

Most Ad supported sites actually have a B2B enterprise sales model - skmurphy
http://andrewchenblog.com/2008/04/04/your-ad-supported-web-20-site-is-actually-a-b2b-enterprise-in-disguise/

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skmurphy
Key points

1\. Unless you are a ridiculously huge consumer internet site, you have to
build up your revenues through brand advertising sales. It’s very hard to just
use ad networks like Google AdSense to sustain yourself: just do the math
using 10 to 25 cent CPMs and you’ll quickly see why.

2\. The users of your website are not really your customers. Your actual
customers are the ad agencies and advertisers. Your Web 2.0 consumer startup
is actually a B2B that sells inventory to brand advertisers.

3\. How to avoid this: directly monetize your users by coming up with
something so compelling people will pay for it through subscriptions, virtual
goods, or other E-commerce models.

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axod
>> " just do the math using 10 to 25 cent CPMs and you’ll quickly see why."

If you're only getting 10-25c CPM, you're pretty much at the lowest bound. To
get a good CPM you have to spend time and effort on monetization, or happen to
be in a good niche.

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eli
Bingo. If you're reaching, say, executives with buying power in a niche
industry (and have a solid ad sales team), you can literally get 500x that
amount.

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ABrandt
I always enjoy reading Andrew's posts, but I didn't get much out of this one.
Calling ad supported sites a B2B is just a unique way of looking at the
situation--simply a different way to look at it, if you will. The fact remains
that this "inventory" that is being sold to brand advertisers is worth very
little in the marketplace (which he does eventually conclude in this article).

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eli
The problem is that there are so many sites reaching the same broad
demographics of consumers that the ad space is totally commoditized.

But if you run a site for well-off cat owners, there's no reason you can't
command a higher CPM for expensive cat-related products, it just may take the
efforts of a dedicated in-house ad sales staff.

Anyway, the trend is to move away from CPM ad sales altogether anyway. Ad
agencies and big marketing departments want CPL. They would much rather pay
you $XX per qualified person who fills out a contact/download form, rather
than CPM. That way the pressure is on you to deliver.

~~~
mediaman
This is true, particularly for direct marketing agencies, but many traditional
agencies are focused more on brand-building than CPA/CPL.

Selling to direct marketers is much easier than traditional agencies for this
reason. There's a million people banging on the traditional agencies' doors
with some pitch or another, and so long as selection is not based on concrete
performance data, the media buys are based more on perceived brand credibility
and agency connections. I know from experience that this approach has a
frustratingly long sales cycle (i.e. >12 months) and involves a lot of
politics between brand managers, agency people, sub-agency people, outside
consultants, product managers, ad nauseam, any single one of whom can tank a
deal if they want.

Direct marketers however are much more willing to try something out and see if
it works.

~~~
eli
Very good point, though I think that even brand building is going to start to
move towards real metrics (be they "clicks to learn more" or something else).

But sure, there's always going to be a cachet with having a really strong
brand that advertisers want to associate with.

