I Want My Slice of the Pie: A Look at Startups and Ad Spendin...
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This is where I personally have an issue. We have thousands of sites competing for a piece of the advertising pie today… the problem is, innovation is outpacing ad spending at this point. This means that if your business is relying on advertising revenue as a sole source of revenue, you better be speaking the same language of the ad agencies and brands today.
Highlighted by plinan
Think about your competition. It’s not just your direct competitors anymore. RSS is competing with in-game advertising who is competing with Internet video. Podcasting and social media ads are competing with each other. Any innovation that is occuring on the Internet is in competition with each other, whether you talk to an ad agency or a brand directly.
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If there were 1,000 startups chasing the $35.89 per user and the top 20% of the sites (200) took 80% of the revenue, the remaining 800 startups/sites are chasing the remaining $7.18. Yikes. The numbers don’t look so lucrative, do they? The only way to do real revenue is to aggregate enough volume to make up for it (many, many eyeballs) which bring us to the Longtail Model. The issue that I have with the Long Tail play is how many sites can utilize this? You’re either a top 20% site capturing real brand advertising dollars or you’re a Long Tail play being mostly monetized by the ad networks and exchanges.
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You build a sustainable business through relationships and creativity.
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Research and statistics. If you don’t have it - get it. Agencies typically have to justify to their clients why they want to carve out money and spend it with you. If you don’t have research or statistics on why advertising with you makes sense, don’t waste their time. 99% of the time, this is needed. Spend $15-30k on research (OTX, Nielsen, Dynamic Logic, etc) and then approach the agencies.
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Nothing is new anymore, remember old-school business philosophy. Take care of your users and they’ll take care of you.
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