Advertising has acquired a very challenging reputation as a digital business model. This is a bit of a conundrum because one of the major trends of the digital era is advertising dollars moving from traditional media to the web. Mobile has accelerated this shift with analysts forecasting massive growth in mobile advertising. Gartner (@Gartner_Inc) for example predicts mobile ad revenues of $18 billion in 2014 will more than double to $42 billion by 2017.
Part of the problem is the prevalence of get rich quick schemes which tempt people with promises of six figure incomes for doing nothing but posting the occasional blog. This is a pity because there is no doubt that advertising is a potential large source of revenue and there are billions of dollars still to move from old media to mobile and digital.
So what is needed to build and grow an advertising based digital business? I have been working with the great team at Mallzee (@Mallzee) who are building a powerful business based on advertising in various forms. These are my 8 top tips for success.
The web has allowed businesses to reach much larger audiences than was ever possible in the past. Many advertising models depend on these large numbers with extremely low click through rates still able to generate a return. All very well but building an audience of millions is not possible for everyone. A much better strategy is to establish a niche and be able to clearly demonstrate that you are reaching a well defined set of potential customers.
Digital and especially mobile allow you to engage you audience. This is very attractive for advertisers. It is also becoming essential for customers. Simply driving the message home is no longer enough. You must be talking to your audience and even more important listening to them.
Engagement depends on you having a clear identity. Your audience needs to feel they know your brand and style. Establish consistency amongst content, design and messaging.
Big data also has a major part to play in successful advertising platforms. You can now measure everything and your job as an entrepreneur is to interpret those measures and target precisely the right potential buyers. Advertisers should demand ever more accurate audience demographics and a real time view of audience reaction to their message.
Real world connection
The best businesses in any field now link together the digital and physical worlds. This can be about timing, delivery and logistics or just convenience. Mobile has transformed this connection because users carry their digital lives in their pockets and handbags. Think of your platform as an adjunct to users lives and design accordingly.
There are many ways to source ads cheaply and easily. Pay per click (PPC) networks dominated by Google AdSense are the easiest but also offer pretty low returns. Similar networks such as Admob are also available for mobile. Affiliate ads offer better returns but are harder to convert. Best of all financially are ads you sell directly on your site but this requires a strong audience so may not be easy initially. Finding the right ads that fit with your audience is essential for success. Tracking which ads work is vital both for your business and for your advertisers.
Another way of generating revenue is by building a strong community, for example a LinkedIn group. Corporates often sponsor and encourage these communities allowing members to express a range of views and using the feedback as valuable input. Social media has made it much easier to share views and companies benefit from understanding customer opinion even when its negative. In an information dominated world the worst business position is to be in the dark.
Data, data, data
Building a successful business on advertising revenue is still tough but there are opportunities. In the next few years, the greatest growth will be from advertising associated with new streams of data. Mobile devices, the Internet of Things and all the elements of big data are creating customers insights of unrivalled breadth and depth.
Both selling data directly and linking sales, marketing and communications to new streams of data have tremendous commercial potential. Many of the innovative ideas arising from data will be essentially advertising based. Keep in mind the principles above and look to use data as a growth engine.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.