Overview of the advertising based online marketing business model

We're going to start with the advertising based business model as that is the easiest and least expensive (generally) type of web business to start. What's so nice about an advertising based business is just how inexpensive it can be to start. It's realistic to think that you can start one for under $100 (we'll show you how). For example this web site, which is advertising based, was started for less than $50.

In the past you only had two basic options for generating revenue with an advertising based business model: Direct sales or advertising affiliates.

Direct sales

Direct sales can be problematic because it generally involves getting on the phone and calling people up (or e-mailing them) and asking them to advertise on your site. This can be a very time consuming process. This doesn't mean it can't succeed though, especially if your content web site is going to be locally focused. Check out this web site from my hometown for instance:

www.DecorahNews.com

It's a very simple site (you could design something similar in about 10 minutes using FrontPage) but it covers news for our little town very quickly and receives just over 1,000 visitors a day (not bad for a town with just 8,000 people).

Now, more importantly, check out the banners off to the left hand side of the page. I count 18 of them (all local advertisers). Now check out his advertising rates page.

He charges $40 per ad, per month - that's $720 a month! Now, obviously he's not going to retire on that but an extra $720 a month goes a long way. And what are his costs? Probably $100 a year for web hosting and $199 for the software to create the site (FrontPage or maybe Dreamweaver), so figure he invested $300 to start the site. After the first year, running the site would cost only $100 a year. So he basically covers his annual operating expense (the $100 for web hosting since the $200 for FrontPage was just a one time fee) in 4 days of operations. Nice.

And while he spends a little time each day updating the site, I know for a fact that most of his news comes right to his inbox in the form of press releases and e-mail. And that's what I call a nice little deal.

What do you think - could you do something like this? I bet you could.