Everyone's biggest competitor is currently Google. So, why not check out what your advertisers are paying on Google first? There's a service called SEM Rush that does just that. Type in the domain name of your top advertisers, and take the "AdW. Traffic price" and multiply it by the field "AdWords Traffic." Multiply that number by 1,000 to get an overal cost-per-thousand (CPM) for impressions. Use this CPM as a benchmark for what the advertiser is willing to pay for an average Internet user.
CPM = CPC * CTR * 1000
Your site's users are far more qualified than Google's, however. So, we need to develop some means of identifying how much better a click from your site is. To do that, I use Google Ad Planner. The "Audience Interests" section will tell you how much more qualified a user from your site is over internet average for a specific marketing category. Take the number most appropriate for your clients and multiply it by the CPM baseline you calculated from SEM Rush, and now you have a more accurate gauge of what run-of-site impressions should be worth.
With a floor and market value in hand, you can now have an educated conversation about how to price inventory. More targeted placements should be near or above the ceiling while broader placements could be priced more affordably.
Here's an example from a site that's been shut down. Let's suppose http://grounds-mag.com (a site for landscapers and grounds maintenance professionals) has a 300x250 ad that gets, on average, a .2% click-thru rate. Toro, a major advertiser, looks to be spending $0.75 per click. Based on this method, Toro would be willing to spend a $1.50 CPM for an average Web site. This should be the absolute floor that grounds-mag.com should accept.
Looking them up in Google Ad Planner, one can see that the site has 40x the affinity for landscaping then the average site. So, the CPM could be $60 for landscaping advertisers. For the construction category, the affinity is 17x. So, the CPM there could be $25.
This is a highly mathematical approach and isn't the only one to follow. I'm sure someone else has some more market-driven approaches. I'd love to hear them!
