Jason Calcanis is growing on me. First, his post about controlling startup costs and now sharp advice about selling ads through 3rd party networks. Conceptually, some of this thinking applies to the way we sell job postings as well.
It's so obvious to anyone with premium content that giving it away is a huge mistake in the long term. HUGE. It is a zero sum game: you have a limited amount of inventory. Give it away and folks get trained to think your inventory is cheap. Do it for too long and marketers don't want your audience.
Many of my friends give their inventory away to 3rd party networks and I've told them in no uncertain terms they are fools--really, really fools. In order to be a REAL publisher you must have control of three relationships:
You can not build a *real* publishing business (as in tens of millions of dollars in revenue) on the backs of ad networks. They simply take too much money (40-50%?!?!?! really?!?! What a waste of money... you internal sales group will cost 10-25%), they are spread too thin, and even with their absurd 50% fees they don't have enough margin.
- Your writers
- Your readers
- Your advertisers
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