by Paige Turner

Your mileage may vary.

"Let's build a really cool Web site about widgets! It'll be really cool with chat, games, really great content and we can even have some VRML and video streaming. Since we know all about widgets, our site will be the coolest widget site around - we'll get millions of hits. We'll make millions! We won't have to do anything!""
September 02, 1999

How many times have you heard this kind of yak? Where do these people think the millions are going to come from? From selling ads on the site, of course. But is this really feasible? Have these people ever sold any ads before? There are millions of widget sites out there but are they making pots of money selling ads or are these sites labours of love thrilled to get free banner exchange deals? The latter situation is the true one I'm afraid. Most widget sites dream of selling even a single Web ad campaign. According to industry sources, three new Web sites are launched every minute. In the long run this is a good thing. More and more pages are chasing a pot of ad banner money that is growing slower than the group doing the chasing.

Average CPMs are going down. Although more and more money is being spent on Internet advertising, sites wanting to sell ads are coming online even more quickly. Since the Internet is so huge and disorganised, big advertisers tend to use agencies to place their ads for them. The agencies find it more expedient to put their clients' ads on trusted, big brand sites. Placing ads on a whole bunch of carefully-chosen specialist sites seems like the best way to go but it is an enormous amount of work to place an ad campaign like that. Even the ad agencies whose job it must surely bo to do this sort of ad placement are not likely to take the time. In other words, most of the big banner ad money is going to the big sites.

Who is going to sell those ads on your new widget site? Has anyone on your team ever sold any ads before? You can probably get some agency to sign you up but they are unlikely to do you much good. Agencies also have more pages to sell than they have advertisers for. They're going to place the ads on the biggest and best sites. The ones with the big brand names. Yahoo, for example, sells out less than half their inventory and they sell cheap. Yahoo is not someone it makes sense to compete with in most cases.

Although there may be widget sites out there actually making plenty of money selling banner ads it is an uphill battle. Which leads to the really big question: are small, niche banner ad-supported sites a viable business model at all? Currently I have to say no unless you have previous ad sales experience and contacts and are prepared to run the site on the cheap out of your bedroom or the equivalent.

This idea of building cool sites and selling ads to make them pay (and the founders rich) has perhaps run its course. A new trend I see more and more: "We'll support the site with ecommerce and make millions. It'll all be automated and we won't have to do anything!" Your mileage may vary.