Ad Models not looking so good.

Reuters put out the following which says that  there aren’t enough Advertising dollars to go around to all the sites that want to generate revenue.   Most stricking was that  90% of Advertising revenues are made by the top 50 sites and the top 10 sites take 70% of that,  with google  taking 40% of all Online US advertising.  

Facebook looks like it will average over  50 billion pageviews a month,  or 600 Billion pageviews this year on revenues of 50 to 75 million coming from banner ads.  That works out to an average CPM of around 10 cents.  Google on the other hand makes an average $15+ CPM  on search.

I see a lot of paid sites now looking to cash in on advertising  but it doesn’t really make much sence,    given the average top 10 site only has  400 million pageviews a month.  Given a 10 cent CPM that works out to about 40k/month,   but since dating sites have less pageviews per unique  you might get  50 cents a CPM  but that only gets you 200k/month in revenue.  For a site like match  does  giving up 10-20% of your screen space  for ads make up for a 2% increase in revenues ? 

Many of the users who end up on plentyoffish do so  because they lose repesect for paid sites.   No one wants to pay for a service and then be bombarded by flashing ads,  like the ones here,  those are so annoying I don’t even allow them!  Many of the sites that trying this,  like Lavalife,  or true.com  etc  are just desperate for more revenues  or a good story  for investment bankers to sell to potential Acquirors.

13 Responses to “Ad Models not looking so good.”

  1. wanderer Says:

    Very interesting analysis, thanks, bt now you’ve dashed all my hopes :-) I was wondering how Facebook can be worth so much when their revenue possibilities are so low?

  2. Hello Says:

    How does the traffic compare to the revenue at the top 50? Would like to see a graph of traffic vs. revenue at the top 50 (by traffic?) websites…

  3. Terry T Says:

    Very disheartening, although I must say I am not surprised. My site is new but my outlay for advertising on Adwords exceeds my revenue from Adsense. I expected that would be the case for some time but it is hard to see the revenues from advertising ever becoming lucrative. Anybody know how much more you can make if you hire your own sales team and have ads that are a better match with the content than you get with Adsense? I know the expense is huge.

  4. Marc Says:

    I’d be surprised if facebook is capabable of making 10 cent cpms. Also based on all the marketer testing that I’ve seen going on, I’m sure their rates will continue to fall. I think they are weak for branding and don’t even bother with conversion offers.

  5. Marc Miles Says:

    wanderer, facebook is worth so much because of the massive subscriber base. It’s the potential of what you can do with that user base and not necessarially the CPM / subscriber / pageviews etc.

    However, for other sites, dont make adsense your only source of income. Thats business 101, never have all of your income coming from one client, or even a large majority of it (obviously many sites are cointinuing to milk that cow while they can).

  6. Massimo Moruzzi Says:

    I couldn’t agree more, Markus!

    Match.com does about 300 million dollars a year – it’s almost sure that they will lose more money as people quit the site or decide not to pay for it in the first place than they will make with advertising.

  7. Ryan Says:

    Markus, were your Facebook revenue numbers annualized? Assuming they are, Facebook is making $1 for every 12,000 page views ($50M revenue). How does that compare to your site?

  8. Mayo Says:

    Ryan, you put 12,000 instead of 12 billion page views…

    I presume that his pageview no.s are arround 1.5-2 billion a month, so that is cca. 18-24 billion a year and he mentions cca. 5-10 million revenue a year so that is even at 2 billion p.v. a year cca. 400 k per BB, vs. 80 k per BB that Facebook makes.

    Well i surely made a mistake at calculation but im sure POF makes way more on page view basis than Facebook.

  9. GuruWatch Says:

    So what do you think this says for the little guy? The ones buying the Adsense e-books, and Adsense pre-builds hoping to cash in on Niche Sites?

  10. Ryan Says:

    Mayo,

    I hope Facebook is making more than $1 per 12 billion page views. At 600B page views a year, that would mean they make $50 a year. Using my numbers, Facebook would be making $50M in revenue.

  11. Facebook chalks up another $500,000,000 « Joe Duck Says:

    […] always has great insight about the relationship of ad revenues to success and to expenses.     Marcus notes that even with the  huge pageviews at Facebook he calculates the advertising to yield to be […]

  12. CPM Rate Contraction on the Way? | News Questions Says:

    […] Friend additionally highlighted which Google controls about 40% of the (heavily consolidated) ad […]

  13. Phillip Says:

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    You have ended my 4 day lengthy hunt! God Bless you man. Haave a nice day.
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