Advertising Revenue Website

In the High Volume - High Margin Opportunities article, the online versus bricks and mortar business topic was mentioned. Let us consider a website venture generating advertising revenue as an example of the former.

Initial Cost

What is the cost to build an information website?
$10 to register a domain name with recurring annual payment
$10 for website hosting with future upgrade path to bigger server
$0 development if you can do web programming and graphic design
near $0 development if you leverage a content management system
$100s for graphical work including logo design
$5000 for website programming if you hire a programmer
$1000s for legal fees if you do trademarks and such
$1000 to register additional domain names surrounding your main domain

A computer with Internet access is needed but that is probably already in place independent of the website venture.

A range of $20 to $8000 is needed to start an information website venture, depending on your situation. Add in the cost of the computer and $50/month for Internet access if you want to account these strictly against the website venture.

Content Cost

The cost of providing the content is not included in the above list. It is difficult to determine the dollar value for different individuals with different types and amount of content. If the content is generated by an individual as a labor of love, then cost is likely near zero. If it is a side venture for an employed person with an income, then the individual's time must be valuated. If the content is acquired, then that depends on the cost and source of the content provider. For example, one can commission free-lance writers. Another example is the use of auto blogging software where there are moral and legal issues at stake.

Earnings

What is the earnings amount for an information website? It is hard to know since they are private companies which do not have to file financial reports and any claims made are subject to the question of validity. A chitika.com study shows $500M revenue in 2006 for the top 50,000 blogging sites.

See Blog Revenue and Internet Advertising Revenue for related articles.

Ongoing Expenses

There is at least 1 person running the operation - the website owner. Others may be hired as the need arises. Ongoing contracting work and other service fees may be needed to support the operation of the website. But basically, after the infrastructure is established, the owner can add content and operate the website with little incremental cost.

An advertising revenue website offers a very low barrier to entry requiring relatively little upfront capital. The advertising bill is probably the biggest component of ongoing expenses. There is not necessarily any visitor traffic at the beginning with unbounded visitor capacity in the fullness of time (e.g. 4 million page views per month). A website venture is relatively high risk because it is unknown if it will succeed. On the other hand, it is relatively low investment to enter the venture. Contrast this with a high margin bricks and mortar business such as a Tim Hortons Franchise.



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