Website Revenue: Introduction
Published: Monday, December 8, 2003
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).
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.
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.
- 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).