Business planning

Can we make some extra money by having ads on our eCommerce site?

Fred Schebesta /

We’ve got a pure eCommerce model but think that we could make some money on the side by selling advertising space on our site.

 

Does this strategy ever work? Or should you keep eCommerce sites free of ads?

 

What business are you in? I think this question is actually a question more about what your business model is about rather than if you should sell advertising or not.

 

Pure eCommerce businesses are not in the advertising business. When you are a pure play eCommerce business, your core goal is for users to go to your website, add products to a cart and checkout. End of story.

 

Nothing is more important than converting visitors into sales in an eCommerce business.

 

By selling advertising on your site, you change your business model from being about users checking out to increasing the number of impressions users make on the website, so that you can sell more ads.

 

These are two very different business models and require different processes, staff, skills and website focuses.

 

So, if you want to pivot your business to be an advertising business, here are some pros and cons:

 

Pros:

 

Extra revenue

 

If you have A LOT of traffic you can earn good revenue from placing ads. I say revenue here because there are costs associated with the advertising e.g. fulfilling it, serving up the ads, providing regular reporting and staff costs. If you don’t have 100,000 visitors plus, I would look at selling advertising as a loss-making operation.

 

Credibility because there is advertising

 

By having ads on your site that are relevant to the products you sell, some customers might find this makes your site more trustworthy because other companies trust your website.

 

Increases conversion with easier buying decisions by website visitors

 

Some visitors are guided by advertising as it can push them down a path to make a decision about a product. Given there is so much choice, a lot of users experience ‘analysis paralysis’, and can’t actually choose what to buy. Ads sometimes frame the product in a way that helps the customer make a decision to buy it.

 

Cons:

 

Diverts users away from the core business

 

If users click on an advertisement on your website, they will leave your space and potentially buy elsewhere. That is the worst thing that can happen for an eCommerce website and I always suggest providing as little number of exit points in an online store as possible.

 

Users are more distracted and it might hurt your conversion rate

 

Some users get distracted by ads and it actually causes them to lose focus and not make a decision to buy on your site; if users aren’t buying, you aren’t making money.

 

Is it worth the effort?

 

If you don’t have the volume of traffic to make it worthwhile, then reporting, sales and campaign delivery can be expensive. You need at least 100,000 plus visitors per month to your website before advertising makes sense. Any lower and the costs won’t outweigh the revenue benefits.

 

Alternatives to selling advertising that will make you more money

  • Focus on making your core business more profitable. Increase your conversion rate, get more products onto the website, add new products, improve the copy written about products, write deeper reviews and generally make your site better.
  • How can you increase each per basket sales value? Small additional items, extended warranties, up-sells in the cart, refer a friend, etc. All of these will increase the dollar value per basket. This will increase the amount of money you make without having to increase your traffic.
  • Finally, increase your traffic. Get more people to buy from your existing business. Increase your traffic with better SEO, PPC, viral campaigns, etc, and all sorts of other ways to bring more people into your website to buy from your existing profitable business.

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Fred Schebesta

Fred Schebesta is the chief executive and co-founder of finder.com.au, one of Australia’s largest financial comparison websites.

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