If you plan on writing for a website that exclusively relies on online advertisements for revenues, you'd do well to understand website ad math and what it means for content contributors.
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Website ad math is also relevant if you own a site and are trying to decide how much to pay for an article, but we've written this mostly from the perspective of a freelance journalist.
The key metric for an online site is the ePCM, an abbreviation for "effective cost per thousand impressions."
In essence, ePCM tells you how much the website earns per 1000 views of an article that you wrote.
A general news site might command an average ePCM of $4, whereas a niche site might command an average ePCM of $40. For purposes of this article, it doesn't matter how many ads are on the page; we're talking about total revenues for the website page for 1000 views.
We'll get to why "niche" commands a higher price than "news" in a second. But, before that, notice that we used the phrase "average ePCM" in the previous sentence.
We talk of averages because ePCM is almost always referenced as a statistical mean.
In theory, an article on Tips When Buying Lear Jets will command a higher ePCM than an article on How to Tie a Bolo Knot. The person who is interested in the former article is worth a lot more to certain advertisers than the viewer of the latter article. (Now, you should also understand why "niche" is worth more than "news").
But a site that has both the aforementioned articles on it won't necessarily track ePCMs on a per-article basis. They'll typically just say "we have an ePCM of $8" or something like that.
So, for starters, let's pose a simple question: "Would you do better by writing for a website that has an ePCM of $4 or an ePCM of $40?"
Your gut might be that the site that has the higher ePCM will be able to pay you more. However, it's not necessarily the case. That's because the lower ePCM site might have 10,000x the traffic of the higher ePCM site. They make less money per person viewing your article but they make it up on volume.
The question we've just posed is a bit of a silly exercise. You can try asking a potential client who you may end up writing for what their ePCM is, but they typically won't answer that question. It's a bit like asking your neighbor "So, how much did you make last year?"
But by understanding the concept of ePCM, you can get a general sense for what websites might be willing to pay you.
For example, let's say you are going to write for the Huffington Post. Start by going to a firm that has metrics on the site. For example, Compete.com says the Huffington Post gets 6,570,071 visitors per month. We don't know the number of page views per visitor, but we'll guess that it's 1.522 because it makes our math easier. So, that would mean they get 10,000,000 article views per month, right?
It's a news site so let's say they have a $4 ePCM on average. Do the math and you'll see that, with these assumptions in place, they are making $40,000 per month. Total online advertising revenues per year would then be $480,000 using this back-of-the-napkin estimation technique.
If you were running a massive newspaper, that is very little in terms of advertising revenues. You can't run a print newspaper with those revenues. It's tangential to the focus of this article but now you understand why newspapers are laying employees off in droves. Without print ads, the online ads alone don't cut it. If you kill the print business, you need to downsize your staff to four people max…and you become a shadow of your former self in the process.
We digress. Let's get back to our exercise. If Huffington Post makes $480,000 per year from online advertising – and remember that this isn't the case (we have no clue what the Huffington Post revenues really are) – how much should they pay a journalist to write an online article?
If you Google "site:www.huffingtonpost.com" you'll see that they have 4,370,000 pages in Google's search engine index. For purposes of this exercise, we'll assume that's the total number of articles they have. So, if 4,370,000 articles make $480,000 per year, how much is each article worth?
Again, we do the math and it works out than an individual article is earning $0.11 per year – that's right, 11 measly cents.
In other words, if a publication with these metrics wanted to pay you, Mr. or Mrs. Journalist, for an article, they'd break even (assuming there were no other costs to be paid) if they paid you an annual fee of 11 cents per year.
Want to earn $50,000 a year from this hypothetical publication? You'd have to write 1,245 articles per day to get to $50,000 (but after that you'd be making that $50,000 every year without doing an ounce of work, so don't get worried about that 1,245-articles-per-day number being so high just yet).
Let's look at it a different way. At 11 cents per year per article, with a discount rate of 10%, the perpetuity net present value of an article is $1.10. In other words, that's the value you might get paid for the article if you only received one up-front payment.
In this case, if you are getting $1.10 per article and you, again, want to make $50,000. You have to do about 125 articles per day. There, aren't you glad that you only have to write 125 articles per day instead of 1,245 per day?!
The point here is that the value of content, the value of the written word, is going down the toilet these days. A rational website with, say, a high ePCM of $40, should be willing to pay you around $10 to $20 per one-page article of about 500 words.
If you charge $20 per article and want to make $40 per hour, make sure you crank out an article in no more than half an hour (and now you know why journalistic quality is declining…journalists are on the clock being monitored for productivity like never before).
If you can do better than that $20 an article, you are doing well. Ways to do better than $10 to $20 include having a personal brand that commands some value and being popular enough to generate traffic.
Alternatively, be less popular but write about Lear jets more often than you write about bolo knots.