Selling Advertising Space Part 4: Choosing Payment Options, Deciding On Subscription Lengths and Offering Refunds

Welcome to part 4 of this article series! In this post, I will continue on with questions 9-11:

• How will I accept payments?
• How long should I offer an ad placement?
• What should my refund policy be?

How will I accept payments?

There are several methods for accepting payments for your ad space, be it by credit cards, checks or PayPal. Let’s take a look at our options.

Offline Payments

Offline payments include checks or money orders. This is a payment method I HIGHLY DON’T RECOMMEND. Not only does it take more time to receive payment since the delivery of it will be through snail mail, this option offers absolutely not protection for you or your advertisers.

Example: Someone signs up for a $15 ad placement on your blog. They decide to pay by check. One week later, you receive the check and cache it, only to find out that the check is no good. You are charged a fee by your bank for the bad check and are not able to fulfill the advertiser’s order.

In the example above, not only did you lose out on a potential ad sale and waste time, you LOST money through a bank fee! This is not an ideal solution for payment acceptance. But, if you truly wish to accept offline payments, here are a few guidelines to keep in mind:

• Don’t approve the ad until the payment is sitting in your bank account – that means no ad until the check or money order has been cached.
• Rather than accepting checks, only accept money orders. This adds more security to the payment as the money order can only be produced if the advertiser is able to pay for it.
• To speed things up, request payments be sent through Priority Mail.

Google Checkout

For the last couple years, Google has offered their own checkout service. It offers buyers/shoppers one central location where they can track all of their online orders with various companies. For sellers (you), they offer low transaction fees and the credibility of being backed by such a well know company.

Pros:

• Added credibility by well known company
• Placement on Google’s “Places to Shop” page
• Google Checkout Badge added to Adword campaigns
• Discounted FedEx shipping rates for users
• Quick checkout process
• Low transaction fees

Cons:

• Advertiser/buyer must have a Google account

PayPal

This payment method, in my opinion, is the most ideal solution. Not only does it offer security for both you and your advertisers, the transaction fees are low and you won’t have to sign up for a merchant account to get started!

With PayPal, you can accept payments as well as refund payments. You get to manage every transaction online and you can print reports or integrate the system with QuickBooks in order to maintain your financial records.

Plus, PayPal now processes credit cards without the requirement of a PayPal account. That means that an advertiser can pay you with a credit card through PayPal, even though they don’t have an account with PayPal!

Pros:

• Added credibility by well known company
• No setup charge
• No monthly minimum
• No fees on refunds
• Low transaction fees
• Quick checkout process

PayPal has grown wildly in popularity – just about every Internet marketer has an account. Though this method may not have been ideal by itself several years ago, today you can feel confident that this one method will support the majority (if not all) of your advertisers payment needs.

Credit Card Processing

This is the most time intensive payment method as you will be required to apply for a merchant account in order to process credit cards. With PayPal’s latest advancements with credit card processing, a merchant account is really only ideal for shopping carts that do not integrate with PayPal.

There are several merchant account providers available today, many of which support gateway processing (online payments). Here are the two most popular:

• Authorize.net
• 2Checkout

Cons:

• Setup Fees
• Higher Transaction Fees

What Does Your Ad Manager Support?

Of course, your payment methods will be limited to what your ad manager supports. Some may not accept PayPal, while others may only accept PayPal. Of course, if you choose to use OIOpublisher to manage your ad space (which I discuss in more detail in part three of this series), you’ll have a number of great options to choose from.

How long should I offer an ad placement?

Your options for ad placement lengths of time are unlimited. You can choose to sell a space for 5, 10, 30, 60, 90, or 5000 days if you wish. Of course, there are some things to keep in mind when choosing to offer longer periods (like subscriptions). Before we get into those details, let’s discuss exactly what a subscription is compared to a one-time payment option.

What’s a One-Time Payment Option?

A one-time payment option refers to the number of payments you receive from your advertisers rather than the number of months (or days) their ad is displayed. So, you could charge $15 for a one month ad placement or $25 for a two month ad placement. No matter what the length of the placement, the advertiser will only be charged once. So, whatever length of time they choose, they pay you upfront.

What’s an Ad Subscription?

An ad subscription is very similar to a membership site payment structure. Essentially, you offer your advertisers the option to pay a lower price (say $5 less) each month if they commit to a 6 month commitment. Rather than the advertiser paying you upfront, they will be charged once a month until the subscription ends.

Type	Charged	Ex. #1	Ex. #2
One-Time	Upfront- One Payment No Matter the Length of Time	$15 = One Month	$25 = Two Months
Subscription	Monthly Until Subscription Expires	$12.50 = Each Month for Three Months	$10 = Each Month for Six Months

So, now let’s look at what you should keep in mind regarding subscriptions and lengths of time.

Will Your Traffic Increase In the Near Future?

You’ll want to be sure your price properly reflects your traffic. What if you offer a 6 month ad placement period, but three months into the subscription your traffic doubles? You will end up losing money on the last three months. Why? Because you could sell that same space today for twice as much (based on your increase in traffic), but that space is still obligated to the advertiser who purchased it three months earlier at a lower rate.

Because of this issue, I’ve elected NOT to offer placement periods longer than two months. Instead, I offer discounts for two month periods. So, my 125px banner ad spots cost $15/mo each. If an advertiser wishes to purchase two months of space upfront, I give them the ad for $25 ($5 discount). I know my traffic won’t drastically change from month to month, but rather it will experience a steady growth over a longer period of time, so two months is an ideal commitment for me.

Consider your traffic patterns when determining your placement lengths.

Subscriptions Attract Advertisers

Though 6 month long subscriptions are not ideal in my opinion, many advertisers will jump at the chance for this offer as it ensures they lock in today’s rate. This may be a great way to start your advertising off on a positive note – a steady income stream for 6 months isn’t bad.

Plus, a subscription offers a low cost entry for your advertisers. An advertiser might not want to pay you $60 upfront for a six month period, but they may jump at the chance to pay just $10 every month for 6 months. Same price, but spread out over different timelines.

Subscriptions Are Not Necessarily Secure

Though your advertiser has made a commitment to pay you a certain amount every month for a certain period of time, they could change their mind later. And with that change of mind could come an official “stop” on charges from you with their bank. Now, you could fight this and present your case with documentation, but is it worth your time? Most likely not – which means you’ve just given a discounted rate to someone who did not live up to their part of the deal.

Discounts Attract Advertisers

Why not offer a discount for longer periods? It may entice your advertiser to purchase a two month slot rather than a one month and you get more money in your pocket! As I mentioned above, I offer a banner placement at $15 for one month or $25 for two. Give your advertisers a reason to pay you more today!

What should my refund policy be?

I’m going to keep this topic short and sweet. My refund policy is:

“Ads are non-refundable unless you contact me within 1 hour of placing your order.”

So, why so strict? Well, the commitment is short (30-60 days) and my prices are low. I don’t want to have to deal with refunds (it’s just not worth my time to process them in the hopes that a longer refund policy will attract more advertisers).

If you want to get more technical, we could look at it like this…

Let’s say 15 days into a 30 day ad placement an advertiser wants to cancel their space and receive a refund for the unused time. Now, you could just refund them half their cost ($15 = 30 Days, $7.50 = 15 Days), but that wouldn’t be fair to you. Remember, as we learned in part two of this article series, your price is calculated based on every 1000 impressions – not by the day. Though your traffic may increase or decrease throughout the month, you’ve offered a flat rate commitment for 30 days, which the advertiser is now not living up to. This voids that contract you made with them. So, to fairly price the worth of this ad space, you would have to run through traffic reports to determine how many impressions your advertiser received and base your refund on that – not fun.

It’s up to you how you want to handle refunds, but I recommend not offering one unless the advertiser contacts you within 1 hour or 1 day of placing their order. Oh, and as long as you provided accurate traffic statistics and information about placement locations, you should never feel obligated to refund someone who claims they didn’t get what they wanted out of their placement in terms of traffic or sales. You’re selling ad placements – you’re not selling traffic. It’s up to the advertiser to create an appealing ad that will drive click-throughs.

Next: Part 5

In my next post, I will cover the following question:

• How do I convince advertisers to buy?

What Advice Can You Give Us On Choosing Payment Options, Subscription Lengths and Refund Policies? Have You Ever Experienced Issues Based On Your Policies?

Topic Tags:

2checkout, ad subscriptions, authorize.net, google checkout, make money online, oiopublisher, paypal, refund policy, selling ad space