I'm amazed there are so many business people that believe they should try to monetize their weblog or website by selling ad space. Apparently many businesses are so dissatisfied with the benefits and performance of their online marketing strategy that they feel they must lower the total overall cost of this activity by going into a different business altogether. This is just silliness.
I was on a panel at NAR this week with the folks at Blogging Systems; they're clearly bright people - they've written a book about business blogging. But they're misdirected. David Crockett, the panel moderator and owner of a community blog by Blogging Systems, suggested that it was a good idea to go around to your community members and try to sell them ad space on your blog for $75 per month. What? Did I hear that right? I thought he was a real estate professional? This suggests he's building an online portal to sell ads - isn't that Yahoo!'s gig?
Consider the hidden costs of engaging your company, your time, and your brand in this activity.
Your Brand Focus - You risk brand confusion by placing ads for other products and services on your pages. This is just one more way to show people how to leave your site or become interested in something besides that which you sell. Nothing says web site success like a bunch of links to another business.
Your Company Focus - Ads suggest to customers and prospects that the advertisers must be more important to you than your own prospects and business focus, otherwise you would use that space to your own advantage.
Your Message Focus - Exchanging valuable web page real estate for a banner or AdSense ad robs you of opportunities to say something important to your prospects. Consider the opportunity cost because it's a double whammy - not only are you bluring your marketing message, you are foregoing a chance to capture prospects by sending them elsewhere to buy other goods and services.
Your Time - Why would any business spend their valuable minutes each day to even ponder this idea? It requires time to establish new revenue models - ad selling, contracts, negotiating, banner placement, responsibilities, ad changes, etc - all these tasks represent costs, and the revenues are miniscule compared to your own time-value.
Think about it this way - if you could say something to a new prospect in the same place you put a banner ad, what would the value of that message opportunity be to your business? Placing a Goggle AdSense or banner ad might net you 15 cents per impression. Are you willing to forego using that space to say something important to your next web visitor in exchange for something that's valued less than a stick of gum? Anyone that would tell you this is a good idea is blessed with economic illiteracy.
You might get $100 per month for a local ad, but that's only $3.33 a day, and for what - the chance to create a diversion for your audience? I put this into the you've-got-to-be-kidding-me class of business ideas. This is a fine strategy for people that write content for a living - indeed - people that are bloggers and have few options to monetize their content. I believe people like Mr. Crockett are simply misdirected by the booming voice of "bloggers" that believe business people should become "bloggers" and use blogs exactly as they have. In my view this is the first step to losing focus of what you sell, and why you blog for business objectives.
Here's some advice - if the value of a new customer is at least as valuable as two month's total ad revenue, consider this a really bad idea because there's a good chance that greater marketing focus and a stronger message will net you at least one additional customer every 60 days. Another way to look at it - would you rather have an extra $900 or 6 more customers next year?
************** update ***************
I rarely update a post once I publish it, but since so many folks are beating me up on the premise that their own ads have actually increased credibility and improved user satisfaction without any risk or cost, I thought it would be a good idea to bring in some research that helped shape my own philosophy of ads. With specific regard to credibility, consider...
There's a really useful site called the Stanford Web Credibility Research center for understanding all this techno-mumbo-jumbo about credibility and web sites. Below are some anecdotes that relate to the true cost of hosting ads.
"If possible, avoid having ads on your site." - here
"Although banner ads are often said to be ignored, they are not transparent to users. Ads can reduce Web credibility in varying degrees." - Stanford-Makovsky's 2002 Web Credibility Study
Given that online marketing initiatives such as blogsites and websites are specifically intended [by most users of these technologies] to enhance visibility, it goes without saying that credibility is one success factor of that endeavor. Why would you purposefully do anything that erodes your credibility? Many sites do, but I sense they do so without factoring in the true cost. And to be clear, there is a context where you might answer this affirmatively - when the net revenue from ad serving is greater than the loss in percieved credibility.
"Sponsorship provides an interesting lens through which to view Web credibility. Sites that were advertised on the radio or other media were reported to get a moderate credibility boost (mean = 0.77). Asking about advertising from a different angle, our study found that the credibility gained by using targeted online ads was nearly negligible (mean = 0.22)." - What Makes Websites Credible
An understanding of sponsorship (i.e., using banner and text ads) really compelled me to think carefully about the question of ads. If we think about how the sponsors of a web site affect credibility we can state with almost certainty that sites that have ads that match the topic you are writing about, will produce a .22 mean credibility advantage to the site itself. To get a persepective of what this really means - consider that if you advertise your site on on the radio or other old media outlet, you can expect a .77 mean boost in credibility - or about 3.5 times more credibility over [just one] hosted ad that is specifically about your content. A .22 mean increase is not bad, but as the study found, it's very close to negligible.
"For the most part, our respondents reported that advertising damaged a site's credibility. Simply having an ad on the site led to a slight decrease in credibility (mean = -0.60), while pop-up ads were regarded even more harshly, seriously damaging the perceived credibility of the site (mean = -1.64). Finally, sites that made it difficult to distinguish between ads and content were reported to be the least credible of all; the mean here of -1.90 was the most negative score in this study."- What Makes Websites Credible
But the data is equally compelling and underscores a risk factor when you consider a site with an ad on every page - the mean credibility loss is -.60; simply stated, with almost absolute certainty, we can predict that any site with an ad on every page has diminished credibility - not much, but absolutely a non-zero amount that is functionally equal [but opposite] of the credibility benefit of advertising on old media outlets. A pop-up ad will net you a mean loss of -1.64, and blending ads so that they're difficult to pick out will create a negative credibility score of -1.90.
In my comments below, you will see my assertion that hosting ads typically comes with a cost - a potential net loss in percieved credibility is indeed [one] component of that cost.
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