Ad Revenue Revenue Business Model: Opinion / Experience?

[DeletedUser397]

Sorry if this has been discussed before, but I had trouble searching for exact threads on the topic.

To those of you who have done well in the Internet / mobile space, what do you think of the ad-based revenue model? Facebook and larger sites were built on this, but it generally means being in the red at first, or going the investor route.

The reason I ask is because I have a few fairly solid ideas that could be very "BIG" industry-shifting concepts, but from looking around it seems a lot of those such types of sites/apps aren't making any money but may eventually get bought by a bigger company or go for an IPO etc. My top idea is similar to a mix between Yelp / Amazon.

I've sort of set aside my random projects and side work aside to focus on 1 at a time and I'm trying to decide which 1 project to attempt first. I'm wondering whether I should start with small projects that simply generate some passive income (like ebooks that I know will make money for a fact), or focus all my energy into the one big idea that I think could have the most impact but has a fuzzier picture of actual revenue/profit.

Thanks for any opinions, experience, and/or advice/tips.

 

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[sle3pyguii]

Go for the passive income first.

1. The BIG idea won't be a short term project. I have yet to see an industry-changer hit it big with a short-term project. You'll need money to keep you afloat during that time.

2. Paid marketing will shorten the time of your user acquisition. Free marketing might be free, but it'll take undoubtedly take more time and effort.

If you can, try to find other methods to make money also. There is usually more than 1 way to make money off a website.

 

[John the Man]

I agree with sle3pyguii. I also have a big idea and smaller ones but I've chosen to focus on the big one. I could have seen some results with the smaller ones now but unfortunately, I lost the opportunity with the smaller ones and the big one is still yet to be finished. I should have learned from software gurus, the reason why there are versions as they've launched the software straight away in the fast lane only to be modified with newer version which also generally converts to more money.

 

[MJ DeMarco]

what do you think of the ad-based revenue model?

Hate it.

It's predicated on huge traffic. With huge traffic you will need huge infrastructure. And you're faced with the chicken/egg connundrom -- how on earth do you get traffic if you have no revenue to finance ad spend?

Just to give you some ideas ... the "ad based revenue" that this forum makes would just barely pay my electric bill, assuming it wasn't summertime. I've focused on this revenue model for 7 years, traffic has grown year by year, at a nice linear pace, and it barely makes anything worth writing about.

The membership revenue (different revenue model) that this forum makes would be sufficient enough to simultaneously finance a $1M mortgage and a Lamborghini Aventador. I've focused on this revenue model for 18 months and it has made more $$ in 18 months than 7 years of "ad based revenue"

One revenue model, IMO, makes thousandaires.
The other, makes millionaire/billionaires.

That is of course, you end up the next Instagram success story. Those stories are few and far between.

 

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[constantin]

well one thing you could do is if you have a very eye catching site that people visit have a mixed business model
fill your site with ad's and then offer to remove all the ad's from the website for a monthly membership.
you can call it a customers support of the website or something similar to that but if you do do that then make sure you doing something extraordinary

 

[100k]

I like it, but like others have said. You need lots and lots of traffic and even then you will be making pennies compares with another monetization model.

But.... I do like it. As long as YOU are in control ... i.e you own FB ads platform or Adsense/Adwords platform and you choose the prices.

 

[Andy Black]

R + R = Profit

where R + R is Repeat Business and Referrals

The problem with the pure ad revenue and affiliate model is you crack open the champagne and celebrate when someone LEAVES your site to go become someone else's customer.

There's ways of doing it so you acquire customers for free by offsetting your front-end costs with ad or affiliate revenue.

They are also quick ways to get started, but they are also quick ways to get banned from AdWords.

Case in point, I worked for a company buying 1m clicks a day for €120k a day. Not one single customer aquired. That's not a business, but a cash-making machine. They never reinvested profits to build a business, because their mindset was wrong to start with. I have seen this numerous times.

My advice, add value so that people buy from you, and come back for more, with friends.

 

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[100k]

How can you buy 1mil. clicks and not get a single lead?

Did they buy bot traffic LOL ?

 

[Andy Black]

AdWords traffic. PPC arbitrage. It's alive and well, just look at Ask.

Forgive yet another link out... I haven't worked out how to embed my vids:

http://www.andyblack.net/the-most-important-formula-in-business/

 

[Andy Black]

and this one:

http://www.andyblack.net/direct-response-metrics-for-ppc-traders/

 

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[DeletedUser9]

People always say the internet advertising revenue model is dead, in my opinion this couldn't be further from the truth.

People look back at the past when 50$cpm and 10%CTR's were commonplace and think internet advertising dying but they forget:

More people are online than ever
More companies than ever are marketing online i.e. buying ads
People spend more time online than ever
Ad spending is at an all time especially mobile ad spending

Obviously the barrier to entry is creating something of great value that people actually will actually go out of their way to visit/use

I doubt you will remain broke if you created something that is of value to 1,000,000 people daily.

Even if you don't generate much through ad revenue your asset value could be huge i.e. Huffington post made only $10,000,000 yearly but got acquired for $315,000,000 (obviously this was a big operation with 100's of employees)

Im sure of one thing its not the easiest business to start and grow, you will need creativity, lots of energy and time in the early days.

 

[M&N]

Bump. I'd love to learn more thoughts of other members on this. Has anyone of you achieved a signifcant success with ad-based revenue model?
I've done pretty big research on this and yes, there are some success stories, but like MJ has already mentioned, they seem to be far and few between.

Here's one interesting article: http://www.businessweek.com/articles/2014-04-24/scott-delongs-viral-nova-success-formula
The guy has been pretty successful with ad-based websites. Although what he does with Viralnova IMHO lands in gray area, there are other content curation/media companies doing it properly and still doing great.

But what's more interesting, there are many acquisition deals in this space. Just recently I've read that the founder of "addicted2success" was offered $1 million for his blog which he started in April 2011.

Any thoughts?

edit: corrected grammar

 

[Andy Black]

Here's my thoughts. I'm going to keep adding to that post too...

The allure of "easy money"

 

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[pickeringmt]

My first foray into online business was a niche site

I did great, and ranked well for my term. The rank has held for over a year and a half now with no work.

I have mad almost $40 in adsense money in a year and a half.

Im not complaining; this was my first baby step into online. Im just pretty sure that this is one of the weakest ways to monetize.

 

[healthstatus]

Did anyone of you achieved a signifcant success with ad-based revenue model?

yep, takes 800,000 visitors a month or more.

 

[whiteeclipse]

yep, takes 800,000 visitors a month or more.

If you place google ad banners on your website, what would be your revenue, $2-3 CPM? Then google takes 20% and they give you 80%, correct? 800K visitors a monthx 3 CPM = $2,400 a month and -20% (google fee) = $1,920. Does that seem about right?

For 800K visitors a month, how much bandwidth a month will you need, 6T?

 

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[healthstatus]

If you place google ad banners on your website, what would be your revenue, $2-3 CPM? Then google takes 20% and they give you 80%, correct? 800K visitors a monthx 3 CPM = $2,400 a month and -20% (google fee) = $1,920. Does that seem about right?
For 800K visitors a month, how much bandwidth a month will you need, 6T?

Too many variables to give any good answers. CPM rates you quoted are high for my vertical - health & fitness, Google pays about 60% last numbers I saw, bandwidth depends on what you are serving, how many repeat visits, how much you host vs offloading to CDN or other server content....

 

[whiteeclipse]

Too many variables to give any good answers. CPM rates you quoted are high for my vertical - health & fitness, Google pays about 60% last numbers I saw, bandwidth depends on what you are serving, how many repeat visits, how much you host vs offloading to CDN or other server content....

Wow, even with 800k visitors a month a site won't be able to bring in at least 2K per month with google ad banners? And let's say hosting ends up costing 1K per month. That's a lot of work for little money.

I just looked up google ad banners payout, it's 68%.

 

[healthstatus]

That's a lot of work for little money.

You can also have multiple ad units per page (your numbers are based on one ad unit). You can add in an interstitial, direct sales can get you above $5.00cpm rates in some niches (and above $20.00cpm in a select few). Throw in some affiliate sales (not the complete evil thing people here sometimes make it out to be), collect emails and direct sell through regular email programs, and it can be a really strong 5 figure business.

 

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