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NONE: Re: Inter_at_ctive Week story on Web site profits
Re: Inter_at_ctive Week story on Web site profits
Jeanne Dietsch (jadietsch_at_activmedia.com)
Mon, 24 Jun 1996 06:13:18 -0400
>In the June 17 issue of Inter_at_ctive Week, Steven Vonder Haar writes an
>article called "Hold On: Web Sites Won't Turn a Profit Until 2000." It
>quotes a study of web site economics from Forrester Research indicating
>that content publishers should not expect to turn a profit until the year
>2000 at the earliest. Forrester developed a model defining an "average"
>content site on the web: "The average Web site can expect to generate
>$170,000 in revenues from advertising, subscriptions and transactions this
>year, leaving it with a substantial shortfall in meeting its $1.37 million
>in expenses for the year."
Well, this kind of story makes good copy and helps scare publishers (and
advertisers) away from big web investments (though I notice that CMP,
publisher of Inter_at_ctive Week, does not seem to be heeding Mr. Vonder
Haar's advice.) Of course, anyone who's familiar with web business knows
that these numbers represent the upper end of the range (on both revenues
and spending sides), and are not averages -- even for large publishers.
What is interesting is that sites are segmented into "content" vs.
"transaction" sites when the essence of the Web is the coallescing of the
search/browsing, informing, transacting, and delivery of product or service
into a unified process. Like it or not, traditional "publishers" -- those
involved only in informing -- ARE fighting for their lives online against a
stampede of newcomers. (For instance, whoever would have predicted two
years ago that the Wall Street Journal would end up BUYING ad space on a
competing business news source offered by some young upstarts with the
unlikely name of "Yahoo"?) Though the cost of entry is rising, the
competition among carriers and other web suppliers will continue to allow
the entrepreneur ready access for some time to come. And large predators
from other industry sectors are on the prowl for new opportunities as they
see their core business changing as well.
Competition for ad dollars will be fierce. In our third semi-annual study
of 1100+ online marketers, we found that 17% of web marketers offer space
ads or paid links on their sites. And traditional "publishers" are far from
having the highest mean ad revenues, though they tend to charge the most.
Still, the flow of ad dollars onto the Net and intranets is increasing
rapidly, so the news is not all bad.
All in all, we foresee unsettled times for some years to come, with
publishers and many other companies finding the ground caving in around
them. After all, the information highway is being built by thousands of
bulldozers, each with their own set of blueprints. But even though the
risks are significant, a head in the sand is no escape; like it or not,
some of those bulldozers are headed your way!
Jeanne Dietsch
ActivMedia, Inc.
** "The Real Numbers behind Net Profits" **
based on our Third Semi-annual Study of 1100+ Net Marketers
** http://www.activmedia.com **
research_at_activmedia.com
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