If advertising is your business model, then you don't have a business model

I get the impression that every new startup’s business model is based on the assumption that they’ll get enough traffic to become profitable via advertising. In fact, Facebook’s whole multi-billion dollar valuation seems to be based on the assumption that they’re going to become the next Google. Note to world, there’s only one Google. Even Yahoo and Microsoft are screwing it up. If advertising is your business model and you’re not an ad server, ad network or technology/media power, then you don’t have a business model.People still hate adsContextual ads doesn’t buy you love. They’re more tolerable, because they’re more useful. But as they become more ubiquitous, they’ll become less effective, simply because of the general dilution that occurs when the entire category shifts to the same model.There’s just one GoogleAdSense as an advertising platform means your advertising-based business model is just as good as your competitor’s, and no better. Google has a continuously evolving ad serving algorithm that helps them adapt and innovate. Unless you also have a continuously evolving advertising technology, I highly doubt your business will be buoyed by advertising dominance, unless…You have massive reachEven dumb ads work fine. Ask the major TV networks, ask ClearChannel. This is where efficiencies of scale can pay off, in that if you’re able to leverage the efficiency of contextual ads and get it to scale with massive traffic then you can have a fraction of the relative “traffic” that HBO gets and still be as profitable. However, sites that get this much traffic are of a select few. The long tail means 99% of everyone out there still sucks. So if you’re one of the 99% of the tail that sucks, you probably shouldn’t be banking on advertising building your millions.