Online Advertising Model- Niche or Scale?

A good post by Fred Wilson on the online ad business model.  He talks niche vs scale.

I will conclude by saying that an advertising model is a viable revenue model option if you are building a service that has a lot of scale. But if you don’t have millions of users a month, you should think hard before going in this direction.  via A VC: MBA Mondays: Revenue Models – Advertising.

My favorite visual for the niche vs scale tradeoff is this chart on the tradeoff between monthly impressions and eCPM that you need in order to have a $50 million dollar run rate business.

If you have 1 million monthly impressions, you need about $4k eCPM.  On the other hand, if you can only monetize at $1.00 eCPM, you need about 4 billion monthly impressions.

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