I recently attended part of the recent Techcrunch 50 conference, and when I wasn’t there I was watching much of it online. For probably 80% of the companies when it came time to ask about their business model, they said ads. Then they talked about cause they have all of this great information about the user they can advertise better than they used to. The problem is they’re forgetting all about user intent. This is why ads on facebook simply arent working, with some CPM’s being as low as .05.
Ads work on search because users are looking for something, and if you place an ad for it they’re fine with it, because they didn’t want to stay on the search page. When a user goes to facebook they want to stay on facebook, not leave. When a user is in an application they want to stay in the application, as long as the site or application is a destination or resides on a destination it will not make great revenue from traditional ads. Yeah, theres oppportunities for newer creative advertising, but this form of ad’s will not provide the same revenue yet as others. If you’re launching a product or site, actually consider how your worth making money, just saying ads in most cases is not a business model.