Category Archives: breakeven

Risks of advertising based revenue

While advertising is an attractive source of revenue for many websites, as it is passive income, it is also a very risky model. An ad network may terminate its relationship anytime, without even giving a valid reason. Alternately the ad network may go out of business anytime, and the publisher will have to hunt for alternative sources of monetization.

Even if the ad network is paying on time, there is always a lot of inventory which remains unused, due to a decrease in the demand. For example, if 20 websites are listed on an ad network, and advertising is sold on only 5 websites, it is very expensive for the publisher, who still has to pay the expenses for the remaining 15 websites like domain registration, renewal without earning anything. Hence it is important to consider the cost benefit ratio while developing and designing multiple websites.

Managing a large network of websites not simple

Though webmasters, domain investors and Paypal account holders are defamed as uneducated fools in India doing no work at all, or that the work is extremely simple, managing a large network of websites can be very complex work. If the system admin is not interested, the downtime of the network will be higher and advertising revenues will get adversely affected.

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It is very easy to criticize, but those who criticize forget the old saying, when you point one finger at others, your remaining fingers point back at you. There are many people who may be jealous/want to take over a large website network, so they criticize the website network owner for whatever he or she does. Since they know they will never be able to develop or manage such a large website network themselves so they become jealous and try to pull down the website owner. Most of these critics do not have a single website of their own and do not have the skills or knowledge for the same or even willingness to spend the money online.

Criticism becomes relevant only when the critic has similar experience or knowledge. When a mediocre inexperienced person with very little indepth knowledge thinks he is “the expert” and passes judgement , it is best ignored. As they say, when a elephant walks, dogs bark.

Breakeven point

In any business , profit is the major consideration, but online this logic does not work. A webmaster is criticised if the website is not of high quality ( hence cannot be resold easily once it is stolen from the webmaster) without considering whether the webmaster is making any money. If a webmaster is spending money on one domain and one webhosting account, he can spend a lot of money of design , content and programming. If a lot of money is spent on domain registrations/renewals /webhosting , there is very little left for design and also email interception makes it difficult to communicate with suitable designers. In this case, the business owner will try to break even, and stay for some time without drawing a salary.

Different companies have different business models and if one company has a business model which cannot be easily replicated by other larger companies, making the life of the owner of the company difficult indicates the lack of tolerance and foresight. Instead , the larger companies do not have the honesty to acknowledge talent.