Page views required to generate $1M in ad revenue?
microsoftstartupzone.com
microsoftstartupzone.com
The real issue is how to engage people when they are socializing. The advertiser needs something more engaging the current social event. Sex sells and flash sells, but the post is talking about something beyond that. I dont think target advertising is much more than the same old same old, but more refined. The break through will be something that enhances the social experience.
Maybe something like a chat about Paris brings up a live feed of a Paris cafe complete with tables for your avatars, with an urchin trying to sell you a travel guide. Whatever it is it needsto be engaging an not annoying.
http://web.blogads.com/adspotsfolder/ba_adspotsfolder_revisi...
http://web.blogads.com/adspotsfolder/ba_adspotsfolder_revisi...
And there's multiple occurrences of those ads. 40k-75k PER week isn't that far of a stretch
FB and Twitter have the ability to preempt Google because they could predict your needs from your updates before you even know them yourself. As it stands though Facebook advertising strikes me as being about as effective as putting up a billboard on the side of a highway.
This makes the mistake of assuming that one page impression = one ad impression. That's not the case on most sites. Most sites can quite easily have 2-4 ad impressions per page impression.
Also, it's not hard to sell out ad inventory at ridiculously low CPMs. There's always someone willing to pay something for a genuine ad impression. Most sites can probably sell a little bit of their inventory for a high CPM and the rest for a very low one.
That isn't to say that sites like PlentyofFish haven't been able to do it, but your CPM has to be fairly high if you're not getting billions of pageviews a month.
Sourceforge doesn't get nearly the level of traffic that Facebook does, but they brought in $5.4 million in media revenue from 36 million uniques in their first fiscal quarter of '09[1].
Assuming 10 impressions per unique, that's still a very respectable CPM of $15.
This is over a sample of about 3 million uniques / month.
They mention 2.5 billion views for $1M. Being very, very conservative in data transfer, that's several terabytes a month. 4k/page is 10 TB (3.858 MB/sec sustained for a month), 32k is 80 TB (30.864 MB/sec for a month), etc. A single banner image off of gamasutra.com (not even flash) was 149k.
The netlink, server hardware, and infrastructure (bought or rented ala rackspace) isn't exactly cheap.
On the other hand, if every page view is extremely heavy with a long tail of uncacheable content (e.g. Youtube) or computationally expensive (web search engine), then bandwidth and servers become a significant percentage of the revenues.
The vast majority is likely to be delivered from a content delivery network like Akamai, at a much lower cost than hosting it all yourself.
The best (outside of unethical methods) way of making money is to generate true value for a customer and allow a medium for that customer to transfer value (in the form of money) to you.
In some cases that customer is the end-user, but in many it is not:
If you make a tool for students, it is the parents or teachers paying for it.
If you make a tool for employees, it is the employers paying for it.
If you make a tool for people to surf the web, it is the advertisers paying for it.
True value would be if students wanted to pay for it themselves, employees themselves, people themselves. Price something correctly (not cost prohibitive) and if you really have a true value building product then people should be willing to purchase it.
If you had a better version of Excel, you could sell it to companies for lots... or sell it to the workers. I'd say you had a better product if you had a product capable of selling to the workers. And while this may not be as much of a cash cow as large corporations, I'd think this was closer to True Value.
But even that is not "true value." I'd think true value is something where you are generating a win-win. An example that came to my mind was Mint.com. Their business model (along with more retail advertising) involves giving money saving suggestions (credit card offers, better mortgage offers) and then charging the financial institution less than what it is charging them to generate a new referral. A "true value" is a win-win... not something like, "well I guess I could use a male enhancement pill, Google... I'll click your ad."
This does not mean that the user must be the buyer. A clear example is a productivity tool (product ABC) that Employer X buys for its employees. The employees save enough time to offset ABC's cost and therefore Employer X saves money by buying the tool. The creators of ABC used sufficiently small hours creating a reproducible product and therefore make a profit.
The less clear example is that of advertising. Google sells real-estate and guaranteed views and has a positive ROI. The ad company pays for the real estate and gets sufficient hits and hopefully has a positive ROI. You get to use Google's services with some distraction which you find to ultimately save you time, so you also have a positive ROI.
Google is saying, use our search engine and you find what you want better and faster. We save you time. (Do no evil?) Google doesn't aim to be a "distraction" that ultimately saves you time, they want to save you time period. If they could, they would give you exactly what you wanted each and every time. But their algorithm can't tell when you're browsing for pleasure or looking for something in particular. It can come close, and in the end some people will be distracted by them whereas others will have exactly what they needed.
Google wants to make profit in the opportunity costs involved in searching for something. Searching for a product has all sorts of pains associated (analysis paralysis, getting lost, etc etc)... google wants to make profit between this consumer cost and the amount of ineffective money spent to reach consumers.
It also seems like you are focusing a lot on banner ads. I think one interesting statistic (sorry can't find a more recent one right now). Is that banner ads are about 20% of ad spend whereas search is 52%. I think Search is a even higher percentage now. Source: http://www.scribd.com/doc/12991408/Internet-Advertising-Tren...
It has never completely gone away, but there was a time when instead of having ads, people thought sites should have shops. Newspapers would have shops. Sell mugs and pens. A lot of sites like news sites actually added them.
This idea never went very far.
Facebook and the like are here to stay n the internet. Even if Facebook itself goes out of business, it will be replaced. They are not a store. They do not magically turn their visitors into Amazon visitors by selling stuff.
Well, not to burst your bubble but there are many sites that use this exact business model.
One of the sites that comes to mind is homestarrunner.com - who have been doing this since they started.
Granted, it doesn't work for every business, but the fact is that if you create a service that your users genuinely care about, they will purchase your merchandise, because for those users, this enhances their overall experience.
It's a classic model that's taken straight from hollywood. Merchandising revenue is a HUGE factor in lots of productions.
I'm saying Facebook are not going to monetise by adding one.
For you it might be something else, but it's almost certainly not mugs. Your comment boggles my mind:
> But that is a way for a business to make money, not a site.
If you are trying to make money with a website, that's called a business. Otherwise it's a hobby, which is fine too.
The power in social networks is the group of trusted friends. I'm sure some sort of group question along the lines of 'do you guys think I should buy an LCD or Plasma TV' with voting, or something similar, would develop new behaviours, particularly amongst consumers of products they aren't completely familiar with (anything from cars to financial products). Once you develop this behaviour in a social network, selling ads into it is a cinch.
If your site is for luxury yachts owners, or people looking to buy Enterprise CRM systems, or is specially tailored to Fortune 1000 CEOs, you can charge CPMs that most sites only dream of. With a dedicated ad sales staff You could probably clear a million with a few hundred thousand page views a month.
For example, look at this award winning Pringles online ad: http://awardshome.com/cannes2009/pringles/can-hands.html
The reason why this one is great, is because it isn't pushy, it has humor, and it uses normal, honest language that we can all relate to. Maybe it's these type of ads that need to be displayed in the social networks.
It's not that _ads_ as a whole don't work, it's that untargeted, random banner ads are very ineffective at driving conversions.
Ads on search, which frequently tell you what to buy, and don't have room to be artsy of humorous generate billions of dollars for Google and probably much more than that for its advertisers. I wouldn't be surprised if Google gets $20-$100 CPM on its pageviews.
Award-winning ads are frequently not the most effective. The most effective ads are often bland, boring ads that tell you what to buy but take into account segmentation, positioning, targeting, behavioral trends, and so on.
Could you provide a source to your last sentence? I'd like to read more about this. Thanks.
Award-winning ads and creative branding are necessary when trying to sell highly undifferentiated, commoditized products (e.g., potato chips). But if you have a product that is obviously differentiated from the competition (a laptop with 100 hour battery life, an electric sports car, etc.), informing consumers of your existence is often enough.