Advertising and Making Money Online
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Steve Madsen
Advertising and Making Money Online

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.

Another Example of How Not to Do Customer Relations
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Steve Madsen
Another Example of How Not to Do Customer Relations

Mozy finally announced their 1.0 release for Mac OS X. I haven’t heard from these guys since I signed up for the notification, probably more than a year ago. Then today, out of the blue, I get an email that leads off with:

One of the nice things about being an ugly American is that I make all sorts of ignorant and culturally insensitive remarks about other countries. And as luck would have it, I had that opportunity last week when I visited Montreal. (That’s in Canada.)

The first thing I noticed about Montreal is that it’s a very clean city – like Toronto in that respect. Oh wait – actually, the first thing I noticed was the streets were on fire and full of police and rioting citizens because I guess they won an O-KAY (that’s hockey) game.

Admitting that you’re a jerk doesn’t give you a free pass to go ahead and act like a jerk. If anything, it’s worse because you’ve made it clear that you know it’s wrong.

And as a method of contacting a list of people who otherwise haven’t heard from your company before? This isn’t how I’d choose to establish a relationship with potential customers.

I’ll rest well knowing that Mozy won’t get any of my money, especially with so many other options available in their market.

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