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07-25-2007, 03:18 AM
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How do they do it?
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Posts: 486
Name: Matt
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How is it that large sites like http://www.meebo.com/ can make a great profit with no ads displayed? We're releasing http://www.forum-front.com/ tomorrow with ads only on the front page (if my budgeting is correct that should work for a while) instead of on every forum created but I know that after we get to a certain mid-growth point (not so small that it wouldn't matter if we put ads on every centimeter of the site we still wouldn't make much and not so large we get enough hits to have advertisers pay a lot for one small ad on the front page) we'll have to put ads on every single forum. I HAVE to avoid this. http://www.ipbfree.com/, our second largest competitor doesn't have any ads on hosted forums so anyone we will get to use our forums would just switch over there if we put up ads on all forums. So as stated in the first sentence how could it be possible to make enough money to pay for server costs (currently only paying $50.00 a month for hosting but there are of course many other costs involved with running it. Mostly advertising costs.)?
Also, if I were to get direct sponsors instead of just Adbrite ads where do you think I'd go to find a sponsor, how much could I expect to make, and how big would I have to be to get people interested in sponsoring my web site?
Thanks,
Matt
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07-26-2007, 03:34 AM
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Re: How do they do it?
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Posts: 3,023
Name: Forrest Croce
Location: Seattle, WA
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No idea. You should write and ask them. Or, see if you can find anything about their business model in any of their filings.
Do you really need $50 a month for hosting? The best way to be more profitable is to get rid of overhead. Of every dollar you sell, a dime or maybe even a quarter will make it to the bottom line. Every dollar you cut out of operations goes straight to profit. As long as you aren't cutting off things you need.
That said, I don't run ads on any of my sites. I think there's an intangible benefit I would give up by having them. Most of the people I know who've used AdSense for a couple months made less than a dollar; maybe the site you're asking about found a better way to turn a profit?
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07-26-2007, 03:46 AM
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Re: How do they do it?
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Posts: 10,688
Name: Steven Bradley
Location: Boulder, Colorado
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Who said they were making money? Not every site online is set up to make money from the outset. Maybe look first to build a community and only add monetization at a later point in time.
If you look at Meebo's about page you'll see they've received to rounds of financing. First in September of 2005 and more recently in January of this year. They might be living off those two rounds for now while they develop something in the background that will be for sale or work to maximize the size of their community before going with advertising.
Sometimes attempting to make money right away isn't the right strategy for a business.
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07-26-2007, 09:38 AM
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Re: How do they do it?
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Posts: 18
Name: Rich
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Quote:
Originally Posted by vangogh
Who said they were making money? Not every site online is set up to make money from the outset.
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I agree and to underscore the point even further - the vast majority of Internet companies never make money. Why they are financed is beyond my, but there are investors who will plow money into an idea that has very little potential revenue value. However, they (the investors) do hope that someone like Yahoo, GOogle or Amazon may come along and buy up the site for the traffic that the site generates. It's a gamble. I personally prefer to invest in companies/ideas that have their own stand-alone revenue stream and not count on a buyout.
Rich |
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07-26-2007, 06:37 PM
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Re: How do they do it?
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Posts: 3,023
Name: Forrest Croce
Location: Seattle, WA
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During the dot-com boom, a lot of venture capitalists had the idea that the more money a tech company was loosing, the better an investment it was. The notion was that in such a competitive economy, loosing money meant investment into either R&D or top notch employees. We all know what came next.
But there's a lot of value that isn't directly tied to $$$. Any money a company puts into anything to do with the environment or charity is extremely low cost advertising, and creates good will in the market place. People buy organic food that's more expensive than directly competing food of the same type because they think it's better for them, and better for the planet.
Likewise, intangible benefits and assets are the reasons why companies exist without trying to make a profit, aside from simply positioning themselves to make a profit next year. I read an interview with a CEO who hasn't spent a dime in advertising, and managed to create lots of publicity on the news that would cost tens or hundreds of millions as commercial airtime.
None of this directly answers Matt's question, but this is turning into an interesting discussion about business strategy in general, and I think intangible benefits are something that get overlooked too often.
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07-27-2007, 12:32 AM
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Re: How do they do it?
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Posts: 10,688
Name: Steven Bradley
Location: Boulder, Colorado
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I agree Forrest. This is becoming an interesting business strategy discussion. How about an example.
Someone might blog and never directly monetize their blog, but the authority they gain blogging leads to book deals and speaking engagements. At firs glance the blog makes no money, but upon further review the person profits greatly from the blog.
Another example is a site that's developed for it's ability to pass valuable links to other sites. You might build a trusted site in the eyes of a search engines and an authority in the eyes of visitors for the sole purpose of linking to your other sites that are monetized. Your 'free' site is an entry point that leads to a network of for profit sites.
I think in the case of meebo there will eventually be direct monetization. Sometimes it's better to build a loyal audience first and monetize later. Ads can turn people off and hinder adoption and growth of your content or products. At some point when they reach a certain size user base meebo may introduce a pay option or add advertising to the site or any number of things. Being free though helps get the word spread and builds their user base much quicker than if they monetized right away.
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07-27-2007, 12:40 PM
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Re: How do they do it?
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Posts: 486
Name: Matt
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Yes,
I have the feeling that will happen soon too. My issue is that we have to make money now though at Forum-Front. We're getting 2,000 hits a day fully monetized and that was just the first day. I feel I'll be getting at least 500 extra hits today and if the hit rate stays the same through the day from my 700 hits from midnight to 7:00 AM (which should be really slow) I should be getting 3,000 hits today. But all your comments make me wonder if I'm able to pay for hosting (to the person who asked if I needed to pay that much I do - You can't get thousands of databases in a shared environment) and make a small profit off ads on the support forums and front page will people not mind it because the actual forums don't have ads? I mean what they come here for is forums but yet they see a big ugly ad they might want to leave. It's something I can't really predict. Any opinions on how that would work in my situation? Sorry, I know I didn't word that very well  .
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07-27-2007, 01:31 PM
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Re: How do they do it?
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Posts: 3,023
Name: Forrest Croce
Location: Seattle, WA
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Quote:
Originally Posted by Mattmaul1992
(to the person who asked if I needed to pay that much I do - You can't get thousands of databases in a shared environment)
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This may or may not be true, but do you truly need thousands of databases? You're being asked by a person who managed a SQL Server with 250,000,000 records and was constantly hit with queries of all sorts, non-stop. The entire company - and we're talking a $10 million a month telecomms - had about half a dozen databases, total. The next few biggest had on the order of 60 to 100 million rows in their largest table. This was two database servers and one web server. The point is that if your code isn't highly optimized, doing so could save you money.
Quote:
Originally Posted by vangogh
Someone might blog and never directly monetize their blog, but the authority they gain blogging leads to book deals and speaking engagements. At firs glance the blog makes no money, but upon further review the person profits greatly from the blog.
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This is my vision for my web sites. I'm going to be writing about the drop test at 6,400 feet - basically, you take optics, that's glass, that cost thousands of dollars, and drop them onto rocks and hard things at high altitude. Why? Professional photographers are hard on their gear, and landscapers are downright abusive. People who change lenses standing in a river, or set up a tripod and then take shelter from a cold, damp wind ... something is bound to happen.
Getting back to my drop test article, if I take advertising from either of the companies that makes the lenses I dropped, people won't trust me. One of them held up pretty well, but am I saying that because it's true, or because I have an affiliate link to buy said lens? |
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07-27-2007, 03:06 PM
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Re: How do they do it?
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Posts: 10,688
Name: Steven Bradley
Location: Boulder, Colorado
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Matt I want to clarify. When you say you're getting 'hits' do you mean the actual stat 'hits' or do you mean visits or visitors. Hits themselves are one of the most useless metrics there is and not something you should even look at.
You can get 3000 hits from one person visiting your site depending on how your site is developed. I doubt that's the case with your site, but hits just aren't meaningful.
I understand the need to make money right away and there's nothing wrong with trying to do that. Some sites don't try to monetize right away is all, one example seems to be meebo.
Forrest I think that's a good example of when you might not want to monetize. You could certainly advertise on that article and probably make some money, but you might also lose out on a lot of potential readers.
On the other hand if you stayed away from ads in the beginning and built the readership, your readers would come to trust you and later when you did begin using ads they would still trust you're being honest in a review. Some would probably leave, but you would have built up that trust over a long period of time.
In holding off on the short term revenue of the ads you might end up generating much more revenue down the road.
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07-28-2007, 08:20 PM
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Re: How do they do it?
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Posts: 110
Location: England
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Do they send ads by e mail ?
Do they sell on e mail accounts?
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08-09-2007, 12:53 AM
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Re: How do they do it?
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Posts: 5
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great and informative discussion!
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