Revenue Models for Non-Trading / Information Sites etc

Given the scenario that a) your site does not actually represent an offline business or b) directly sell goods or services or c) charge visitors for information access or such likes then what kind of revenue models are available to monetize such a website and what are the expenses and risks attached to each? If you already have organic search results and traffic then in order to convert this into currency you may well be considering

Drop shipping sales

Your site essentially appears to the visitor as a well stocked online store. The idea of dropshipping, however, is that you do not carry stock or fulfil orders. Purchases are made via your site and payment made to you, but the order is transmitted to and dispatched by a third party to whom you make payment.

Advantages: Set your own markup usually. No investment in stock or storage overheads
Disadvantages: You are directly involved in the chain and responsible if things going wrong. The purchase has been made with you and you, naturally, have obligations and liabilities under such an arrangement.

In-House Ad Schemes

Directly offered and negotiated advertising by banner impression, click through, text link etc. You run all advertising schemes in house. These can be fixed banner placements, rotating banners, partial banner exchanges, paid text link etc. You choose where, how much to include and on what terms the adspace is to be offered to potentially interested parties.

Advantages: No third party taking a cut of the advertising revenue. Full editorial power over advertisers
Disadvantages: You're advertising space is not necessarily put in front of the widest interested audience if only your current visitors are made aware of it. Remember that those who may want to advertise are not your target audience for the site itself. If they don't know you exist, you've got to let them know somehow and that can be costly. In-house Advertising schemes that need to be promoted offsite (via PPC, banners etc) will of course lower the return.

Third party managed, timed text links

Text Link Sales Networks seemed to be the buzz in 2004-5 and are still popular. Search engines may try and penalise links designed to transfer PR from one page to another in exchange for financial inducement. How the market will fare if the use of the "nofollow" tag becomes common is not assured as many are currently purchased, not for the exposure, but to try and increase the paying (linked to) site's position in the SERPs for keywords and key phrases

Advantages: Fully managed and automatic. Ad inventory is available to a wide cross section of potentially interested parties. Editorial approval is pretty much standard with ability to accept or reject each advertiser's submission.
Disadvantages: Unpredictable future treatment of paid text links from the search engines. Can be high % of revenue kept by the link network

Contextual click through advertising

Including Google's Adsense™ and the upcoming Yahoo Publisher Network. Text ads are served on pages in relation to search strings or links that have brought visitors in and page content of the page carrying the ads.

Advantages: Simple to implement and easy way to monetize existing organic traffic. Instant ads when the inventory is sufficient. Ability for advertisiers to target your site due to its reputation etc. Links on 'Authority Sites' will be in constant demand. Ability to exclude competitors
Disadvantages: Unknown and varying % of revenue kept by contextual ads network. Ads can sometime be wide of the mark in terms of relevance

Affiliate advertising - pay per lead / pay per sale

Affiliate sales have the potential to generate large income, given sufficient traffic and conversion into tracked sales. Commissions can vary from 1% to 15%+ according to merchant, item and sector.

Advantages: No outgoing cost unless other methods are used simultaneously to drive the traffic. Commission rates on some item categories from some merchants can be in double figures, although some high ticket value goods / services can be low. High commissions, high traffic and and high conversions can translate into a substantial revenue stream
Disadvantages: Certain sectors require a huge volume of traffic to convert into any meaningful revenue. Invalidated sales/ commissions can always be an issue with the merchant / network involved especially with merchants on multiple networks. Short 'session only' cookies from some merchants can be of little use, especially with products where a buyer would naturally be expected to do a bit of shopping around before committing to buying

Lead offloading (filled form allocations)

Your site is effectively run as a feeder site for enquiries which are then delivered (as stated) to a partner to follow up. The precise nature of the relationship should be made clear to visitors before taking information from them in order to comply with Privacy reuqirements.

Advantages: Partner deals with all potential customers. You are paid on a 'per lead' or completed submission basis, meaning that even thopse that do not become sales are revenue generators
Disadvantages: Finding the right calibre of partner, who appreciates privacy and other issues involved. For high converting schemes the payments can be lower than utilising affiliate advertising from the same sector in the same space.

Adwords / Adsense arbitrage

Although this is not a revenue stream from organic traffic it can represent a way of monetizing pages using the margins between relatively obscure and frequently inputted search terms. PPC (Pay Per Click) bidding on a large number of low demand search phrases to drive traffic to a destination where the hope is that even after the contextual ad provider's cut the margins and click throughs are sufficiently good to create a profit

Advantages : Big payouts on successful campaigns
Disadvantages : High budget and skill level required to make on narrow margins. Risky strategy than can lead to heavy losses when things go wrong. Very often nicknamed Adwords 'spread betting' not without reason and associated risks

Author : Mike Goodyear - Feb 2006