Debugging the Myth: The Ad Revenue Business Model Doesn’t Work

Lately, I’ve come across a few entrepreneurs whose sole business model is based on ad revenue.  I hate to be the bearer of bad news, but you probably need to rethink your business plan if all you’re doing is selling Ads.

The reality is:

1)  In advertising big numbers talk: Businesses solely based on ad revenue only works for large media conglomerates with substantial traffic.  With the ever increasing accuracy of digital advertising, marketers require precise metrics on traffic volume, demographics and conversion rates.  If your blog / website traffic is below 1 million unique visitors per month, good luck getting any traction. Let’s face it; to generate this type of traffic it really takes significant investments and years of persistence.

2)  Google Ads don’t pay the bills: Google Ads essentially work by providing advertisers with a huge network of blogs.  They accomplish this by bundling up various independent blogs by category and then providing advertisers different ways to display their content through AdSense.  The model is usually based on CPC (Cost Per Click) meaning that as a blogger you only get a few cents per click; bloggers might make between $50 to $200 a month if they’re lucky, but it’s very rarely a substantial amount.

3)  Banner Ads are slowly dying: The click through rates for banner ads keeps decreasing every year.  Banner ads also require partnerships with media agencies or direct client contacts in order to secure placements.  On top of that, banner ads also require a Cost Per Click model, which isn’t very profitable for the bloggers or websites involved.

via The Man Repeller

4)  Sponsored content: Sponsored content can be a good additional avenue to dabble in. It’s very often a common practice for brands to ask bloggers to review their products.  However, this is usually only extended through a barter or product gifting. Unless you have a fanbase hovering above 10,000 fans, it’ll be hard to get much more. One of the bloggers that I respect is The Man Repeller; she strictly states that as a business she doesn’t promote products based on a barter system and is only interested in partnerships.

Moral of the story – Here are some options you can explore to generate additional revenue:

1)  Create premium content that your community or client wants to pay for.

2)  Create a service based business where you can offer clients consulting in your specific area of expertise.

3)  Create a product:  Whether it’s a book, T-shirts or jewelry, whatever you do, make sure you’re able to turn your skills into a product clients will want to pay for.

I hope these tips have been helpful. There are tons of opportunities out there to get your business / blog going; you just need to study all of the different possibilities before you get your business off the ground.  I’d love to hear your thoughts on other ways to expand business revenue online.


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One comment

  • Jay June 19, 2012  

    I gota a buddy that make a tun of money off adsense. Its very rare to be able to do that and requires a huge investment towards viral media and licensing. I would say 1 in 10,000 people who have something that is possible to blow up, never can. It takes a special nitch and a good solid goal to get in a place where you can feel comfortable. For the first couple years you can expect to reinvest everything form ad rev.