Greg Yardley makes the prediction in his post “2006: watch your mouth and the bottom line” that in the upcoming year many currently zero-revenue startups will devote “an increased emphasis on revenue generation, and the placement of advertising everywhere advertisers are willing to test.” I completely agree that the current climate (in the consumer internet space) of sole devotion to product creation instead of business generation isn’t sustainable long-term. Of course, a natural progression of any startup begins with the product with the distribution and revenue following – so what Greg is saying isn’t revolutionary (nor overly critical), perhaps just merely sobering.
What I think is interesting, however, are the ramifications of this statement. In the next six to eighteen months, there are going to be a significant number of startups searching for revenue sources, which is going lead many of them down some very creative paths to find it. And that’s what’s exciting. Of course, “traditional” advertising networks (AdSense included) will provide the bulk of dollars. But advertisers are increasingly searching for alternative and imaginative ways to reach audiences, and emerging startups possess the flexibility and responsiveness to experiment with new notions of how to reach consumers. As I’ve written previously, social commerce is one substitute, but that’s just a mild deviation from the norm. I’ve seen a number of not-yet-launched ideas cross my desk in the past couple months that start to push the boundaries farther, and I’m looking forward to see ones which are even more innovative. We’re currently seeing an explosion of creativity in the web services themselves; I am eagerly anticipating/hoping for a similar originality on the revenue-generation front as well.