When I took over The Lounge back in December of 2007 I looked at it as a great way to make a little extra money each month, but not a ton more than that. As it grew, and after I launched Ruby Row, I started to see that advertising networks could be a good little business. I liked working with publishers and the advertising sales side wasn’t all that hard. As time passed though I began to realize a couple of things.
I am competent at sales, but not much better than that. I am bad at organization and scheduling and I don’t have the nerves to handle doing things like cold calls. I figured out I am basically good at customer relations and taking orders, but not pushing sales. This is of course a large part of running an advertising network and when I realized I didn’t want to do sales for a living it made me realize that building ad networks might not be the best business for me. I am in talks with a company to actually take over most of the sales for The Lounge which will help that network grow and keep the sales burden off of me, this alleviates the long-term issue but when starting a network it would be tough to outsource the sales from the beginning.
The second thing I realized is that most publishers aren’t that faithful. They will quickly leave your network for the next big thing or the next network that offers them a better rate. I am actually lucky in that most of my publishers feel some allegiance to me, but after a number of them left to a competitor and put the future of the network in jeopardy I learned that I couldn’t rely on allegiance alone and made some compromises that hurt my overall margin. This is something you constantly see with the larger networks, they all fight over large publishers and push their rates lower and lower.
When I decided to go full-time on The Lounge and Ruby Row in January my plan was still to build additional networks to get myself to a sustainable level of income and then see where to go from there. I started to build The Branch, a network focused on advertising to Twitter users. I made a couple of mistakes on The Branch. The first was I did not realize how general the Twitter audience had become by this time, at one point it was a very influential group of people but in the last 18-24 months it has become almost as general an audience as Facebook. My second mistake was that I tried to launch with some of the largest twitter applications out there, which put a huge sales burden on me. Launching an ad network is an interesting problem since you need to get publishers to commit to draw advertisers, but if you don’t draw enough advertisers quickly enough you can’t keep the publishers. Needless to say The Branch didn’t work out and I ended up shuttering it before it even officially launched.
After the failure of The Branch I started to think about why The Lounge and Ruby Row have done so well. The Lounge continues to grow because I know the .NET community, I know the publishers I want and I know what companies to approach about advertising. Ruby Row continues to grow because of my great partner on the project, Geoffrey Grosenbach, and because it is such a great niche market. I am also somewhat involved in the Ruby community so I know who I want in the network and what companies to approach. In both cases I had an inside person in the community which made all the difference.
My next thought was to simply find a good contact in another nich community to try and launch a network, I have tried to do this in a number of other niche markets and have had a hard time finding a reliable, motivated individual to partner with. It turns out I got very lucky with Geoffrey and finding people like him in other markets wasn’t going to be easy.
So my focus has completely shifted away from building new advertising networks. I am not saying that I won’t launch a new network in the future, if the right individual or idea comes up I would definitely do it, but I am not relying on it to float my business anymore. My focus has shifted for the moment to building Ruby Row and The Lounge into the largest and most successful networks they can be to keep my business sustainable while I work on my next big idea… which I am not yet ready to talk about.
The real lesson I have learned is that the idea you start out with probably won’t be the idea you end up with. So don’t hold on to it too tightly and don’t worry about failure, its just the quickest way to learn.
-James
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