Is Online Advertising Dead? Not quite yet..
Heading into the next year, websites are going to have find new sources of revenue as advertising sales continue to decline. Is there a viable source of revenue for sites, especially social networks that can’t really solely on ad space? Some prepare for the worst and have already pronounced these sites dead, but I’m a little more optimistic. I mean Google was the leader in transitioning most website from a subscription-based model to ad-based, and now there’s an opportunity to innovate once again.
A partner at Khosla Ventures, David Weiden, said that ad space will still sell but websites, especially start-up seeking funding will need diversified revenue streams. The simple answer to this would be introducing premium subscription-based services, but who’s going to pay for something that they once had access to for free and especially in an economy like this.
Elvis' studded pantsuit, $4
An interesting concept that Facebook has tried, amongst others, is virtual gifts. One of the leaders in this space is Gaia Online, a virtual world that sells gifts like Justin Timberlake’s fedora for $2 or Elvis’ jumpsuit for $4. Even during the current economic climate, they have seen monthly sales of over a $1m. Obviously this can be taken to the next level with brands and retailers stocking their item at these virtual storefronts. From the point of a consumer, the real thing is out of their budget but buying a virtual gift is the next best thing and for the retailer the margins are great – so its a win-win. That being said, I can’t imagine myself feeling good about rocking JT’s fedora online.. I’m pretty sure I’d rather be wearing it in the flesh.
