Silicon Alley Insider is reporting that Google will show much lower growth this quarter… yet another sign that the world’s poor economic condition is going to crimp the growth in online advertising. If Google’s revenue growth falls to 11% this quarter then the 15% revenue growth in search advertising projected by some analysts for search in 2009 starts to look pretty darn aggressive.
Note to online startup founders: VCs are not in the mood to hear about business models driven by online advertising… You may need to find another way to monetize all those eyeballs (sorry, I mean users, eyeballs was terminology from the LAST crash.)
March 10th, 2009 at 3:38 pm
Good point. It has often seemed to me that advertising is too easy an answer to the revenue model. I believe that to make an ad based model convincing you really have to have something unique and (to use an overused word) have traction demonstrating that many someones will actually pay to reach those users.
March 10th, 2009 at 5:01 pm
For a B round in particular with an advertising based revenue model we'd look for escalating, repeat purchases by the same advertisers. This sort of repeat purchase would indicate that the particular form of advertising has real ROI to the advertiser.
March 10th, 2009 at 5:33 pm
What about an A round? It has seemed to facile to me to say we are going to make it on ad revenue, unless the founder has figured out a clever way to target a well defined, large and highly desirable demographic.
March 11th, 2009 at 7:55 pm
I'm not sure there is an A round for most content/destination style sites looking for funding if they have only an advertising driven business model… That is a really tough sell these days.
March 11th, 2009 at 8:30 pm
I agree, as you say for most such sites.