Based on your experience, is advertising still a viable revenue model these days? I know that Google makes money from their ads systems. But what about other site like Facebook? I heard their ads system is not profitable. For some social networking site or other freebie online service site, the only thinkable way to make money is through advertising. But is it viable these days? Can your company actually survive only through advertising?
The channel can be using 3rd party ad tools like Google AdWords, or using your own ad management tool like what Facebook has done.
What's your experience on this?
It all depends on the content and traffic of your website. My wife and I run a site involving graphics for download and we see wild swings in ad revenue per day. To boil it all down to one metric, we've earned anywhere between $0.20 and $20 per 1,000 visitors (with $2-$4 being the norm). However when factoring in hosting costs our revenue is diminished.
I personally believe that advertising alone is not viable. With Facebook, you can make money off of virtual credits model and supplement that with advertising. Even if you are not developing a Facebook (or FB Connect) app, there is an emergence of virtual payments systems including PayPal etc, effectively breaking down the "payment barriers" that exist between your site and its users. Ultimately though you need to provide a compelling feature that users are willing to spend their virtual money on!
Overall, if I were tossing around ideas for a startup I'd look beyond advertising for viable revenue models. You may also attract funding easier.
Try to sell ads directly, if possible.
If you go with an ad network (e.g. google adwords), you get pennies to the dollar.
Instead, sell banner ads directly to the advertisers. I know at least one big blog that does this. They have an intern whose job it is to dig up 50 potential leads per week. Then, a sales-person calls the potential advertisers and tries to sell banner space.
If you mean 'place Google, Amazon, etc. ads on a regular website, and make a profit matching the annual salary of a software developer in the US', then the answer is no. Take a look at Stack Overflows experiences with ads, here is their latest article.
If you go for a 3-party business model like Mint, or of you go for a freemium model with ads for the non-paying customers, then ads still make perfect sense as a supplement to other revenue streams.
It certainly depends on your method. Advertising banners still make money on very busy websites but "not much" compared to targeted search, or social ads.
I'm trying to work in this space now, and doing my best to connect social media to relevant personal ads. The only way to get folks to opt in (yeah it's opt in advertising, and it's probably a little crazy), is by giving them fantastic services. We're building information filters, two-way search, and other information assistant tools to help them handle a potentially large input information stream quickly.
You can check Victus Media for more information if you're interested on an advertising business model that I believe has merit.
It depends on how you define "survive". If you have no expenses and are not really working on the website, but rather the website works for itself, then making a few dollars here or there is nice. If you want to be successful, and pay salaries to people, then advertising is a very difficult way to make money, if at all.
If you are looking to raise money, then you must find another model, because any investor that knows anything about the business will not be interested in investing in a business model based on advertising. There are only a handful of startups that managed to make any money that way. While Google makes lots of money that way, they take up most of the field, not leaving enough for great companies like facebook.
During the bubble days in the late 90's. you could raise money on the promise of having lots of users, but those days are gone.
I strongly suggest finding a different business model. Users don't like ads, and they ignore them when they can. If you provide them with real value, you will be rewarded, but not via advertising.
Both yes and no.
But always remember, as long as you have people on your website, you can make them pay by meeting their needs one way or the other..
If you are looking at a new business model then basing it on ad revenue is bad, as that option is running it's course, I think it has peaked.
There is an opportunity to find a replacement that is a win-win for all parties, and if you can find a better way to do it you may be able to make a business with the new ad revenue scheme.