Advertising and Making Money Online

Posted by on May 5, 2008 in Blog | Tags: , | No Comments

David Heinemeier Hansson gave an amusing talk at Startup School ’08 and it echoes something I’ve been thinking about for some time. A lot of web sites out there get very, very popular and yet there is no indication they plan to make money. Many more web sites fall back on advertising as their primary business model.

ZingLists isn’t terrifically popular, but I’ve given a lot of thought to how it might generate some revenue and least pay the hosting bill. Up to now, I’ve taken the easy route and put Google ads on the list summary pages. They aren’t very intrusive and once in a while they’re actually useful, displaying an ad that helps you cross something off that list.

There are really two problems with relying on advertising as a business model. The first is my problem. Relying on someone else to sell the ads (Google) means you essentially have a single customer. If something happens to that customer, all of your revenue disappears in a puff of smoke. Google disabled my account about a week ago and I can’t get them to tell me why. It’s the whole account, too: AdSense, Analytics, Gmail, Calendar, everything. I have no idea what the perceived problem is, though my best guess is click fraud. That sucks, though, because I can’t control an end-user’s behavior, and if I don’t show them the ads, I have no chance of generating revenue. So Google AdSense (or any single provider of ads) is not a real business model.

The second big problem with advertising is this simple question: why are you in business? Is it to sell advertising or to write software / provide a service? If it’s the latter, I’m sorry to inform you that generating revenue by selling your own ads means you are in fact in the business of selling ads, not writing software. This is not a business I want to be in.