Ad Revenue on the Web? Don’t Count On It

Never has it been so easy for teams of entrepreneurs, or even individuals, to create a business from scratch. However, one of the biggest red flags I see with many web-based startups these days is relying on advertising for their main revenue streams – or even a large part of it. All too often, I see small startups that have the “Field of Dreams” mentality and think that, if you build it, they will come. The harsh reality is that, unfortunately, this generally isn’t the case.

Most startups fail within a few years of inception, so clearly the most challenging time for a startup is early on, when their sites are largely unknown and page views are minimal. Until you’re at the point where you’re averaging a million page views per month (no small feat – trust me) your revenue will be negligible and advertisers won’t be interested in your site.

It’s important not to set your sights on the Facebook business model, i.e. offering free service to users while generating (or thinking you’re going to generate) revenue from ads. To put it bluntly, this isn’t going to work for you, unless you are a specialized niche site with lots of startup capital. Facebook has had several hundred million dollars in funding, and has been profitable only in the last two years, and when’s the last time you thought of Facebook as being a startup?

Exactly.