Start-up ad-dependent ePublisher: financial realities please?

[Wokemedia MD]

Hi there. I'm one of two partners in a potential mid-2009 web-based start-up. Basically I've joined in the hope of gaining some 'local knowledge' that may well determine the feasibility or otherwise of our fledgling online venture.

While the basic concept, design and editorial expertise are in place, the obviously vital e-business aspect is pretty daunting.

As a starting point, and as a novice 'webmaster' (if that's not an oxymoron I don't know what is!), I'm basically wondering whether this is worth pursuing if advertising is the primary, and initially only, source of revenue?

I'm told the likes of Adsense etc are pretty paltry payers and the sort of CPM figures quoted by the likes of salesonline.ie for display advertisers don't exactly inspire confidence.

Is it the case that niche (eg, predominantly local/geographically-specific) sites can sell advertising at higher rates on the basis of repeat visitors/(free)registered users, compared to the values typically charged by high-traffic, low-specificity websites such as search engines?

Obviously given our lack of online marketing expertise etc we would need to engage expert agency advice/consulting in the whole area of internet marketing, advertising and SEO, and general ongoing website development.

Any words to the wise would be appreciated.

[PCIMerch]

This model can be done, but it's tough. It's a very played out model so to really be successful you're going to need content that is better or different than what's already out there. Also keep in mind that overall CPM and even CPC advertising is on a bit of a decline in the US given the current economic conditions...

Do local ads get higher CPM's typically? In most cases I'd say yes, but not by huge percentages. Keep in mind that large ad networks can really geotarget users pretty well across their whole network of sites. They will charge a bit higher CPM to the advertiser for this targeting, but they also have the ability to reach across all properties they work with. That means they can scale this for local much better than an individual web site.

More niche sites specific to particular themes typically get the best CPM's, but that also means that your advertiser pool is probably smaller. Mass market advertisers care more about reach than about content, so those household brands of the world probably aren't as interested to advertise at a higher CPM when they can pay very low CPM's for millions of impressions per day.

I think all in all the viability of your venture really depends on how much up front capital you have and your tolerance to be negative for quite some time as you build up reputation and readership. Premium content providers can charge premium CPM's, and only when you get to that point and your readers come back frequently do I think you will have the ability to become a healthy, viable company.