Jacques Mattheij

Technology, Coding and Business

Advertising as a revenue stream

With all the attention shifting to freemium and charging directly for the product, I think it’s time to make the case for advertising as a valid way of creating or augmenting the income you make from a web property.

Over the years, I’ve shifted ‘models’ several times. Initially, it was all advertising, then we moved to subscriptions, and now we have a mix of both. Typically, the ads bring in about 40%, while the subscribers the remainder.

For me, the way I look at advertising income is as the absolute lowest baseline way in which a visitor to the site can pay. The numbers need to be huge for this model to work, unless you’re lucky enough to be in a segment where advertisers still pay insane amounts of money, or if you plan on making direct ad sales your every day focus (something that we’ve decided not to do).

We try to keep it tasteful (one ad per page), and we try to give the advertisers value for their money so that there is a long term relationship. Right now, a ‘slot’ on ww.com goes for 1000 USD per month, typically that exposes an ad to about 100K uniques every day. This works out to a ridiculously low ECPM. I don’t bother with sophisticated reporting, the only way a customer has to relate their expense to their income is by tracking the traffic from the landing page that it gets sent to. Simple, robust, very little overhead beyond the initial setup (about 5 minutes for an ad). Payment is via wire transfer, so no need to have a merchant account, no bouncing checks, or other complicating factors.

Yes, it’s cheap for what we offer, and if I wanted to, I could probably squeeze more out of it, but then I’d have to spend more time on it too, I’d have to improve the reporting, and there would be a higher turn-over.

If you can use adsense (we’ve been blocked from using adsense on ww.com, there is no recourse for it, so we don’t even know why we’ve been blocked, same on reocities.com), then that would give you a baseline to figure out what your traffic is worth, I’d advise you to start selling your traffic at a 100% premium compared to what adsense brings initially, then slowly increase it over time as you get more advertisers competing for the same pool of traffic.

Remember that repeat sales to the same customers is by far the easiest way to keep the money flowing and that a satisfied long term customer is more important than squeezing out the last drop on a deal that only lasts for a month.

Using advertising like that you can easily add another revenue stream to your site, even your premium product gets better because you can add ‘no ads’ as a feature.

If you’ve got significant traffic and you are not experimenting with direct ad sales, you are probably leaving money on the table.<!– 165 –>

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