Be Smart about Setting Ad Rates

It'll be up to you to set the ad rates for your site. As with any other business, how you price your inventory (in this case, your inventory is space on your site where ads can be placed) will largely determine your profitability. Set prices too high, and you're not likely to get any ads at all. Set prices too low, and getting ads will be easy, but you may not make enough to generate a profit.

Think about online ads like a pyramid. At the very top are the best ads available; these are also the ones that pay the most. At higher prices, there are fewer ads available. As you move down the pyramid, the quality of the ads goes down, as does the price they're willing to pay. So the higher you set your floor (the minimum rate you're willing to accept to showcase ads), the fewer ads that will be available to your site.

Remember, too, that yours is not the only site vying for online ads. There could be thousands of sites competing with you, and the ad exchanges will determine which sites meet the demands of their marketers. So think carefully as you figure out how you want to price out your inventory. Balance what you want to get paid with how many ads you might be able to get. Chances are, you won't get it right the first time. It's sometimes a hit-or-miss process, and it takes a good amount of adjustment to get it right.

(MLA 8th Edition)