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| September, 2007 | The monthly newsletter by Felgall Pty Ltd |
My Word
Advertising and the Web
In the case of voluntary contributions these can either be obtained by actually asking visitors to donate money toward the operating cost or by displaying minimal advertising on the pages that earns just enough from the advertisers to cover the costs. In this latter case the amount of advertising required will be a lot less than would appear on pages on "free" hosting since the site owner only needs to cover the hosting cost while with "free" hosting thhe hosting provider is trying to make a profit. The advantage that advertising has over asking for donations is that the advertiser is the one funding the site where advertising is used instead of the visitor. Of course they recover that money from those visitors who buy their product but the visitor gets the product in addition to having helped fund the site. The other reason that a non-business site may place advertising on their pages is to help make their visitors aware of products that relate to the particular interest that the site covers. The ideal situation is where the site owner can use advertising that relates to meaningful relevant products to raise the small amount needed to fund the hosting. Business web sites are a slightly different situation because businesses are in business to earn a living for their staff. This means that the business needs to make a profit in order to pay those staff. Web sites belonging to businesses can be divided up into three groups. The first of these are those web sites that belong to business that are not primarily web related. In these cases the main business activities do not happen on the web itself and the business web site's main purpose is to advertise that off web business. With this type of business web site the entire site is basically an ad for the business and so advertising of anything other than the business and its products would be completely inappropriate on such a site. These web sites are financed out of the businesses advertising budget. The income that they earn in order to pay their staff comes from their off web activities and the site just helps people to find out about those activities so as to hopefully choose that business rather than their competitors. The second group of business web sites are those whose business web based products. These sites need to make their income from the web itself and they do so by selling their web based products. As any advertising on their web pages would make potential buyers of their products off to some other web site, placing ads on their web pages would be counter productive. The third group of business web sites are information web sites. These sites are somewhat similar to television and newspapers in that their product is the content. Like those two off web equivalents, an informational web site can operate in one of several different ways.
Some pay TV systems combine the second and fourth of these methods as do most newspapers. Some web sites may also use some combination of the fourth method with either the second or third method. The thing to note with these different methoods of financing and hopefully making a profit from an informational web site is thhat the third and fourth of these methods are voluntary. They do not force visitors to make a donation to the running of the site or to buy the products advertised on the site. They rely on the fact that with sufficient visitors that enough of those visitors will take those actions to allow them to continue to operate the site. They rely on the quality of their content to attract the visitors to their site in the first place. Those that do not want to rely on voluntary funding will use the second method instead but as for many subjects there are many sources for the information that do not operate on a user pays system, there may be less opportunity to make money from a site this way than there would be through voluntary contributions. Even where you do use advertising to earn money from an information site you need to be careful as to how you do the advertising. If you do not make the advertising obtrusive enough then no one visiting your site will notice it and so unless you are being paid a flat fee or "pay per view" for having it there you will not earn enough income from it.On the other hand if you make it too obtrusive then you will alienate the visitors to your site and will end up with a vastly reduced audience for your content resulting in your again not earning enough. Make it obtrusive enough and your visitors will just block the advertising and view your site content without it which will lead to even less income. Finding the right amount, type, and position for the advertising so as to maximise the income you get from it may require much experimentation and is likely to change over time in any case. Just optimising the advertising could be a full time job for someone and so in most cases a less than optimal solution will be selected. The one thing that you can't do is to force your visitors to view the ads. The purpose in advertising is to increase sales and so the advertiser hopes to make more money from the increased sales that the advertising brings in than the advertising costs them. The least risky way for them to organise their advertising is on a commission basis where the site displays the ads and only gets paid when someone clicks on the ad and then buys something. "Pay per click" advertising is slightly more risky for the advertiser because they ave to pay every time someone clicks on their ad whether the person buys or not. They then need to rely on a certain percentage of those who clicked going on to buy. The one thing that they can be sure of with this form of ads is that the advertising they are paying for has at least been seen. "Pay for View" is even riskier for the advertiser because while they have a count of how many pages have actually displayed their ad they have no way of telling whether the people who viewed those pages actually scrolled the page far enough to see the ad. These advertisers also have no way of telling if their visitor has implemented an ad block in their browser or firewall that allows them to view the page without seeing the ads at all. Because the views are counted when the ad is retrieved from the server and the ad is blocked after that they end up paying for ad views that can not be seen. The varying risk in these different advertising models is taken into account in the setting of the price for the advertising. Ads that pay only on a sale will pay a lot more than those that pay per click which will pay a lot more than those that pay per view. It may take tens or hundreds of thousands of page views to make one sale and the advertiser will determine how much they are willing to pay accordingly. There is one other type of web site that attempts to make an inclme from advertising. These sites do not offer any real content, instead they fill their pages with very little apart from ads. They then take out their own advertising to advertise these web pages filled with ads. Their hope is to earn more from people viewing on or clicking on the ads on their page than it costs them in advertising to get the people to that page in the first place. They will get a higher than normal number of people who actually click on the ads on their page because the people who get to their page have already clicked on an ad to get there and are therefore more likely than the average person to click on ads. There is also nothing else for them to do on that page except click on the ads and so that will also help to increase the numbers. Web sites like this are basically trading in advertising and while some of these sites may actually make a profit by buying advertising at a lower rate than they are selling at, the end loser in every case is the visitor who has to click on at least two links to get to the product that they were looking for. Such sites just help to give advertising a bad name. In the end the site owner has to make the decision on how they will finance their site (and for business sites with no off web component - how to make a profit as well). They can collect compulsory payments from their visitors by requiring their visitors to pay for access or they can set up a voluntary payment system by either asking for donations or by displaying advertising. If they decide to display ads then they need to try to find the right balance between ads that no one notices and ads that are annoying. People visiting those web sites also need to make a decision. If the site requires a compulsory payment for access (eg. a paid membership site) then they have to decide whether to make that payment or to go elsewhere to try to find an equivalent site funded some other way. If the site is funded by voluntary payments then they need to decide whether to contribute or not. In the case of donations/sponsorship they will probably make that decision based on how useful they find the content (assuming that they are the type of person who would make such a payment). In the case of advertising the ad needs to be noticable enough for them to see it without being annoying and interesting enough for them to want to find out more. Modern web browsers are flexible enough to allow their owners to configure them to completely block the types of ads that they find to be most annoying so that they can visit web sites as if those ads were not there.The number of people who apply such blocks will depend on just how annoying the ad is. The most annoying ads will be blocked by everyone who knows enough about how the web works to be able to block it and so only those who do not properly understand how the web works will ever see it and they will be lobbying the company that produces their browser to implement a blocker that will be easier to use than the existing ones that they don't knw of because it will work automatically. The thing to remember is that those people who block the ads and those people who ignore the ads are the web equivalent of those who leave the room during ads on TV or use a PVR to skip the ads completely. Advertising works on percentages and these people were either never going to buy or always going to buy anyway and so the only effect that forcing them to view the ad could possibly have is to annoy a onfirmed buyer so that they will not buy after all. Annoying someone who has no intention of buying in the first place could not possibly convert them into a buyer. As long as enough of your visitors see the ads, click on the ads, and buy the products to allow both the advertiser and the site displaying the ad to make money then the advertising model is viable. If they can't make money that way then it may be time to investigate alternatives such as a different style of advertising or switching to a compulsory payment model. The one thing that you can be sure can only ever lower your income from advertising is to try to make it compulsory. On Site
A longer than normal 'My Word' this month because I ended up with quite a bit to say about advertising and web sites. A new category has also been added where I have started writing a series of tutorials on the NVU web editor for those who would like to use a decent WYSIWYG web editor to create web pages.
What's NewThe following links will take you to all of the various pages that have been added to the site in the last month. | Main LinksAsk Felgall CategoriesBrowsers Other Links
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