What’s wrong with an ad-supported business model?
Many large companies employ ad-supported business models as part of their wider marketing and advertising campaign. But businesses that rely solely on advertisements leave themselves in quite a difficult position, as rather than relying on their own quality content, they’re dependent upon the quality of other company’s advertisements.
Diverting Audience Attention
Using an ad-supported business model is not going to keep your customers interested in you. You’re actively encouraging them to go elsewhere and therefore your business is at a disadvantage. Yes, you may receive a cut if they purchase products from any of the ads they’ve clicked on your site, but there’s no benefit to your site in its own right. The most successful ad-supported business models become profitable because the adverts happen to be exactly right for the users in question. The adverts and therefore advertising partners need to be carefully chosen to ensure the advert is beneficial for all potential users. When adverts become annoying and a hindrance the business is unlikely to see success. What you’re aiming for is a symbiotic relationship between your brand and the ads you support on your site.
Advertising is without doubt a potentially profitable avenue and it can be seen as a quick step to success. But realistically it’s all about the management of advertising and keeping it appropriate for your business. The value of an advert is in part dependent on how specialised it is. Companies which advise and guide users to make purchases can easily charge high advertisement rates because the advertising company knows that their users are visiting their site with the intention of making a purchase and so there’s a higher chance of the adverts being successful. The problem comes when you’re creating a product or service that does one thing but then you’re including adverts which are showing off another. There may be a link between the two, but the focus shifts from your product or service to the advertised one. You’re effectively muddying the waters. Similarly, users are likely to either be put off as you’re not focused on your own brand or you’ll need to generate huge levels of traffic for the advertisement to have any success whatsoever.
To achieve success with an ad-supported business strategy you need to match your advertisements very closely to your users and their purchasing requirements. If you’re able to do this and do this successful then perhaps an ad-supported business model can work for you whereas if you’re just adding them for the sake of it they’re very unlikely to have a significant impact on your revenue. Alternatives to Fully Ad-Supported Strategies Rather than going the whole hog and relying fully on advertisements for your business why not consider a less ad-supported model such as software as a service? In this software delivery model, customers are involved in the process of renting online software rather than purchasing it. This rental process means a company is able to generate revenue through rental fees and combining targeted, relevant advertisements throughout. An ad-supported business model is a risky choice and not something that often comes off on its own without other related strategies being incorporated. You could always give it a go, but you shouldn’t be too disappointed if it doesn’t work as successfully as you may have thought.
About the writer
Carlo Pandian is a freelance bloggers and tutorial writer on Intuit QuickBooks accounting software http://www.intuit.hk/. He is interested in finance, start-ups and web marketing and loves providing business tips to the entrepreneurial community of The Hive co-working space.