Can websites Survive on Online Ad Revenues?

Online ad revenues has been the major setpiece for Google’s success as a company. Of course, a lot of websites are currently survive on these kind of revenue models. However, the question really exists, is this sustainable? Our contributor, Wannapreneur presents a bleak picture to whether the websites can really survive on this kind of business model.

Ever since Google released Adsense, it changed the face of how people look at web advertising. Now, practically anyone and everyone could become either an advertiser or ad publisher. As more are taking to the web to spin out their own online ventures and trying to be the next big IT startup, one question I keep having is “what exactly is your revenue model?”.

A lot of startups I see (especially local ones) basically follow this trend : “We offer the best (in our opinion) service or feature which everyone would use. We expect our user base to explode into the millions soon, then advertising revenue will start to flow in. Meanwhile its Google Adsense for us.”

I would think that score A+ for optimism and pretty much a C- (a tad generous already) for feasibility. My rationale being that advertisers are a picky bunch and if you want to compete in this market, you can either choose to look at yourself in a broad sense as an “ad publisher” or more narrowly as an “online ad publisher”.

If you want to opt for a broad definition, how do you compete with traditional advertising in all its forms? This would include print-ads, posters-ads, radio-ads and television ads just to name a few. Would you be more cost-effective or boast a high conversion ratios? Do you know the pricing model for each and can you target the right audience your advertisers are looking for ( meaning : do you know if the eyeballs on your site are glued to the head of a 16 year old youth or a 25 year old yuppie professional? )

How about just looking at a narrower scope as an “online ad publisher” ? Sounds like something more in your league? Hey, wait a minute, wouldn’t that make your strongest and most direct competitor, the exact folks who were your first income source – Google Ads? Otherwise, is there any way you can build yourself into a strong value contender for online advertisers to consider?

I seem to paint a pretty bleak picture, don’t I? But that’s the way I see it and you can debate with me on it. I would not go so far as to say that this is a sure-fail model but those who have succeeded with such a revenue model typically provide high value offerings for a certain demographic (who are also conveniently the biggest online spenders) that advertisers have great interest in.

But in most general case, I haven’t found the ad revenue approach a really convincing model for startups to substain and grow themselves in the long term, but hey, some of you may just prove me wrong.

Editor’s Note: This article is also published in Wannapreneur’s blog.

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