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Advertising - Thursday, March 8, 2007

A VC's View Of Online Advertising

Jeremy Lieuw of Lightspeed Venture posts on the painful economics of online advertising. Here is his easy math on three ways to build an online media business to $50M in revenue per year.

+ At the $1 RPM (CPM/CPA/CPC) level achieved by most general sites, you need 4 billion page views/month.

+ At the $5 RPM level achieved by demographically targeted sites, you need 800 million/month.

+ At the $20 RPM level achieved by highly targeted sites, you need 200 million/month.

We would throw in a couple factors that make online publishing more appealing than Lieuw's breakdown:

+ Other revenues streams. We know of several sites that make substantial revenue from job boards, content licensing, as well as leveraging online audiences off-line in trade-show and book deals.

+ Fat profit margins. If you are good, online publishing should not cost much so margins on $40M in revenue should make everyone very happy.

Read - Three ways to build an online media business to $50m in revenue (Jeremy Lieuw)