Courtesy of ZDNET
Advertisers look for niche audiences

What can small companies and start-ups without huge audience numbers do to earn money from their Web sites? At the Revenue Bootcamp Conference in Mountain View, Calif., panelists discuss pay-per-click ads, and why they might not be the best model for small companies. Rather, they say, finding a single sponsor or targeting a more specific audience could be a better strategy. Panelists include: Neil Chase, vice president of Author Services at Federated Media; Samir Arora, chairman and CEO of Glam Media; and David Kopp, senior director of North American ads at Yahoo. Moderator: Bill Reichert, managing director of Garage Technology Ventures.


>> How does a start up company with a smaller audience base tap into that movement? It feels as though there might be what could be happening is that those dollars are going to the bigger online sights, right?

>> Yeah, I think some of those. But let's talk of the biggest problem for entrepreneurs and, you know, you have to divide online into two buckets. Content or application. Then they are very different and very significantly different to monetize. One of the biggest issues is Google's Ad Sense product which performs incredibility well for Google and for publishers for search, is not monitorization enough. And I'm sure with a raise of hands you can say how many people are using Ad Sense today? And if it contributes to you getting coffee everyday. It's just the base level of nonsearch Ad Sense does not really exist.

>> How many people here are using Ad Sense?

>> How many of using Ad Sense? For how many is it a significant source revenue, for anyone? One, two, three. So, it's very very hard  of course, four. Laughter. It's very hard.

>> He doesn't drink coffee, though.

>> He has got a long list of other drinks. I presume that's inaudible.

>> Right, right.

>> So the problem is the opportunity, which is we all know that content has quality and applications are very useful on the internet from iPhone all the way to the web. There are many networks and many rap firms. Just if you look at television for an analogy, you start to see some of the answers because people who produce shows, people who produce movies, people who are in the aggregation business and people who are in the distribution business like cable are very distinct companies. You can be a studio that is producing movies or shows and that can be pulled all the way and you can be NBC who does all of the above. So the answer here is, assuming that you have a small audience, getting the data and getting to know your audience as much is the start, and then finding partners who can help you really reach the advertisers that want access to those audience or content is at the end what this is about. So, from that perspective it comes down to that in a nut shell.

>> That maybe true, but the premise of the question is flawed, right? Like advertising, advertising is a business of large numbers.

>> Correct.

>> If you only have a few visitors, advertising might not be the best advertise model for you. And I think, you know, Tim's sort of focus on the funnel, the funnel is very important. If you are at the very bottom of the funnel, if you create data that says there are users who want to buy a product. That's valuable; it can be sold for a lot. You don't need a lot of users. But when you are at the top of the funnel and you don't engage users deeply and you don't get that demand feedback. You got to have volume. And that's, I think, fundamentally is you got to figure out if you want to be in the advertising business, am I going to have high quality users that are so valuable to a set of advertisers that they will pay a lot for each one or am I going to have a lot of users.

>> Plus it depends whether are you trying to build, I mean, everybody wants to build a business with high volume and super high revenue, you know, anybody can start a website, sign up for Google Ad Sense and maybe want to try their services get a little bit of money. And you saw a few hands go up when a mentioned Ad Sense, right? There are, of the hundred plus authors we work with, there are probably five or six who get really good numbers from Ad Sense and it's not just by chance, it's because the content they have is, remember what Ad Sense does, it thinks about the content on your page and tries to find the best adds to match with it. They have got advertisers who really want to be on certain kind of sites. So you turn Google Ad Sense for your site, one person will be getting five cents per thousand ads, another person will be getting six dollars because the stuff on your site is really well laid out, easy to read. Google's algorithms can read it, can match you up with advertisers who really want to pay to be there and for a small midsize company where, you know, you can make a couple of thousands dollars a month on Google Ad Sense, that's significant revenue for you, you know, don't throw that away. The business of advertising, massive amounts of ad banners does have to have volume and scale, but there could be  I have had people come to me who have got a few thousand, tentwenty thousand page use a month and they say, I have got one deal, this one copy is paying me $50,000 a month to have their banner on top of my site and go to go all of my events and to be my main sponsor. You know, I write about the VC?business and I have got a law firm in the VC?field that really wants to sponsor my site. I tell them, like, don't change anything; don't screw with that, that's the best deal you can get. That's a really good model. Try to grow it, but, you know, I can't beat that. You found the perfect sponsor for your site.

>> So sponsorship at a small site might be much better than pay per click, right?

>> If you find the right match up. Often when you start, if you get out there and start having some impact, people reach out to you. A lot of these folks, they didn't go out and try to sell, they are not going to endorse. Some law firm called them up and said, wow, you are really talking to my clients; can we do something to get in touch with you to serve you, to serve your readers, to start a conversation with your readers? And that's when you are on phone and you say, you know, I was just thinking I was going to do a conference next week, would you like to sponsor it? Sure. Then you try to figure out how to throw a conversation together. Laughter. It's often, that's where the 

>> Hey, there's a cool idea. I think it might have happened.

>> That's the kind of thing where it doesn't  you didn't go out in your business plan and you didn't say I'm going to have someone call me on Thursday who is going to be the perfect sponsor for my site. But if you are doing something about a niche and you get noticed by the people in that niche and one of them has, not the ad budget with the big ad agency, but the person whose got a hundred thousand budget this year to sponsor a couple of events and a couple things and finds out, wow, I should spend forty of this on you because, you know, are you the perfect, you are bringing a hundred people into the room who are the perfect audience for me.

==== Transcribed by Automatic Sync Technologies ====