I posted a little while ago pretty much calling into question most web revenue. In my post I mentioned;

the eventual discovery that online advertising doesn’t really work, and that there are a bunch of emerging technologies that could cause a significant dent in how much of the ad biz comes the online way.

A comment on the post asked me to clarify my views, to which I replied;

1) I’m something of an outlier. No TV, fully self-informed consumer on the odd occasions that I consume and kind of impervious to marketing – so from that perspective for me advertising doesn’t work

2) Even though Google is very targeted, in comparison to old school advertising – I believe it’s the tip of the iceberg in terms of how far we could go with true “personal intention” type stuff. To that end I believe a significant proportion of advertising as we know will be rendered unnecessary

To add fuel to my argument I was please to read this post by Yves. They have a pretty successful website that since its inception has attracted 35000 visits – that’s a fair number of visits in anyone’s estimation.

They have adds on the front page as a way to drive some revenue – if only to cover costs.

And how much money have they made?…….$15

35000 visits and $15

To put that in perspective, in order to derive a modest income of $50000, one would have to generate 120 million visits a year.

OK I know the metric is kind of wrong, advertising success is dependent on content, heavily trafficked sites are attractive and that some people are actually making money of advertising – but notwithstanding all of that…

$15

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

7 Comments
  • Ben, ad revenue is not a game for everyone. With 35,000 impressions (assuming one page per visit) a good site could make about $1000.

    But looking at their site we see that it’s very nice, for developers only, looking for a specific Javascript engine component. People visiting that site are not looking for something else. They land there looking for that specific component.

    They grab and go.

    Advertising revenue will not work on that page. Sorry…

  • @MF sure – but your comments show that in this long tail world – ad revenue is only dependable for more mass market sites – grab and go needs some other monetisation path

  • To continue from http://diversity.net.nz/sanity-returns-and-from-the-godfather-no-less/2008/09/26/

    I agree with Miki’s comments there.

    The act of informing the masses, or pretty much informing anyone outside of your circle, is advertising in one form or the other.

    Whether or not it’s paid or unpaid, or how much you pay – it is still advertising.

    The internet has revolutionised ‘advertising’ by providing a new channel or medium that can be accessed by billions of individuals and millions of small businesses globally.

    All of these people are now talking in the digital world. “Noise” levels are up way higher than it was before which places “traditional advertising” models under pressure, because of competition.

    But, therein lies the opportunity:

    1. The existence of a new platform, and its facilitation of a new advertising channel, means that businesses actually need to do much more to differentiate themselves and stand out from the crowd (a global crowd now). This can only be good for advertising, as it encourages new ideas, new creatives, creates paradigm shifts etc… Ultimately, being able to communicate with your audience IS advertising.

    2. While the TradeMe example is good, I’d argue that examples like those are the ones in the minority. It would be pretty difficult for Honda to use the same approach for all of its models. And it’d be more difficult for Ferrari to try and follow suit, because within a week, each and every automotive manufacturer are going to be asking themselves the same question – “How do I differentiate myself to get my message out there?” – And when they do ask that question, they go back to the first step of advertising – Getting your message out there, and being heard.

    3. This is where the revenue bit comes in. Each individual has the opportunity now to use the internet and reach a wider audience than they previously could (when they were limited to the Yellow Pages and local newspaper classifieds). But the great thing about the internet is that there exist no barriers to disseminating and copying, great ideas. So you end up with a truck, no, a jumbo jet full of great ideas every day! This is simply great! But…

    a. This creates competition (for both the ‘advertiser’ and ‘advertising’)
    b. Competition encourages innovation
    c. The most innovative will succeed
    d. The most innovative of the lot, will also not innovate for free

    4. The end story in unsurprising and predictable. Those who can change, adapt and innovate based on current opportunities, will be the new advertising giants of the next generation. Whether or not they are the same as the advertising giants now, remains to be seen. So it is not “advertising” that is facing extinction – it is the “advertisers” that are under threat.

    5. Lastly, to place another line of thought to point (3) – If an individual can now reach more people than he/she previously could with the internet – then how many more people can the P&G’s and Unilever’s of this world reach? These brands now have more avenues to reach their customer base, and they are likely to want to be present in as many of these avenues as possible. This again, creates opportunity.

    I’d argue strongly that the internet hasn’t diminished advertising in any way. In fact, I think that the internet has just extended the boundaries.

  • Ben , MF,

    Indeed, the ads are not making real money on our website but the approach was not the ads approach.

    If we wanted to use ads as it for monetization, I would have positioned the ads completely differently (Something more obvious).

    The approach here is that if you click on the ads, it is like sending money to us. Just like a support badge but without the annoying process of asking to supporters to use their credit card.

    So, we haven’t tried to use ads for monetization. We have tried to find an easy way for people to support us.

  • But then there’s a conflict there. The Google AdSense T&Cs are clear in the sense that one should not ask for or give the impression that clicks are welcome.

    You haven’t done that of course, but your writing here seems to suggest you expected people to use that Google AdSense spot as a “donation box”. It just doesn’t work like that.

    I know some people “click to donate” but most people will only click when something is of real interest for them.

    Perhaps in this case you should look at some sort of programme that is actually made for that – Amazon Honor System for example at http://zme.amazon.com/.

  • Quotes from me….

    “Ad based models will cease to work by 2009”
    “Traffic based models will cease to work by 2009”
    “Single income stream models will find life difficult in 2009”

    A mate of mine is the director of infonews – http://www.infonews.co.nz. I’ve been talking with them for a while now about the rapid decline in advertising and traffic as a valid model. They’ve listened and are putting some new monetization methods into play.

    They are onto it and have recognized the demise of the ad model so are doing something about it.

    We all need something ‘up our sleeves’ in the coming years.
    Go read the “Purple Cow” by Seth Godin and you’ll see what I mean.

  • This post reminds me of our thinking about 2years ago. “wow, we have 70,000 uni ques and are only making $500 a month from our ads.” Why? well there are a few reasons we identified, firstly,

    1.) Fairfax and APN need to stop dragging the market down in NZ. The direct collation between the efforts to retain revenues from Print models while the web model continues to evolve has a negative effect on online advertising rates and reduces the true value of online advertising for anyone with a dedicated online model. Without their print models supporting them I doubt their ability to generate so much profit would continue and their operations would shrink.

    2.) Google AdWords in New Zealand are a joke! in my experience, they are mostly irrelevant and very much overpriced as the majority of their customers are corporates who are competing for the same keywords leaving the minnows to fight for scraps. for example NZ herald Fairfax.

    3.) ad networks are screwing us over. With a CPC model we are effectively giving away branding space to advertisers who are only paying for conversions. The ad agencies out there are laughing all the way to the bank as they now control our income directly. and it is never good to be reliant on some one else’s business to generate you revenue.

    So we tackled this by restricting the size of our clients businesses (no corporates, help those who will help you) and we have addressed the issue from 2 angles.

    “what do our publishers want from us as an aggregater?”

    and “what do our readers want from us as an information and news resource?”

    as a result of nearly 2 years debating this problem in house we have finally found a solution which, is now in the final stages of development, will be deployed next year. We think the outcome will greatly benefit many small and niche websites throughout New Zealand at no or minimal cost and with all going well will level the playing field and hopefully destroy any perception that traditional ad models can be translated to online models.

    It is important to note, we don’t see advertising based models as a corner post for our business, just some icing on the cake. So if you were hoping to make your site profitable from ads, you better start rethinking your model.

    If you are thinking about advertising online, go for a highly targeted or long term sponsorship options. But, if you really want to market online use a PR company, not an ad network, as the PR people will give you so much more for your dollar.

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