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May 14, 2009

Should You Monetize Your Site With Ads On Launch Day?

I was checking out a soon-to-be launched website recently when the founder asked the inevitable question: should he monetize the site with ads right out of the gate? Seems like a simple question, but the argument does have two sides:

Against monetization:

- Ads ugly up the site. If you are in the media business (i.e. selling ads to eyes), the difficult part is usually audience accumulation. If you build it the advertisers will come. So why put something on your site that will detract users from coming? Ads usually take away value from a site - that's why advertisers have to pay for placement.

- There's zero cost to not having ads. Most sites have very little traffic on day 1 - ads don't make anyone any money without an audience. So, if there's no money to be made on day 1 anyway, and the ads are ugly, why have them at launch?

- Ads can be bad for brand. Most websites starting out show ads from a network. That means 2 things: 1) the website owner does not have final control over the ad content; and 2) the network probably wants their brand displayed on or near the ads. A bad ad can offend people and the "powered by" branding can cause confusion. Neither of those things is good for you.

On the other side of the coin, the argument goes:

- Ads mean money. This is why you are launching the site to begin with. To make money. To build a business. Some money is better than none. Simple as that.

- If not now, when? Ok, so if you defer monetization until you've reached a critical mass of audience, you need to be prepared to pick that point in time when you've reached that level. When will you know?

- The culture of moneitzation. When you start monetizing your site on day 1 it actually builds monetization into your company culture. you start thinking about it. You start trying to optimize it. You build it into your design and your product plan. It flows through your veins. Dont underestimate this - ad monetization is like anything else, a learned art. And you can only learn it through experience and trial and error. Leaving ads off your site on day 1 means you are deferring this experience to a later date.

At Topix, we started monetizing the site via Adsense on day 1. Optimizing CTR's and CPM's became a company wide obsession. We started out making enough money to buy pizza, then rent and finally paying ourselves salaries. When we had our first $500 day on adsense, an email was sent to all - and followed up with several reply-to -all "woots!". Everyone had their eyes focused on the business we were building - and that was hugely positive.

Bottom line, most times I would tell people to start monetizing on day 1. There may be some special circumstances that don't allow you to, but you should think long and hard about deferring this decision.

May 26, 2009

Will Microsoft Score at the (Bada) Bing?

Over the past few days, there have been a lot of stories about Microsoft's soon-to-be-unveiled new search engine. I haven't seen it yet, but I'm rooting for its success. Skeptical, but rooting. Some thoughts:

* The new engine reportedly will be called bing. Its working name internally at Microsoft used to be kumo. I like kumo better. Bing makes me think of the Sopranos. Rocky thought of Chandler Bing from friends. TechCrunch mentioned Bing Crosby. Both of those are probably more obvious than an indirect Soprano's reference, but neither occurred to me. Is a search engine that makes me think of a fictitious strip club a good thing or bad?

* Microsoft's strategy to grab market share includes a huge ($80M) marketing campaign. As a founder of a search start-up that won't have $80M to invest in marketing, I'm skeptical of that strategy.

Buying market-share online is tough to do. Most of the successful online properties don't seem to have emerged from an immense marketing campaign, but instead from a smart product strategy. This isn't to say that Microsoft doesn't have both. I just don't think that TV ads or billboards will get me to use something online. The product itself needs to tell me why I should use it.

* With Microsoft spending $80M on marketing alone, it puts start-ups that have raised much smaller amounts into perspective. Here at Blekko, we're still lean and mean on our small raise, despite what others might say...

* So why would Microsoft throw that kind of money at search? We know the answer to that one: it's simply THE best online business to be in. The rest pale in comparison.

* With that, chalk up a new question for demo's/ testing: if Microsoft and their massive team of engineers and $80M in marketing can't make a dent against Google, how could Blekko possibly compete? I actually think the question is a pretty bad one - because in my mind there's no way an established company with a massive marketing budget can compete. The only one's who stand a chance against a market leader like Google is a start-up.

Why can't Microsoft compete? Well, the usual answers apply: they're too big, too slow, the marketing budget is a crutch, etc. But at the end of the day, this is a HUGE problem for competitors:

Google has conducted internal tests in which the company put its logo and treatment on another engine's search results. Users still prefer the results with the Google logo, even if they're not Google results.

With this type of problem you can't just make incremental adjustments to your exisitng product and throw a bunch of marketing dollars at it - you need a brand new approach. And big companies don't do well with new approaches. They require big bets, something only a small company can make because it has literally nothing to lose.

So I'm skeptical that users will score at the bing - but as I've set about every other attempt at search in the past, I'm rooting for them. Competitive search is not just good for Microsoft and Blekko, but most importantly, for users.

About May 2009

This page contains all entries posted to Marksonland in May 2009. They are listed from oldest to newest.

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