[balajiviswanath]

Thanks chewxy. The only issue is that advertising is getting increasingly sophisticated and contextual. The big boys (Facebook and Google) have way too much data and crowd out the smaller startups. So, startups should start thinking beyond advertising as a main source of revenue.

[chewxy]

I maintain that if you know what you're doing, advertising is ridiculously profitable. Most of the time though, most startups that use advertising do it because: they don't have other business models, and so advertising is shoe-horned in.

On the other hand, a startup that knows what they're doing will know that building out the correct audience is the way to go - if you provide your clients (the advertiser) what they want (quality, relevant audiences, preferably with intent to buy), you can do quite well.

[boyter]

Any examples to support your case?

[chewxy]

Google (the search engine) would be the prime example. A search engine is the service that Google provides, and by virtue of its service, they build their product (audiences) by making the audience self-select into niches (i.e intents).

Google isn't a startup anymore. If I were to be asked about more recent startups, I'd list Buzzfeed, the 9gag peoples, Ben Huh's company (can't remember the name) amongst those with quite decent strategies for advertising. You may notice that they're almost all content based companies/startups - that's because it's easier to build audiences with content.