the site running. So, when I get an email like the one above, or a comment to that effect below a piece, it motherfucking stings. Because it says that people aren't willing to wait five seconds once a day to read otherwise free content. I thought maybe if I explained the mechanics behind it, readers would understand that it's not because we're trying to gouge you or ruin your life; it's because it's necessary to sustain the site.

I totally understand it if the mechanics of a browser are screwed up and those ads fire off more than once per day, or if some reason those ads are appearing on your iPhones (they shouldn't). That sucks, and I try my best to avoid that with what limited know-how I have. I get it. I don't like intrusive ads, either, though I am thankful as hell for them. In fact, when I visit another movie blog and there's some monster from a video game being splashed across the screen making me wait to find out who has been cast in what, I don't get annoyed; I'm usually a little giddy, because it means there's a spring in that siterunner's step. Content will probably be even better that day because they're actually making a few dollars. I like it when my colleagues succeed, especially the nice ones.

Anyway, that's the reason why we run intrusive ads. I hope the above explanation didn't sound too gauche or self-serving, and hopefully it's of some benefit to others considering starting their own websites. We've always tried to remain as honest and transparent as possible with our readers, so I hope this is not overstepping, over-sharing, or in any way suggesting I'm being a petulant whiner or a smug douche. It is honest-to-God the best fucking job I could ever hope to have, and the remarkable writers here are as close to a goddamn family that I have outside of my own. I hope we can continue to do this for years to come and find smarter, less intrusive ways of monetizing with the least amount of annoyance. Until then, I apologize in advance for the inconvenience.




Are you following Pajiba on Facebook or Twitter? Because every time you do an angel does the Paul Rudd dance

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