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Website Revenue: Introduction
Published: Monday, December 08, 2003
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Does your website make money?
There are billions of websites on the internet. About 30 million domain names are registered.
But among these, how many of the websites do make real money and have real profits. While
developing a website, the owner has some aim in mind. It may be a website for educating people,
or a showcase for a product. Whatever the goal maybe, there needs to be a way to generate
revenue for long term sustainability (unless it is funded by an external source such as a non
profit agency).
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Revenue channels
Considering the various models and theories for generating revenue from a website, each of
them can be categorized into one of the three
revenue generating channels. However, the get rich quick schemes, which flood the internet and
our mail boxes, will not be discussed here as any sustainable model. This chapter will discuss only those
that are legitimate and does not use deceptive techniques.
- Ad Publishing: The website sells
advertising space to potential advertisers. The rates are based on number of
impressions or clicks or actions. In late last century, the advertising rates
were mostly based on number of impressions delivered. However, due to low click
through rates and downturn in the dot.com era, advertisers
now have moved to performance based models.
- Affiliate:
This model
uses affiliations with other websites or businesses to generate the revenue. The website itself may not
sell any product or service, but helps in promoting the product. In turn, the website
receives revenue similar to commissions in business sales terminology.
- E-commerce:
An e-commerce model is the most well known revenue stream where the website sells products
or services online. Big e-commerce merchants like Amazon.com and Dell.com sell products using
this model. Every e-commerce entity on the internet should have a business model that
performs on the internet. Some business models are based on pricing (Overstock.com, Dell.com),
some on customer service (AOL.com), while some focus on niche target audience (BlueNile.com).
A website can use a combination of these models to generate revenue. Amazon.com is a prime example of
the e-commerce model. However, Amazon is also a pioneer in affiliate partnership marketing. An Amazon
partner website can display Amazon books (and reviews etc.) directly on their website, and sends customers
to the Amazon's website when the visitor is ready to buy it. In turn, Amazon pays a commission for the sale
to the site owner.
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