Obviously with blogging the range of profits/losses is nowhere near as wild as with a start-up, thus the term “nano”

But as pointed out above in detail, the financial risk with frugal blogging can be minimized, while the potential has no theoretical limit, but it certainly has a reality-check limit!

Ever heard of Louise Gray? Well he just told 40–50% of my readers they should focus on their day job and forget about the blogging
I had not even noticed his existence and until recently but today on Techmeme I saw his post “Most Bloggers Don.…..

I think for these companies the same rule holds true: test and refine that revenue model!

In that situation — when the startup has borrowed millions and is relying on
ads — that’s the sort of stressful situation I had in mind.

As for the blogger’s end, most of us are just one person with ridiculously
low costs to keep the site running. So I nearly think it’s a no brainer to
put a few ads up. The barrier to profitabiliy is so very low.

Ever heard of Louise Gray? Well he just told 40–50% of my readers they should focus on their day job and forget about the blogging
I had not even noticed his existence and until recently but today on Techmeme I saw his post “Most Bloggers Don.…..

1. Advertising is a reasonable business model for certain businesses. It certainly won’t work for all web 2.0 startups. Any startup that doesn’t first research their space and try to understand what it will take to make an ad-based revenue model work is doomed.

2. Regardless of the business model, I’m a big proponent of “testing” and “iterating” the business model early and often. Too many startups create a product, launch it and figure they’ll worry about the revenue later. Sure this works for the companies hit the grand slam (like Youtube). But there’s only one Youtube. It makes a lot more sense to also start working on and refining your revenue model when launch your beta. I’ve been amazed at how much we’ve learned at Fanpop from 2 years of advertising on our site. Our site’s advertising “evolution” has run parallel with the site’s product/feature-set evolution.

3. Figure out the inflow/outflow equation. If you make low revenues, you can still survive if your costs are low. It’s obvious but we’ve all seen a LOT of companies that have huge burn rates and are unable to get revenues high enough to sustain their overhead. You’ve got a tough choice to make here, go with the high burn rate and hope you don’t go supernova, or shoot for slower, sustainable growth (it won’t take you from 0–10,000 employees in a year, but it’s more realistic).

4. Understand the CPC, CPM, CPA models and determine the scale necessary to achieve sustainable revenue with the traffic you have (or project you’ll have). This is an important one. I see a lot of companies thinking they’ll be getting the $50+ cpms that premium sites like the Wall Street Journal can charge. Remember that if you’re going with AdSense you can probably expect a much lower effective CPM on your CPC ads (sub $1).

5. AdSense is not the end all be all. I think there are a lot of folks who think that AdSense is all they need. It might be for the “melisthemeoma” bloggers, but for the rest of us you’ll need to look to some of the higher tier branded/display ad network and even some of the rep firms to start garnering those higher cpms and big ad spends.

6. Invest in advertising. You can’t run an ad-dependent website without investing time, energy and money on advertising services and technology. If you’re large enough, hire a sales person. People within the company should work on refining different programs and pitches and should target advertisers within their space. If you can lock in a specific advertiser or agency and provide them with a great campaign you may be in store for repeat business. Direct ad deals = higher cpms and potential repeat spends.

So in the end, I’d say I agree with you. A reality check is definitely needed. A lot of hard work, research, and failures are needed before a site can hit on that formula that will generate some revenue profitability. It’s possible, but it’s not a given and all the pieces have to come together.