Why venture capitalists aren't interested in ad supported businesses
Great article over at the Lightspeed Ventures blog about what it takes to generate $50 million in revenue from an ad-supported website (Fifty million was chosen as it is unlikely Lightspeed would be interested in investing in a company whose revenues top out before it)
O'Reilly sums up the goal as follows:
- At the $1 CPM (Cost Per 1000 Banner "Impressions") level achieved by most general sites, you need 4 billion page views/month.
- At the $5 CPM level achieved by demographically targeted sites, you need 800 million/month.
- At the $20 CPM level achieved by highly targeted sites, you need 200 million/month.
In other words, if you are looking for venture capital investment and your online business is solely ad-supported, you're probably going to have to be one of the top websites in North America.
For reference, Fox's webpages (i.e. Myspace.com , Fox.com, etc...) were estimated to have 39.5 million page views in the USA in Dec 2006 (source)