If you’re basing your entire business model on advertising, bin it, it will get you nowhere. Especially if your business falls within the boundaries of a mobile / web business. Why?
How shall we count the ways.
Supply & Demand – With the prevalence of Google’sAdSense on even your grandma’s blog, advertisers are just not willing to pay big bucks for most keywords. Sure you can get a list of high paying ones and try to develop a site for that, but your target market will also be so miniscule that your traffic will make a blip on the radar, and then how much fun can it be to write about “Mesothelioma Lawyers in San Diego” or “Endowment Selling”. Remember, in the web world – Quality Content is King. It’s the differentiating factor between a site that grows and a site that stays stagnant. Same that goes AdSense goes for AdMob, except that on Mobile devices people are even less likely to click through, due to the basic nature of phones. People use apps for one specific task, then close them. i.e. I’m not signing up to flickr when translating something from Catalan to English.
Savvy Individuals – Perhaps savvy is the wrong word here, but do you yourself click on ads when visiting websites, or do you simply pass over them as if they were empty space? Reckon it’s the latter, and just like you, so’s the rest of the wider internet community. And while in a perfect world we’d like to think the opposite, it’s just not the case, even when it comes to mobile applications, see above ref.
Dedicated Ad-Space – Sites that typically rank in the 1000+ range on Alexa can charge between €30-40 CPM. Mind you these guys tend to have dedicated sales teams going after advertisers, and have information on their users that goes far and beyond what you can access with Analytics -Age, Sex, Annual Income, all the stuff that warrants a high CPM. If you want to star playing with the big boys get your traffic to their level 1st, and if you can, by all means best of luck.
It’s Inefficient – Chris Anderson editor-in-chief of Wired Magazine wrote in the WSJ said this better than I ever could. “The standard business model for Web companies that don’t actually have a business model is advertising. A popular service will have lots of users, and a few ads on the side will pay the bills. Two problems have emerged with that model: the price of online ads and click-through rates. Facebook is an amazingly popular service, but it also an amazingly ineffective advertising platform. Even if you could figure out what the right ad to serve next to a high-school girl’s party pictures might be, she and her friends probably won’t click on it. No wonder Facebook applications get less than $1 per 1,000 views (compared to around $20 on big media Web sites).” You can read the article here.
Notwithstanding there are some things that you can do to augment your income from online advertising revenues, such as placement, colour coding, etc… etc… and as a supplementary revenue channel it can cover some operational costs but don’t bet your bottom dollar on it, and don’t try and raise money with it as your main revenue source. You need to have a value proposition that is actually viable, mobile or net, or for that matter with any business.
You’ve got your business idea, it’s the hottest thing since sliced bread and you’re already envisioning yourself on the cover of Time and the Economist. You’re convinced it’s going to be a unicorn, you see those 10 billion valuations – and then the paranoia starts taking over. You start thinking that you need to be hush-hush about it, you’re thinking ” Should I get my wife to sign an NDA?”. Jokes aside, maybe not your wife, but definitely the dev shop you’re going to contact, and absolutely those angel investors you’re talking to next week. Will my startup idea get stolen?
You’ve got your business off the ground, you’ve secured some financing, you’re cash flow positive, and business is good. Great! But you need to expand into a new market and to do that you need cash, it’s time to start researching European venture capital.
Your 3f’s (friends family and fools) are all pretty much exhausted, and Angel Capital’s already been spent in your national expansion efforts. So now it’s either debt or venture capital…
And while we won’t go into the semantics of why we’re recommending a VC injection rather than debt acquisition (just yet), we’ll just say that this option is the better one for your business at its present juncture.
You’ve been working for days on end, the business plan is more or less finished, you’ve started developing your product, and still putting some polish onto the conceptual side of things. You figure you can get the basics up and running, or simply put you’re at a wall, and the best way and only way to get over it is cash. You’re now officially seeking or looking for investment.
While ideas as far as ideas go are great just by themselves, they don’t help you generate revenues. What really makes an online blog / enterprise valuable is the user engagement. Users of your site / product / what have you need to have something to do, spend time on your site, and need to come back there for more.
How do you do this? Give them something they want – first and foremost content, that is relevant, well written and interesting. Second – a value proposition. In today’s marketplace there are hundreds if not thousands of competitors to your product – so the question is, what makes you stand out from the rest of them, what value do you give the user that all the other guys out there don’t. And in the event that you’re one of the lucky ones out there to have a product that fills a niche and doesn’t have any competitors, ensure that the relevance, engagement and value proposition are still there in the event of new entrants, and more so – user retention.
But what about SEO and seed traffic, and consultants, after all there is an entire industry out there surrounding it. Yes, it is important, being on Page 1 of searches is extraordinarily important, especially on your Google’s, Yahoo!’s MSN’s – most users will hardly ever head down to page two, and less so page three, four, and so forth. But again, when you come down to SEO, content is king, if you’re writing an article on travel in Namibia, make sure to put into the article valuable keywords that people will search for, for example, Adventure, Naukluft, Swakopmund, Etosha, Safari, and so on, these keywords, will then come from within the article, within the content, and in conjunction with tags, and the topic of your site should make you shoot up the search rankings – meaning more visits to your site. It may seem obvious but you’d be surprised
But how do you know what keywords people search for? Doesn’t matter really, it’s about the content which you’re writing about. If you write about politics, politics related keywords, business, then business, pick a topic and stick with it, be consistent. But know that certain searches / terms / keywords will generate you more capital than others, these can be researched.