I still think the CPMs are optimistic. 78% of the participants in the survey seem to have average CPMs of less than $5. Which means the average CPMs in the model at $5 and above are high. I ranted on my blog about why ‘the average online CPM is now a piece of purple cloth and a gobstopper’. I think transparently demonstrating the value of online advertising will be a very important task if this model is to work.

2. Yes, this is what our research found. We have some of our survey info up on the site. Other comes from in-depth interviews. It is what fed the models. Believe us or not but that’s what we found. We agree that a site is not going to get to $200k a year on $1 cpms. They aren’t.

3. Look at a bunch of local sites and you’ll find that button ads are almost a new form of directory & promotion but that is working so far in local sites. We are not saying this is the right model but we went with current experience so we could answer questions such as yours.

4. Look at our site for a large list. You’re sensitive to the need for anonymity and I appreciate that.There is no end of examples.

5. Of course.

On an annual income of $26K where is the small blog going to find the resources to sell these locally sold ads? If they don’t aren’t they network ads, even if it is not National? I see what you are saying, but without more evidence, I just don’t believe it. I want to. I wish it were true.

2) “We spoke with many sites and went with the conservative end of the CPMs they are actually getting.’

Really? Is there anonymized data on the CPMs these sites are getting so we can see it? I really don’t believe this. I need more evidence. What was the population size, sample size, sampling method? Evidence please.

3) ‘We also found local sites have up to 20 ads per page. We went more conservatively on that.’

Where does the content I went to read go? I appreciate this and understand, but really, it’s not leaving much room for great design and it seems like a poor standard to set.

4) ‘One can and should quibble with all the numbers in this or any model and bring experience to it. But we need relevant experience from local sites. That’s what we’re tackling here. We’ll look at national verticals later.’

Can you give me an example of local site? Plus give me a call when you do national verticals.

Dig into our numbers and you will find very little revenue associated with national advertising – that is, networks as you quote them. And that we project would be at a higher rate because it would be handled by the framework, putitng together quality networks of quality sites & advertisers, not just the remnant ads that national networks are today.

We also found local sites have up to 20 ads per page. We went more conservatively on that.

Note that we also see many ways to improve the quality of service local sites gives to local advertisers; we’re not accepting the current as the right.

One can and should quibble with all the numbers in this or any model and bring experience to it. But we need relevant experience from local sites. That’s what we’re tackling here. We’ll look at national verticals later.

http://www.guardian.co.uk/media/2009/sep/14/ecosystem-hyperlocal-bloggers

and Tweeted to Jeff Jarvis who are the bloggers earning $200,000 per annum with an audience of 50,000 people? He asked me to consider this model, so I have, and here are my thoughts from the front line.

In the Google spreadsheet drivers master and drivers blogs I identify the following CPMs which revenue calculations are based on.

Average CPM
Local Banner Ad (Effective CPM) $12.00
Local Ad Network CPM $7.50
Metrowide Ad Network CPM $12.00
National Ad Network CPM $5.00

In my experience undertaking sales as an online Webby Award winning publisher, and with the other publishers I know and confided with, I would suggest the average CPM for a display ad sold over a network is less than $1. You might get $5 occasionally, even $10 once in a blue moon, but $1 or below is the average. The network ad providers who I am aware of and have worked with include: Glam Media, Gorilla Nation, E-Type, Google Adsense, Interluxe, FlipGloss, Fast Click and Casale. If you sell the ads yourself, you would definitely get more, but we’re talking small budgets here and I assume network delivered ads.

The other factor at work here is the number of ads on the page, 6.6 it would seem. At least half of these will be off-screen when a page loads putting further pressure on the CPM you might get for an ad. The $1 average is for leaderboard/rectangle/skyscrapers that are on page as the page loads.

So in my view, this model over estimates revenue by a minimum of 500%. You assume no print newspapers, so one might assume CPM goes up, but increased inventory online at the same time as print declines (from more people publishing online) means this is unlikely. There is talk currently of Google Market actually display lowering prices. It won’t be long before publishers are paying advertisers for their content!

So in summary, I think this ‘Operating income for hyperlocal businesses, year three: Large, $66k; medium, $32k; small, $26k’ is wildy optimistic and not even that large if it were true.