Websites that make Money

Making a website generate money isn't an easy task, but it is not impossible. In this month's COMversations, Atul looks at the concepts of local content websites and web advertising revenue.

Too much has been written about the World Wide Web. To the layman, it sounds like the Web is the final frontier, the solution to everything. To the initiated, it is all too often the cause of a lot of gray hair, frustration and broken promises.

Is it true? Is the World Wide Web really a waste of time as far as Indian business is concerned?

There are many interpretations to the "failure" of the Web to provide Indian businesses the promised goodies, the millions of dollars and the massive exposure that they long for.

The most common one is, of course, that the reach of the Web is vastly overhyped. That the real business targets don't really use the Web and hence do not "see" you.

The second, less acknowledged one is that Indian businesses do not really know how to tap the potential of the World Wide Web.

The true picture is probably a combination of both.

The Indian "Business on the Net" Model

Over the past year, Indian usage of the Internet has shot up tremendously. Not only have many business houses begun to seriously use the Internet as a communication and research medium, but quite a few have actually started Internet related businesses.

The typical Internet related business that most Indian companies attempt to set up is that of "Business Exposure Services" or "Online Services". The former promises to make the international business houses sit up and take notice of you by setting up world wide web pages for you (or just listing your name and address in a directory), then "spreading the word" about you. The latter attempts to emulate the typical magazine, with content that people have to pay for to be able to reach it (i.e. a subscription service).

Sadly, neither approach can really deliver on its promises.

Let's look at the reasons why.

The Business Exposure Service Model

It is surprising how many people think that by simply putting up WWW pages about their company, they will be inundated by enquiries and orders for their products or services.

The "Business Exposure Service" Model capitalises on this belief.

It is true that pages on the web are a great resource of information for people looking for your product or service. Once they find you, your ability to give them this kind of information plays the leading role. If the visitor to your pages feels that sufficient information has been presented, he/she may actually get in touch with you to explore doing business with you.

However, the current breed of "Business Exposure Services" offered in India are far from fulfilling this need.

For one, they are usually extremely limited in nature, and do not offer the kind of flexibility businesses require to make this kind of setup pay for itself, let alone generate money.

I am not going to get too deep into this - I have addressed the topic in a previous article ("The Truth about Webpages").

Let me leave it with saying that in order to "make money" off this kind of service is extremely difficult, and requires tremendous amount of interaction and constant updation. I will address the issue of "corporate web sites" in another article in the future.

The Online Service (Subscription) Model

The concept of "pay per view", i.e. paid for online services, doesn't work because of the vastness of the Internet and the World Wide Web. An Internet user who is denied access to the content offered by a site can usually very quickly find similar information elsewhere - for free. It is virtually impossible to create a "unique content" scenario that someone would pay for.

Is the concept of an "online magazine" then doomed to failure?

Not at all, as long as the "online magazine wannabes" understand how the traditional printed magazine model works.

No printed publication (or at least very few of them) ever breaks even on the basis of subscriptions or even stand-sales. In fact, these magazines could probably distribute their issues free and save money - the sales and distribution process itself is very expensive!

The real money spinner for these magazines is, of course, advertising. Without advertising, none of these magazines (or other publications) would exist.

This creates a rather familiar "chicken or the egg" paradox. You need lots of advertisers to break even (or even make profits), but people won't advertise in your publication unless you have a very broad (or focussed) audience.

Now let's look at the online magazine model again.

Advertisements work

It is clear from the millions of advertisements one sees all over the World Wide Web that the concept of online advertising works - otherwise advertisers would spend their money elsewhere. The amount of advertising one sees on a site is usually directly proportional to the popularity of the site - more people visit it, hence it makes more sense to advertise there than on less frequented sites. And you very rarely see advertising in subscription services - mainly because the audience is limited.

The message is therefore clear. Access to your site should be free, and content should be interesting or useful enough to draw in the crowds (and make them come back again and again).

Information Services

This throws a major wrinkle in the path of most potential online magazines - suddenly, the "magic" of being online is not enough. You actually have to do some hard work, create online magic, write meaningful, entertaining or useful articles (or articles that are all three), etc. This itself is not always easy - in fact, it is virtually impossible these days. Creative writing is an artform that is perfected over years, and to hold such writers in your fold is almost as difficult as finding them in first place.

Is it hopeless, then?

No, it isn't.

I analysed my own web usage the other day, just to see what it is that draws me back to a particular site or web page, over and over again.

You won't believe which pages topped the list - AltaVista's search pages (http://altavista.digital.com) and IndiaWorld's airline schedule pages (http://www.indiaworld.co.in/open/info/flights.html)!

Neither site offers anything but raw information - they perform services that are useful to me, and I will return to them over and over again because of this.

It is hardly surprising then that you see advertisements at AltaVista these days, and it won't be long before the airline schedule pages at IndiaWorld start sporting these little (sometimes annoying, yet livable with) ads that you can click on to get more info about the products.

As web usage increases, and as the web becomes the warehouse of information it has always promised it would become, more and more people will turn to the web to get information about everyday things.

A classic example of such a potentially high-interest area would be information about a particular city - i.e. local content.

Local Content

I know of several pages world wide that get an exceptionally high number of hits because they offer "local content". Anything from movie listings (which ones are running, where, phone numbers for bookings) to restaurants (types, quality, addresses, phone numbers, reviews) to local transport rates and timings is defined as "local content".

Sites offering high amounts of "local content" get the best of both worlds - frequent visitors from both within as well as outside the city. The former use the site as a daily reference point for information about their city, while the latter would use the site to gather information about the city before travelling there.

This makes such sites especially attractive to advertisers, both local (for example restaurants) as well as national or international (brand name products, for example). Therefore, by offering such informational services for free to readers, the service provider can almost guarantee high advertisement revenues.

Everyone wins.

Advertisement types

Ads being the main revenue generator, it is important that you make sure early on that you can, in fact, cater to them. To understand this, let's look at the types of advertisements you can cater to.

1. Static Ads:

These are ads that are fixed for a particular page. This means that everytime someone visits the page, the same ad will be seen.

This is probably the first kind of ad you will be catering to, mainly because you won't have too many ads to display in first place. Typically, someone will pay you an amount of money to display his ad at the top (or bottom) of a particular page, for a particular period of time. Dependant on the popularity of the page, this could be a fairly long period (say a month or two) if you do not yet have too many visitors to that page, or a short period (maybe a few days or a week) if you have pretty heavy traffic.

2. Rotating Ads:

Rotating (or dynamic) ads are much in vogue these days, especially with heavy traffic sites. They allow you to cater to multiple advertisers at the same time, and thereby generate more revenue.

The way this works is that each time the page is displayed to someone, the next ad from a database of ads is displayed in the advertisement spot. When all available ads have been shown, the queue wraps around, starting with the first ad.

This requires some pretty complex setups - you need to both maintain an ad database on the site, as well as have the mechanism that rotates the ads for you everytime someone summons up the page.

Not every website can cater to this (it basically requires something known as CGI Programming) - most definitely not the kind most commonly being offered in India (where you are basically a sub-site to another site, without your own domain). Make sure that the CGI programming facility is available to you before you contract for the site.

Bottomline

The bottomline? It is perfectly possible to generate revenue from websites, provided of course that you are clear about what needs to be done.

Local content sites offer the biggest draw here. Of course, like every web based project, it will require constant updating, upgrading and attention. But if you do it right, you will find that it works, and works well.

Just make sure that you do not fall to the prey of greed - subscription services usually fail (unless they are have some really high-value content, such as share prices for example). Remember that almost anything you have to offer is available free of charge elsewhere on the web, which makes your "pay per view" approach meaningless.

Winding down...

OK, time to wind down. Before I go, let me wish all my loyal readers a Happy New Year. COMversations has come a long way since the first episode in January 1993, and with your valuable feedback, I hope it will continue to provide my readers the kind of information they are looking for.