by Eric Rowell
It seems like everyone and their uncle these days have some kind of get rich quick scheme to make money online, but very few of them (I would say less than 0.1%) actually understand how real online business models work, in particular with respect to ad driven business models. The purpose of this post is to give people an overview of the two most common ad driven business models while providing some realistic expectations for each.
Free Service Ad Driven Model
This is by far the most difficult business model to accomplish. A free service ad driven website is a site that is free to use that offers a valuable service like online search or social networking, and makes money from advertisers who place ads on their web pages. Great examples of this business model are Google, Yahoo, Myspace, and Facebook. In fact, the largest websites on the net in terms of unique hits per day are free service ad driven websites.
Although this business model might initially seem very attractive because the upfront costs of getting the site up and running is very low (you don’t have to build a stock of inventory to resell for example), the cost of initially bringing visitors to your site is astronomically large (thousands or millions of dollars). This is because you need an extremely large amount of traffic to earn revenue with an ad driven website. On average, you will earn about $1 for every one thousand unique visitors. That’s a lot of visitors! To get this kind of traffic going, you will need to advertise your website (ironic I know) by paying for hundreds of thousands of new potential users. In my experience, if you use a PPC program like Google Adwords, you’ll be paying $3-$5 per user. Furthermore, if you wanted to make just $100 per month, you’ll need to build a website that can generate 100,000 hits per month!
In order to successfully profit from a free service ad driven website, you will either need to be extremely wealthy, or have an investment firm backing you up. However, if you’re fortunate enough to pull it off, your site could be worth millions of dollars in the long run. This type of a business model is a high risk – high reward model.
Free Content Ad Driven Model
This business model usually refers to blogs, which is the most popular of the two models. Unlike the free service ad driven model, you won’t have to spend any money to bring in visitors to your website. This is because most of your visitors will find your site from a popular search engine like Google. Since a blog is content based, and since search engines regularly crawl websites whose homepage content is updated frequently, a lot of people will come across your site just from surfing the net.
Blogging won’t make you a millionaire, but if you’re successful with it, you could supplement your income with an extra $1,000 a month or more. In some cases, the best bloggers in the world can make a full time job out of blogging, earning up $100,000 a year. Generally, a new blogger will start to see a noticeable revenue stream after blogging every day for six months. After about one or two years of steady work, a proficient blogger can earn anywhere from $100 to $1,000 a month. In other words, this is a very low risk – low reward business model.
About the Author
founder of http://www.treefrogpost.com
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