I think that it is fair game to say that most of you reading this post either own a blog now, or would like to own a blog sometime in the near future. It comes as no surprise that many of us, myself included, like to monetize what we have with some advertisements to get some extra cash in our pockets. The average blogger will earn around $200 a month from private ad sales. But no matter how you decide to monetize your blog, it’s important to understand how pricing SHOULD work, so you can maximize your profits!

The most typical forms of blog monetization are through text ads and banner ads, both of which can be located pretty much anywhere on your website. Regardless of the format, what I am going to be talking about will apply as long as you offer your ads paid on some kind of periodic system. For example, maybe you charge your advertisers every month to put a banner up on your site; maybe you instead go by the week, or even semi-annually. Whatever the case, chances are that an ad today, is worth less than an ad tomorrow if you are running a successful blog. This is what we call in economics the “time value of money.”

The Time Value Of Money: So why is a dollar today worth less than a dollar tomorrow? Holding inflation aside, which will naturally cause the value of money to appreciate over time, we assume that you could always invest anything that you own today and make more money into the future! The less time you have to invest, the less money you will have in the long run.

So what am I going to talk to you about today? I’m going to talk about properly valuing your ad real estate using compounding interest rates. This is an important lesson, as you could be losing hundreds of dollars if you don’t keep this in mind when you negotiate.

Don’t Rip Yourself Off!

Just a few days ago I received an order for a text link ad, only the advertiser wanted to buy a text link for an entire year… that’s 12 months worth! While this was great news, ordinarily I would have just asked him to pay for one month at a time. Not wanting to lose such a massive sale, I decided to use a compounded interest chart to map out what the fair cost would be.

A typical blog owner would say that if my current rate per month is $20.00, then 12 months would be $20.00 x 12, or $240. This sounds fair, right? WRONG! If this was your answer, you need to seriously rethink the way you do business. Assuming that you are running a decent blog, your rates will go up over time, correct? Therefore, we need to adjust for this when we work the rates into a 12 month period.

What I have done is create a compounded rate excel file that will take a starting rate (e.g. $20.00) and adjust it up x% for each month, depending on how quickly you predict you will develop your website and increase the value of the advertisement. A small note, this is not the same as adding 60% for 12 months of 5% growth… this is wrong. The way that this works is that we would start at our base price, $20.00, then add 5% for the second month, or a new cost of $21.00. After that, it is a third month at the second month cost plus 5%, or $22.05. This process continues all the way to the 12th month, when each ad spot would cost $34.21 adjusting for that 5% growth we expect.

Think it doesn’t make much of a difference? Think again!

If you had used simple straight-line growth at a constant rate, you would have billed a total of $240 for the ads. However, if you used a 5% growth per month, you would have billed a total of $318.34… that’s a difference of $78.34! This is revenue that you are just giving away if you are going to give an advertiser the same rate into the future.

The Net Fool’s Advertising Cost Model – A FREE Gift to You!

I have developed in Microsoft excel a model that will take two inputs, a base ad price and a rate (specified by you), and generate a 12-month pricing plan… showing you the difference between constant rates and compounded rates. It’s very easy to use, but if you need some help, follow along in the video so that you can see just how to use this powerful model.

DOWNLOAD THE NET FOOL’S ADVERTISING COST MODEL

Remember, you can really use any growth rate that you want, and my 5% is only a sample. Suppose you are a newer blog and you are going to grow tremendously in the first few months… maybe you would like a rate closer to 20% growth? Or suppose you are an old timer who doesn’t increase traffic as much as you should… perhaps you use 2.5% growth? My model can pump out valuations 12 periods into advance, and you can look anywhere in the middle and pick out, let’s say, 8-months of payment if you’d like.

Bottom Line: If you are going to sell ad space to your users, you better make sure that you aren’t ripping yourself off! If somebody asks if they can pay for a year of service… don’t tell them “no!”, tell them that you need to account for 5% growth and show them my model in work… they should easily agree to the terms. Heck, it works for me!

- The Net Fool

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The following is a guest post that was written by Caden Grant, who blogs about making money at CadenGrant.com. Caden is a fresh face in the MMO world… check him out!

Search engine optimization is very important for any blog right? The better your blog is optimized for search engines, the more traffic you get. The more traffic you get, the more money you make. There is a lot to learn about search engine optimization. Many bloggers make simple mistakes… so I’ve made a list of the most common search engine optimization mistakes most people make. Try to avoid these mistakes and it should help you out.

1. Not updating and maintaining

This is very important. Most successful bloggers or website owners do this, but if they don’t it will affect their ranking. If you don’t keep up to date with the new algorithms of search engines, your page will eventually drop in the rankings. Some people think that after optimizing their website, they’re done forever. Well, this isn’t true. Try to always update your web page and work on your search engine optimization. As far as updating and keeping up with the competition, it’s also important to update your content. Google likes updated content and will make your page rank better in the SERPs.

2. Wasting your time on the meta tags

This is another common one. People think that if you get your meta description and keywords tag right, it will help optimize your site to perform well in the search engines. Well, this also isn’t true. Nowadays, meta tags don’t really help at all, they’re mostly a thing of the past. Now, you don’t even need the meta keywords tag as it doesn’t have any effect on your rankings. Although, the meta description tag does come up as the description for your website in Google.

3. Not minimizing duplicate content

Duplicate content mostly refers to blocks of content on websites that match other parts of content on your website. Some examples are discussion boards like vBulletin that can show the regular version of a post and then a different version, WordPress, printer-friendly pages, etc. Some people will use duplicate content to try to gain more traffic from search engines, but it’s not necessarily good for your users… or even yourself. Google will probably think you’re trying to deceive your users, and it will hurt your search engine rankings or cause in complete removal in certain search engines. You can try to minimize duplicate content in a few ways.

1. You can tell the search engines to block certain pages through your robots.txt file.
2. Use a 301 redirect. A 301 redirect, (Permanent Redirect), will redirect your users and search engine spiders to the actual page that should be displayed. (Do this in your .htaccess file, look up 301 redirects)

4. Canonicalization Issues

Canonicalization is a term that means you can get to your website through different urls like for instance www.yoururlhere.com and yoururlhere.com and someotherurl.com. Decide on the link you want and use it. You can use Google webmaster tools to tell it which URL you prefer to be indexed and Google will use that link for future crawls. Another way to do this is in your .htaccess file. Use this code:

RewriteEngine On
RewriteCond %{HTTP_HOST} ^example.com$ [NC]
RewriteRule ^(.*)$ http://www.example.com/$1 [R=301,L]

Replace it with your link details of course, then save it and upload it. That’s it!

5. Not using the HTML attribute rel=”nofollow”

As Wikipedia states: nofollow is an HTML attribute value used to instruct some search engines that a hyperlink should not influence the link target’s ranking in the search engine’s index. It is intended to reduce the effectiveness of certain types of search engine spam, thereby improving the quality of search engine results and preventing “spamdexing” from occurring. NoFollow is not meant for blocking content or preventing it from being indexed, but instead is meant for telling the search engines to not affect the pages PageRank. For instance, the “About Us”, “Contact Us”, “FAQ”, “Privacy Policy”, etc aren’t really important enough to have a PageRank.

6. Not using relevant keywords when linking internally

Try not to use the words like ‘click here’ or ‘here’ or anything similar when linking to posts or something within your website. Try to use keyword relevant links. Like if I was linking to 10 Ways to Make Money Blogging, I wouldn’t link to it saying “Click here.” Instead I would link to it using the words 10 Ways to Make Money Blogging.

7. Ignoring the <title> tag

The <title> tag of your website in the heading of your code is very important as it comes up in the search engines for the hyperlink to your website. Use relevant keywords related to your site in the title of your tag. If your website is about making money online, include those words in the title of your Web page.

8. Using JavaScript menus

JavaScript menus aren’t necessarily bad… but just know that search engine spiders cannot read JavaScript. So, if you can, try to stay away from them altogether.

9. Letting pages get indexed that shouldn’t be

There are certain pages on websites that shouldn’t be indexed in search engines. For instance, printer-only versions of web pages, or just content-less pages with no use to the user. Go to Google and use the site:link.com/page.php or whatever to check and see if certain pages that should not be indexed are indexed. If you find pages that shouldn’t be there, you can tell the search engines to block them using the meta robots tag in the heading of your website and the robots.txt file.

10. Not using SEO friendly URLS

Not using SEO friendly URLS is also another mistake bloggers make. For instance, if you have the link http://www.linkhere.com/page.php?id=3&blahblah=computercases it’s not very friendly to the search engines. What would be a better option is something like http://www.linkhere.com/computercases/ or something similar. In wordpress you have the option to change your “permalink” so that it’s more SEO friendly.  It should be under the permalinks option in your settings. Choose custom structure and put /%postname% in the field.

11. Using flash without HTML

Flash might look good but it’s not good for the search engines. Search engine spiders can’t read flash (yet). So either try to stay away from flash or as an alternative create an HTML version of the web page and optimize it.

12. Images as headlines

Some people think that images do better as headlines but it’s really better to use h1, h2, h3 and so on for headings. Images are good but text is great. Search engines love text. Although, be sure to use the alt=”" attribute when using an image to describe what the image is.

13. Lack of keywords in content

To rank for certain keywords, of course you have to have keywords in your content. Put them where necessary. Putting them in heading tags or in bold is really good. Just try not to make it look spammy. Write for people not for search engines.

So there you have it. 13 common mistakes most bloggers make when blogging. If you try to avoid these problems, they should help you in optimizing your own blog for success!

-Caden Grant

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