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Website Traffic & Revenue
Published: Sunday, January 18, 2004

Does traffic correlate to revenue?

Often traffic is associated with the success of the website. A content based website often gets a lot of traffic due to incoming links and higher visibility to search engines. However, generating revenue from content only websites is often difficult. It relies mainly on ad publishing as the revenue stream. With advertising rates so low these days, only a very high volume website (more than 1 million page views per month) can make substantial money.

On the other side, generating traffic for an e-commerce site is very costly because of associated advertising costs. Not many sites want to link to an e-commerce site and therefore, search engine rankings are low. However, profits for a successful e-commerce site can be very high. Even if a website makes an average of 20 sales daily with an average margin of $10 per sale, the yearly profit is $72,000.

Traffic can be related to ad publishing revenue for content based websites because higher page views generate more ad revenue. However, for e-commerce sites, if the traffic consist mostly of people who are searching for information and not ready to buy, page views do not convert to sales. The quality of traffic matters in this case. Turning internet surfers into buyers is what makes a website successful.

How revenue depends on traffic for content sites?

Let us consider the income potential for a content based website. A web page on average can show 2 banners (one on top and one skybanner on the side). The average CPM rates are around $0.50. This translates to a CPC rate of $0.10 per click with a 0.5% CTR. The inter-conversion between CPM and CPC is explained in this article.

The website can also show one pop under ad per visitor at $3.00 CPM. The revenue that can be generated is below (assuming 5 page views per visitor on an average).

Monthly Page Views     2 Banners @ $0.50 CPM     Pop Under @ $3.00 CPM

25,000     $ 25/month     $ 15/month

100,000     $ 100/month     $ 60/month

1,000,000     $ 1,000/month     $ 600/month

30,000,000     $ 30,000/month     $ 18,000/month

For high traffic websites and for niche markets, the owner can always negotiate a higher CPM rate. On top of that, these websites can also promote one line ads directly from the advertiser for a fixed amount per month. Usually that rate is around $500 per month per text ad for approximately 30 million page impressions per month or 0.0167 CPM.
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