Whether you’re a social media expert, or you just happen to pick up a business section every now and then, you’re probably well aware that social networking sites can’t seem to make any money. Facebook can’t do anything right, twitter hasn’t even bothered to develop a coherent revenue model, and even digg is losing millions of dollars. It’s almost a paradox–you can have all the traffic in the world, but it’s still possible lose a bunch of money despite trying really, really hard.
It’s a not-so-gentle reminder that revenue models are more important than ever. Creating a start-up built soley around high traffic volume can, at the very least, lead to wasted time. Incorporating a revenue model upfront and actually understanding how you’re going to make money is far more important than it use to be. Why? Because generic forms of advertising are not nearly as effective as they once were. Banners are dead, and Adsense is the new Banner ad.
Develop a focused, engaging ad model that adds real value to the visitors experience. As the average Internet user gets savvier, anything less will lead to lost revenue.