What’s Wrong With Ad-Supported?

An ad-supported business model isn’t a bad one; plenty of sites do well with getting advertising to pay for costs, and even have a tidy sum left over. Many people have benefited from Google’s Adsense and other advertising networks, earning sufficient to devote themselves full time to webmastering.

The pitfalls of ad-supported lie in what your business goals are. If you’re looking for a multi-million dollar valuation and being acquired as the cash-out route, this can be hazardous. You need to aim for popularity and traffic that’s in the top ranks; and getting there can be both chancy and expensive.

On the other hand, if your objectives are a lot more modest, this is probably the easiest route to take. You don’t have to sell anything, or count on subscriptions from members – or even set a premium vs basic distinction between users. For a niche focused business model, this could work out great – you attract the advertisers who don’t fancy spending on advertising to the mass market, yet will pay a premium for focused advertising.

Obesityhelp, which I talked about in an earlier post, is a good example. (Disclaimer: I have no special knowledge or insight into their business model, and ads might be a small part of their revenue stream). If you check out their home page, you’ll see a few small banner style images on the left; and Google Ads on the right. Chances are, none of the advertisers would even think of YouTube or Digg as a place to advertise on; here, however, it fits in very well into the overall theme. Obesityhelp reportedly has over 340,000 members, and over 3 million page views a week, which could translate to a substantial pay-per-click / pay-per-view revenue.

For this model to work, you have to think long term. Building such a member base doesn’t come easy, in a focused niche – they’ve done it over a eight year period. Compared to YouTube’s numbers, this looks somewhat anaemic. But within its niche, it’s superlative.