“Having worked on ad-supported online businesses on and off since 1996, I think 90% of the people who talk about their startups as ad-supported are just fooling themselves. This turns up a lot at the Lean Startup Machine events. Many people avoid thinking about business models, and one way to do that is to say, “We’ll run ads!” And then they go back to dreaming about the product.”
William Pietri (@WilliamPietri) on a recent thread on the Lean Startup Circle

Here are five tests you should be able to pass when your team decides “We’ll run ads” is your business model:

  1. Someone on your team has sold ads before.
  2. You know who will value the audience you are collecting.
  3. You know how much they will pay for the attention of the audience you are collecting.
  4. You have run the numbers against a other models (e.g. subscription) and believe ad supported is superior because (show your work).
  5. You can acquire an audience for less than you will earn selling their attention to your customers.

See also Nate Berkopec’s “Attention Arbitrage