It isn’t difficult to own a website. But it’s hard to take it far unless it makes money for itself, and its owner, who sinks a fortune to get it up and running.
The dotcom dirge has not started, but it is a wake-up call for online entrepreneurs who think advertisements are the only tickets to profit.
The writing is on the wall (web?). In the welter of websites, it is the canny few which find new revenue streams that will live through the shake-up. Many are already at work.
Having opted out of the race for eyeballs and space, they are now realising that survival may lie in selling. Everything, from products to entertainment to services, is on offer.
Says Marc Miller, general manager (South Asia), Space media: “On the internet, advertising is just one revenue stream of the many. Very few websites are profitable on advertising alone.”
Transaction fee from service-based features is a much favoured and viable revenue stream for websites. Channel partnership, co-branding, joint marketing opportunities are other sources.
While advertising still appears lucrative, it need not be of the kind we have known it. It can be in the form of sponsored features, links to other sites, sponsored content, all of which brings in money. Partnership, rather than plain promotion, is now the name of the game in the dotcom heap.
Agrees Sunil Lulla, president & CEO, Indya: “Internet is not about building one business, but many of them, simultaneously,” he says.
Besides, wheels within wheels in the web world results in a scenario where a potential advertiser may set up his own
website, and may not venture out for online ads.
For offline ads, an entrepreneur has take to recourse to traditional media. Optimists such as Lulla feel that if the website notches up enough eyeballs, then advertisers would be keen on it, as is the case in other media forms. Lulla says the focus is to bring in a new audience for his website all the time.
According to Miller, internet as a part of a larger media-mix, is much too small for India given that it has not acquired the kind of critical mass needed to make it a popular medium.
“A lot of traffic on Indian websites comes from outside India. Naturally, that won’t excite those whose products are meant and designed for being sold largely in India,” he says.
Kajaria Ceramics is one of the many potential advertisers, which has decided to turn into an e-tailer. Rishi Kajaria, a 20-
something scion of the industrial family, has floated the venture. Floor2floor.com displays and sells construction material, interiors are displayed for sale, including of course, his own family’s.
The site doubles up as a sales-point on the Web as well as a branded ad for the family concern. Naturally, Kajaria will start putting up computer screens with his site on at all ceramic showrooms owned or franchised by his company.
First-time businessmen who think the Net can place them on the same footing as an Ambani or a Modi have come to the conclusion that e-tailing is the way to accomplish their goal.
Says Amod Dadich of BuyAsOne.com: “We know it is tough to exist on ad revenues alone. So, we took to e-tailing.” “BuyAsOne wants people wanting to buy a consumer good to come together on its site and bid down prices of goods to as low a level as possible. Companies selling products will be willing to give larger discounts if consumers can pool in their purchases. This gives these firms big volume sales,” he adds.
Dadich, of course, hopes to live off a 2-3 per cent commission he will charge from companies which sell their goods through his site.
Says Anil Sengupta, a financial consultant: “It does not pay for websites which e-tail to sell low cost or low-volume products, such as books.
This is one of the reasons why Amazon.com is a loss-making proposition even though it is one of the most popular sites on the worldwide Net,” he said.
The answer to the predicament, says Sengupta, is to sell high-value products or services that bring in more moolah.
He says he is currently advising a company on a revenue model based on re-selling customised software applications which would be submitted to the company by developers who do not have the wherewithal to sell on their own, or feel are being conned by existing buyers with a ‘crummy deal’.
“Essentially, the site will be a glorified agent for independent software designers, but we feel it is in a position to make money. It is not that everybody is deserting advertisers,” he added.
Chequemail.com, a popular Mumbai-based e-mail service, depends on advertisers to pay for its operations.
More important, it has gone a step ahead, sharing 30 per cent of its revenues with its registered e-mail users.
“We have already paid two installments to our subscribers,” a spokesperson for the service said. However, the actual revenue earnings of the site still remain shrouded under a cloud of secrecy.
K Satyanaryan, CEO of cricketinfo.com, takes a more realistic position, saying revenues from advertisements were a hot proposition only in the initial days of the dotcom rush.
“As the euphoria subsides and gives way to some serious bout of stock taking, it is now quite clear that ads on the website cannot fetch a lot of money in India, especially for the startups. If a website is rich in offerings, content syndication can turn out to be an important revenue stream,” he adds.
