John Jago

Day 82: Making money from ads versus purchases

My working hours today were spent writing up the past few days of reflections, as well as doing some reflecting in my head, so I wanted to take this space to write something I’ve been thinking about lately.

Many informational websites make money from ads. Unfortunately, the incentives at play create a downright terrible experience for the end user.

Ads make money two ways: from impressions (people viewing the ad), or from clicks on the ad.

If someone wants to make money, they can place a single ad on their site, in a location away from the main content where it can’t accidentally be clicked and doesn’t get in the way visually, and they’ll make a few cents.

It’s very easy to make more money with a decision that can be made in a few seconds. Place more ads, and place them in spots where people will surely see them, and where they are likely to be accidentally clicked1.

It’s how you end up with a recipe webpage that has a 3,000 word backstory serving you no fewer than 10 ads before you even get to the ingredients. It’s also how you encourage rampant clickbait. It’s the very end user, the one that doesn’t know about ad blocking, who suffers the most from this in a number of different ways (confusion, clicking on an ad and getting a virus, and so on). I never liked this business model. Some people only see the money, but there’s more to it that isn’t measured, that is perhaps more shocking than the amount of money made.

On the other hand, the model of “pay money, get a thing” for internet products causes much less grief for the end user, and incentivizes the right behavior in the seller. The transaction is simple. If it’s good enough to buy, then people buy it. The seller is only paid when they’ve done the work to solve a problem or otherwise deliver something of value to the end user, without tricking them. There are certainly things like scams, false marketing, and monopolies, but if those factors aren’t in play and there are fair refund policies, it’s an achievable, ideal business model.

  1. Ad networks undoubtedly try to make sure the advertisers aren’t paying for clicks that don’t deliver any results. I recall reading something that the cost per click is higher for people who are in the target audience of the advertising brand versus those who are not. Creepy. ↩︎

👋 This is my work journal, a series where I write daily about trying to make a living building a bootstrapped software product.