Ready for Anything

As an internet startup, how do I project advertising income?

How do I realistically estimate year one advertising income for a startup? What sources can I draw upon for comparison? What metrics can be used to build on income after the first year?
min read
Opinions expressed by Entrepreneur contributors are their own.

Forecasting revenues is tough at any time, and so much harder for startups. Rather than trying to find a precise number, it's often easier to develop a range--bookends of high and low projections.

Web advertising is typically paid for in one of two ways:

* Impression (CPM ) based: Advertisers pay to have their ads shown to your visitors, and pay per impression. The CPM (cost-per-thousand impressions) varies dramatically depending on the value of your audience; it can range from pennies to hundreds of dollars or more for niche audience.

* Performance (CPA) based: Advertisers pay only when a site visitor completes an action (fills in a form, purchases, etc.)

A revenue model for impression-based advertising would look like:

# ads per page * # pageviews * CPM

A revenue model for performance-based advertising would look like:

# ads per page * # pageviews * (% that take action) * CPA

Obviously you make more if you have more ads, but at the risk of driving away your visitors.

The common element is that if you have a lot of good quality traffic then advertisers will be more interested.

More from Entrepreneur

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

3 Mind Hacks for Overcoming Your Fear of Marketing Yourself