Advertising is not a good revenue model for big sites?

Ghazi

jesusphreak said:
I'm just wonder how a site like digg would make money, or how del.icio.us would make money if it tried.

This is how!

jesusphreak

lol...yeah...

But how will del.icio.us now make money for Yahoo?

Grep

Back in the .com days I was doing media buys for several firms. It was the case that if you wanted to generate real hits you had to advertise offline, one advert in a Sunday magazine or newspaper could garner 20 - to 75,000 hits [depending on the size of advert and the paper you could be spending 20 – 50GBP, a full page advert in a UK national daily begins at around 100K GBP so you can imagine how much Dell spends]. Online adverts were not nearly so effective - a 50k GBP spend would only generate 10,000 hits with the best referrers [keywords on search engines] having a 2% click-thru. Over the last two years online advertising hit pay-dirt: It began to work! Infact, this year, for the first time ever online ad spend actually exceeded offline ad spend. Thanks in large part to Rich media [flash] advertising, ever present Google ads, and a shift in user culture, people began not only clicking on the ads but actually doing things when they got to the other end! Most large sites aim for a 3 - 5% conversion, 3% being the average - so you have a site that’s gets say 100,000 unique hits a day with a 3% click-thru earning them 25c per click and you're looking down the nose of 750USD per day [close to 300,000 per year], 1,250USD if you can get a 5% conversion. Now consider that Job sites will pay up to 2.50USD for a successful registration, software/hardware companies like MS, IBM and HP pay up to 5USD for a registered product enquiry (the only other companies that pay that kind of cash are adult sites) and you begin to see how you can make money. Amazon pay a good deal of cash too plus many smaller retailers offer excellent payouts for purchases – and that’s really the key for everyone in sales and marketing; online adverts have quantifiable results that don’t cost money to measure, if you check the success of your offline ads are working you have to pay for surveys. In conclusion advertising is a very effective model for websites, especially communities as the webmasters can actively solicit the users to click on adverts - even smaller sites like Planet-Tolkien [10,000 unique hits a week] do pretty well. We make around 300 USD per month which covers the hosting nicely.

jos

What's your conversion rate for your google ads? And what's the conversion rate when you don't solicit clicks?

Grep

It's a bit hard to say without adding all the different sources up - at a guess it's 3% give or take. Google brings in about $40 - $50 USD, on the solicting front i ask all the members to click on one of our Amazon links when they have anything to buy there so we get a %age which brings in another $100USD. The sideshow weta collectables bring in another $100 USD and the remainder comes in from the Newline cinema shop, the iTunes music store and this little german company who make very beautifal and very expensive LOTR jewelery; giving us 25USD when we send them a buyer.

jos

That's done nicely. Another 10 such sites and you can quit your daytime job. :-) I see p-t has a PR of 4-5 so if you can optimize a bit I guess you could improve. Eg I see no <h1> used. There is some discussion about whether this is still part of the google algorithm but it won't hurt using one. There probably are other things too that can be improved. Be careful asking visitors to click google ads. I don't know about this for amazon (this doesn't hurt the advertising model here) but I know google is able to penalize this.