The latest changes in EntreCard provide an interesting chance to sit back and look at the cost of ad-oriented advertising and will hopefully be useful as people decide where to place their ads.

To understand this clearly, it is useful to grasp two key acronyms. CPC and CPM. CPC is Cost Per Click. How much money does it cost to run an ad and have someone actually click on the ad and visit the site? With some systems, you will buy ads, on a CPC basis. As an example, you might bid on an adword on Google, offering to pay five cents each time the ad gets clicked on.

On the other hand, you might pay for the number of times your ad has been displayed. This is typically called CPM, referring to cost per thousand impressions. These two numbers are tied together with a factor called a click through rate. If one out of every thousand views results in someone clicking on the advertisement, then your CPM and CPC would end up being effectively the same.

However, this isn’t typically what happens. Some sites, like EntreCard and Adgitize incentivize their users to click through on the advertisements. This results in higher click through rates. Google, on the other hand prohibits people from clicking through for the sake of driving up clickthrough rates. This results in a lower clickthrough rate. On the other hand, it means that people that click through on a Google ad are more likely to be more interested in the site they are visiting than people clicking through on an EntreCard or Adgitize site.

All of the sites have different ways of paying for ads. So, what I’ve done is attempted to normalize the data, so we can do something closer to an apples to apples comparison of the different advertising options.

I’ve chosen five different advertising networks to compare. I run ads on three of three of them, so I could take a close look at what the underlying numbers really are. The two I’ve simply taken a look at what it costs to advertise using their methodology, so I can’t really normalize their numbers.

I’ve been using EntreCard the longest. However, I’m going to save them for last. The advertising network I’ve been using second longest is Adgitize.

Adgitize provides three different formats, the classic 125x125 advertisement, the 468x60 banner, and page peal ads. When you place an ad, your ad gets included in a list of ads that get displayed on all advertisers. With that, you can’t tell exactly how many impressions you’ll get, where they will be, or how many clickthroughs you’ll get.

I’ve only used the 125x125 advertisement. The ad costs $7/week, $10/fortnight or $14/month. I’ve been running month long ads. In addition, since I run Adgitize ads on my site and since I click on their ads, I earn money back from Adgitize and it is self-sustaining.

They had some technical problems as they got going, so my statistics are based on data since mid January. Based on the monthly advertising rates, my effective cost per thousand impressions has been 7.64 cents. Since to incentivize clicking, I get a good clickthrough rate and my cost per click works out to be around 1.09 cents.

CMF Ads runs 125x125 advertisements a month at a time. With CMF Ads, you select the site you want your advertisement to run on. The site owner can accept or reject the advertisement. Typically they will have a few slots for advertisements. If they have more ads than slots, the ads will be displayed at random times on the site proportionately to the number of ads and slots.

CMF Ads has a credit system. You earn credits for running ads and you use the credits to place ads. You can also buy or sell credits and they are worth 25 cents each. Site owners can specify how many credits to charge for an ad. Most people charge five credits. Sites with low traffic charge less and a few charge more than five credits.

I’m running ten ads at CMF right now. Converting credits into cents and normalizing it over a month long period, CMF ads are currently costing me about 7.26 cents per impression, or slightly less than Adgitize on a CPM basis. However, this isn’t completely a fair comparison, since Adgitize incentivizes people to click on ads, so Adgitize has a higher click through rate. When you compare CPCs to CPCs, Adgitize costs about 1.09 cents per click and CMF costs 2.21 cents per click.

Then, there is EntreCard. At EntreCard, you earn credits for clicking and for running ads. You can also buy credits at about .6 cents per credit. The ads are 125x125 and they run for a day. Like with CMF, they require approval. I’ve tracked my advertisements on EntreCard since mid February. I don’t know how many times my ad has been displayed, so I can’t give you a CPM calculation. However, working out the number of credits I spent and the number of clickthroughs I received, I could calculate the CPC for EntreCard. CPC is currently 7.56 cents. This is substantially more expensive than Adgitize or CMF Ads.

This may be because EntreCard credits are misspriced and a fair value for EntreCard credits is probably about .16 cents per credit. This would put them in the range of the other advertising networks.

With that, EntreCard has introduced new Paid advertisements. My understanding is that you buy these ads like a traditional ad buy. You have the option of buying credits on a CPM or a CPC basis.

On a CPM basis, they are charging thirty cents per thousand impressions. You will recall that Adgitize and CMF Ads charges around seven cents per thousand impressions, so their CPM pricing is three times that of Adgitize or CMF Ads. To make things worse, they double it for targeted ads.

On a CPC basis, they are charging two cents per click. That is in range with the other networks, but less than the effective CPC rate for earned ads on their network. It seems as if this disparity may contribute to some of the concern with their new advertising program. There are many other concerns with the new program, but I’ll leave most of them for right now.

With one exception: With the introduction of paid ads, earned ads get displayed, and hence clicked on less frequently. So the value of an EntreCard ad is effectively decreased. Given the frequency with which paid advertisements are appearing, the old practice of ‘chain dropping’, clicking from one ad to the next, gets broken as people hit paid sites that are either coming up to frequently, or do not have an EntreCard. This will further depress clickthrough rates and hence the overall value of EntreCards.

Now, lets look at some other ad networks that I haven’t advertised recently on. With BlogAds, you run an ad for a week. They have a bunch of different formats, all of which are different from the standard 125x125 ads popular with the networks above. The standard ad has a 150x200 pixel image and 300 characters of text. They recommend a price of eighty cents per thousand impressions for a standard ad. However, it appears as if people many people are selling ads at half that price.

Project Wonderful also sells ads on a CPM basis. Their approach is a little different. You bid on 125x125 ads. Any day that your bid is the highest bid, your ad runs. The bids tend to be all over the place, but the bids are very often under five cents per thousand impressions. Based on this, I may take profits from Adgitize and roll a little bit of it into Project Wonderful ads. However, I’m unlikely to advertise there.

Then, there is the big daddy of all the advertising, Google Adwords. Like Project Wonderful, bid on ads. Adwords has lots of different formats, but they are considerably different than the 125x125 ads that are used in blog advertising. The closest is a 200x200 small square. Adword ads start at one cent per click but they can go very high, depending on the adword chosen. Perhaps, someday, if I get enough money coming in from various advertisements, I’ll plow some of it back into Adwords, but I’m not planning anything like that any time soon.

Hopefully, this helps put blog oriented advertising into a better context as you look at sites like Adgitize, CMF Ads, EntreCard, Project Wonderful and others. What do you think? Where do you advertise?