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Thursday, January 9, 2014

Why Advertising Based Business Model Not Sustainable

Media companies have always seen ups and down when they try to monetize their content inventory with advertising by looking at their their annual profit reports it always saddens both investors as well as publishers their are lots of factors which makes adverting based business model unsustainable.

Lower eCPM

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When recession strikes in companies taking out their money out of advertising markets due to that lack of competition between advertiser it has lowered the overall eCPM and the result you can see in your own dashboard whatever ad network you might be using you will notice signification loss in your average cpc as you were getting previous years.

Google Updates

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Google continuous algorithm update has biggest impact on online publishers as they have biggest search market share and even if you like it or not we all depend on google for traffic, some wise guys might suggest you that it's not wise to depend google for traffic but still at the end of the game we do need google to make people find our website specially newly launched businesses that don't have brand or want to build their own brand from scratch. 

Fluctuating Search Results: When you look at the search results you won't see same search results,today every time you surf on google your search position does belly dancing sometimes it's on first page the very next day it's on 4 th page of the search result.

Due to this fluctuating search traffic ad revenues fluctuate too as a result we get horrible average income some month you going to earn 1000$ and very next month you earn 200$.

Fast Updates: Now a days they are doing too much experiment with their search algorithm every 1-2 month they come up new algoritm updates and bang your organic traffic lost and you just wonder why? what has affected your organic traffic and when you figure it out and do necessary changes bang another updates comes by and your search traffic drops again.

Higher Cost of Production

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This is the main reason why you should not go with advertising based business model now search quality standers has tighten up and with current requirement you can't pay someone 5$-15$ dollar to write engaging indepth article for you.

Free user submitted content is not an option either just look at what happened with article directories they all hurt badly at serp. The biggest article directory ezinearticles.com which used to hang up under 150 on alexa rank now at 719.same with articlesbase which was under 250 now at 3074 also note that ezinearticles have 77,862 backlinks and have been operating from many years.

ezinearticles.com traffic stats


articlesbase traffic stats

By looking at the above graph it clear that with low quality content this can happen to your business too.
No, business is sustainable for longer term if you are paying more then you are earning with lower eCPM and high quality standers it hard to produce quality content at such cheap rates.

The Solution

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Today you need implement multiple source of income and have solid business plan rather then driving blind folded. Just look at growth of hubspot they have shown 82% growth in their annual income and soon going to hit 50 milllion they have achieved it just by doing content marketing other successful business like kissmetrics are tasting the same pie.

So here is a basic plan you need to survive with the current market trend.

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1) Avoid Advertising Completely or Partially ( Just don't depend on it just look at it as some side income )
2) Have a Product To Sell ( Selling something always Rocks then advertising)
3) Create A Blog
4) Produce Quality Content And Build Audience
5) Monetize Your Audience By Selling Them Your Product And Services. 

Sounds easy but you need to know more on this their is an ebook which covers content marketing which you can download here. Basically it's a ebook on affiliate marketing but the tricks given on this ebook can be use to sell your own products as well. I like the topics that this ebook has covered from beginning to end it's a complete guide very helpful for content marketers.

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