Newbie CPM Question

Hi,
I looked into CPM for the first time yesterday, out of interest in how ppl are making money online with ads. Can someone confirm if my thinking is correct.

Your website charges $10 CPM for a banner ad, at the top of a page.
You get 10,000 visitors a day, to the page.
Thats $10cpm * 10 (thousands) = $100 dollars per day, a company pays you for displaying their banner. Is this correct ?

Next if you where to start a website, from scratch, are companies willing to pay a $cpm from day one, and if the site fails, or gets very low hits, then they simply only pay a few cents, and if it succeeds then it starts paying off.
How can you organise $cpm purchase before the site is launched, so as not to launch a "Bare" site with no ads, until the traffic builds up.

Also, does 'you' the webmaster have to pay and commisions, fees etc, out of the $10 cpm.

Anything you wanna ad, your experiences and stuff ive missed, i would like to hear about it. Its really interesting!

As a sidenote, i read the post about the proxy site, where the guy gets 70,000 hits per day, yet only makes $30 per day from adsense or adwords, when a $10 CPM banner, would yeild $700 perday. This is too good to be true, Im surely misunderstanding on my part, cos obviously you guys are in the know, and certainly know how to maximize profits.

 

First of all, no one is likely to pay $10CPM; secondly, Its not as simple as it sounds. Even if an advertsier pays $1cpm and you have 1000 page views, there is no certainty that you will actually get this amount. If it was this simple, some arcade sites, for example, would make really big money. There are a lot of people that have bad experience with CPM hence they prefer adsense/ypn.

 

here are some of the "pitfalls" to CPM based advertising a lot of people don't realize when they don't have much experience:

1) the advertiser is allowed to decide when they want to show ads. if they don't show ads to certain users (users that view a lot of pages, foreign traffic), you don't get paid

2) they don't fill 100% of your ad inventory-- there are exceptions to this, but they're rare

proxy sites have many pageviews per user. because of that, they won't have ads shown all of the time.

and 10$ cpms are virtually impossible to find. 50 cents to 1$ is more typical for most sites.

 

I dont really understand how it works.
Do the advertisers pay 'you' the webhost for every 1000 views ?

All the sites ive come across in google, suggest that u got paid roughly $10 for every thousand views of your advertisers banner on your website. So this is not how it works ?

Can you guys really simplify how this works, (yes im slow)

 

they pay you at the end of the month based on how many impressions you served up.

I don't know where you're looking, but there's pretty much no chance you'll get a 10$ CPM...

 

The first 1-2 pages of a search for 'cpm rates' in google, gave me this impression...

hxxp://www.lifehacker.com/software/announcements/advertising-with-lifehacker-029834.php
*looks like these guys are getting $30cpm in total

hxxp://www.codearchive.com/advertise.php

say you create a site with 10,000 weekly impressions, of a companies banner
and charge $5cpm, In a static fashion, ie their banner will remain in the position they paid for, for instance at the top, or side. Thats $50 per week.

Do websites work like this (independently) or do they work through an ad agency.

 

most smaller sites go through an advertising agency (tribalfusion, casale, valueclick), and they do not pay anything near a 10$ CPM, nor do they have a 100% fill rate.

it's quite common for in-house advertising companies to offer advertising at rather absurd prices (5, 10, 20$ CPM) but that doesn't mean they actually get it.

 

I cant quite grasp this yet, you are very helpful though,
Im having trouble with the quoted points.

Can you explain 'in-house advertising companies' is that where the website independently issues their price, without a third party, like those links i posted?

Is it also possible to find advertisers before the launch of a site, how do you make deals with them ?

No doubt i will have many more basic questions, so bare with me if ya can! lol

 

no, you'll almost never find cpm advertising agencies willing to take you on before you have a site launched and getting traffic.

an "in house advertising agency" is one that does not deal with a 3rd party. they're usually used for bigger, realy successful sites. think myspace, ask.com, etc. unless you're very established in your market it's probably not worth trying to set up in-house systems.