Do You Have a Business Model? Advertising Is Not a Business Model

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by: Karl Long

First of all, what the hell is a business model anyway? As with many terms used in strategy and business it is often used in different ways and interpreted differently by different people. Lots of entrepreneurs and misguided bloggers will conflate advertising and business model, but this is a mistake. Advertising could be your “revenue model” but it is not your business model.

Your business model is all the things your company does to create value, and how some of that value gets turned into revenue. I like to think of business models as systems, groups of interconnected, and reinforcing activities that your company enables. Anyway, I was inspired to rant a little bit about this as I was looking through Mary Meeker’s presentation at Web 2.0 and a couple of things lept out at me.

  1. Companies with cogent business models that provide consumer value should survive/thrive
  2. Advertising spend tends to track to GDP (that’s going down)

In some ways it’s a little redundent to say “business models that provide consumer value” because if it doesn’t then it’s a broken business model, but I digress. The point is that if your business model is dependent on advertising revenue you should be looking for other ways to A. create value and B. get people to pay for that value.

via Austin Hill who is also on twitter at

I have actually been getting and sharing a lot of ideas recently through using twitter, if you are not using it yet, do it, it is becoming incredibly useful and for me has become the ultimate social network, i’m at I have not posted here in a while but that’s mainly because apart from my full time job i’m working on a couple of startups and applying some of my theories and ideas, the good news is it’s working I was just featured in both the Huffington Post and Boing Boing for my T-Shirt blog and T-shirt shop (oh and both of those connections were formed through Twitter with who writes for Huff Po and of course of Boing Boing fame, are you starting to see the value of twitter?).

More reading about business models check out the comprehensive but rather uncritical wikipedia

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