Are The Ads Worth It?

One of the biggest mistakes I’ve seen among web2.0 companies is complete failure at using ads to monetize their websites. While I’ve always firmly believed that Adsense isn’t a business model, that hasn’t stopped me (or many others) from making a small fortune off of it.

There are times when ads make sense, and times when they don’t. It’s always possible to make money with ads, but sometimes it can actually be more harmful to your site. The problem is, many companies don’t seem to know (or care) how to tell if the ads are really worth it.

Let’s look at some examples. Popup ads pay $3.00 CPM (that’s per thousand impressions.) For a site that recieves about 3,000 visitors / day you’d make a maximum of $9/day (roughly $3,000 per year.) Of course, thanks to firefox, popup blockers, and the 24 hour visitor cookie, the actual payout here is more like $3-$4/day. That may seem like decent money, but in my opinion it’s not worth pissing off all of your visitors for an extra cup of Starbucks each morning.

The same goes for “malicious” ads. A website I frequent recently began showing some ads that tried to download viruses when you view them in Internet Explorer. After browsing one day and encountering 15 warnings from my spyware program, I fired up IRC and seeked out the site developers.

Upon telling them about the ads, this was their response: “We contract ad space to various companies, and they can put whatever they want there. We can’t afford to cut off any advertiser relationships because we’re currently not profitable.”

I can sum up that reasoning in one word: FAIL!

That particular administrator just doesn’t get it. Eventually his site’s traffic is going to continue to plummet as people get sick of the viruses and popups, and he’s going to have to resort to more devious techniques to make money from his reduced traffic. It’s a nasty cycle.

In addition, he also faces getting banned from search engines and being listed as malicious in all the spyware / anti-virus programs. If left alone for long enough, his domain could be blacklisted causing his corporate email to be automatically deleted by recipients. I’ve seen similar happen at a company I used to work for after somebody sent spam spoofed as our domain.

I agree that sites need to make money, but if you’re considering monetizing your site you need to be smart about it. Launch first without the ads. This will allow you to not only build a user base, but to build trust. Then, when you put in some useful, non-obtrusive ads, people won’t mind.

I’ve done something similiar on noslang.com. You’ll notice there aren’t any ads on the home page. Testing showed that putting ads here made me an extra $10/day or so, but it also greatly reduced the average number of pages that users visited. By putting ads only on the pages that are 2 or 3 levels deep, I’ve noticed that users click more pages of the site, and repeat visitors are up. The very limited ads still manage to make a profit after hosting and everything is accounted for.

Here’s another great example:

One of my favorite types of ads are those on fark.com. Catering typically to the type of crowd who doesn’t click ads, Fark came up with a classified system. For $40, anybody can place a text ad on the right with comments enabled. That’s the key- the comments and interaction draw even more eyeballs to the ad. It’s been making them millions (according to the business2.0 article a few months ago)

So before you decide to monetize your website, ask yourself this: Is it really worth $3 to piss off my visitors?

December 3rd, 2007