I’ve always thought “Web services” is a boring name for one of the most lucrative areas of tech-business innovation. The term encompasses many interactions on the Internet—everything from Web-based software to shopping to social networks. A big question these days is how to monetize these Web services, and how to get revenue from all the various Web 2.0 applications that have emerged. Sure, there are traditional business models based on advertising, subscriptions, and transaction commissions, but what are cutting-edge companies doing with these models?
I had a feeling last night’s Washington Technology Industry Association (WTIA) event at the Westin Hotel in Bellevue, WA, would provide some unique answers—and I wasn’t disappointed. (The drinks and dinner, which I hadn’t expected, didn’t hurt either.) I’ll give a straight recap here, and try to follow up with more insights down the road.
The title of the WTIA panel was “Cashing in on Web services: The display ad model and beyond,” and it packed an all-star lineup of Seattle-area Web companies. The moderator was Scott Jacobson, a principal at Madrona Venture Group. Perhaps the most striking thing about the panel was how young everyone looked (I’m starting to feel old around these entrepreneur types):
—Matt Hulett, chairman and CEO of Mpire, maker of ad network WidgetBucks
—Andy Liu, CEO of BuddyTV, the largest TV destination site
—Mike Metzger, CEO of PayScale, the largest salary comparison site
—Spencer Rascoff, CFO of Zillow, the second largest real-estate site
—Tony Wright, co-founder of RescueTime, a time-management software site
Jacobson opened with some brief remarks about online advertising versus other revenue models. “You have to have massive scale to build a business on advertising,” he said. “But there are other ways…to make money, and we’re going to explore those here.” Indeed, it was interesting to see the different approaches taken by the five companies, based on each one’s product and size.
Mpire, though small in workforce (18 employees by the end of this year), has the sort of scale to make advertising work (1.2 billion impressions a month). Hulett explained his approach with WidgetBucks, an online ad network used by some 20,000 publishers, including many small bloggers, where the ads run alongside the content. “The state of online advertising is still in its infancy,” Hulett said. “The bar is pretty low right now. Publishers are looking for other solutions that monetize better than [Google] AdSense.” Jacobson asked whether advertising budgets are shifting away from display ads. “I don’t think anyone’s going to say online advertising is dead,” said Hulett. “There’s a little softness in display, but overall the area is strong.”
Liu spoke a bit about BuddyTV’s traffic (over 30 million pageviews a month), content, and user behaviors. The site includes news, videos, and trivia games for TV fans. “We always wonder, when do people spend time on our site? Most of it comes during the workday,” he said, to laughter from the audience. “We always build two things into the products.
