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Monday, May 9, 2011

Business Model - Advertising

As discussed earlier, a business model is simply how a company makes money! Advertising though is a component of marketing, it is worth putting if up as a business model separately. An add requires a space, whether real or virtual to be displayed. The real estate dedicated to marketing would fetch a higher premium if the real estate targets a specific audience instead of having a scattered audience.

There are companies which have made a fortune by creating or making available this real estate. Google towers overs others in this race. Google is able to provide all the applications it provides for free since, it able to subsidize these applications with the ad revenue these new apps create, using these apps also reveals a lot about the user statistics and hence earns a higher revenue for google. Social networks too rely heavily on their insights to be able to use their real estate for revenue.

One needn't tell a lot about the real ad-space since this is a well established business and has a history to support it.
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