Many people see the ad revenue model as their main revenue model when they start a business. First-time entrepreneurs typically flock to the ad revenue model because it is the simplest revenue stream a business can have, and there isn't too much complex strategy behind it. But as with everything else, there are pros and cons to making money with ads. In this tutorial we'll cover the main things you must be aware of when choosing ads as one of the main ways your business will make money.
There are a number of advantages to making money with ads. It is usually easy to set up and get going. With Google Adsense, you can start making money on literally your first day of operations, and there isn't too much strategy that must go into publishing ads on your website or product.
The main challenge with this approach is that to make any kind of significant money, you need to reach a very large scale of people. Let's go over an example. Ad revenue is typically measured in something called CPM which stands for cost per mili. That means it is measured in cost per thousand impressions. Usually for a small business, a $10 CPM is quite good. But even with the healthy $10 CPM, the revenue will be underwhelming.
If you get a thousand impressions, which isn't easy, you only make $10. If you get 10,000 impressions, you make a mere $100 and to make $1,000 you will need to get 100,000 impressions.
To put that in perspective, to get 100k monthly impressions, your website or piece of content must average over 3,000 impressions each day. That is pretty difficult to achieve for a small business. But the sad thing is that even if you do reach 100,000 page views, you still only make a mere thousand dollars which isn't enough to pay for rent, employees, or even a reasonable salary to you. You need to reach 500,000-1,000,000 monthly page impressions to begin making reasonable revenue that will help you pay yourself and have money left over to re-invest into the business.
When your business grows up and becomes big, the revenue from ads will be felt, and it will be a pleasant one. But when your business is new, you will likely earn tens of dollars per month, or no more than a few hundred. And that won't be enough to sustain your business long enough for it to grow into a bigger business.
Here is a video tutorial with more thoughts on making money with ads.
You might now wonder what the better options are if the ad revenue will give us such poor results. While there are many potential ways to generate revenue, the caveat is that the method you choose must be the right one for your business.
You can make money with affiliate sales, selling something your company makes, by getting donations, or on many different kinds of websites online. If you are a small business owner, or a home-based business owner, I created a course with 18 different ideas for how you can make money. You can learn more about the course here.
For the past 10+ years I have run my own home-based business. My main focus has been in the online course business. I also help new entrepreneurs get into the online course business either through custom course creation so they can resell their custom course or licensing PLR courses that are already made.
Here is a video on how to generate revenue for a home-based business.
Here is a tutorial on how to make money with Amazon and selling Kindle books.
Here is a tutorial on how to sell products you create online and offline.
Here is a tutorial on how to make money on Fiverr.
The revenue model of your business doesn't just exist in a vacuum. It must be a natural fit for your product, your customers, and the rest of your company's operations because if you have expensive operations, you will need a far stronger revenue model before you reach scale. A good business model is like a stool with three legs. With 3 balanced legs, the stool is able to stand well. But if one of the legs is missing or is shorter or longer than the others, the stool will fall and become unusable.
And here is a tutorial to help you understand what a business model really is, and how to create a solid business model for your business.
Try my book on how to go from business ideas to starting a business or my business plan book. The book takes you through each step in starting your business from the very initial business ideas you have, to business planning, to raising money, to strategy for starting. And if you need business planning help, here is a page where you can learn about how to hire a business coach to help you plan your business.
Article by Alex Genadinik