Ads – the primary source of 2007 hot startups

At http://money.cnn.com/galleries/2007/biz2/0702/gallery.nextnet.biz2/ , there is a list of 25 hot startups for 2007. I looked at them and gathered some statistics. Below are some key observations.

16 of them are started in or after 2005
13 of them rely mainly on advertising as their revenue model
19 of them rely on advertising as one of their revenue models
4 of them mainly on subscription
1 of them mainly on service

Min funding : 0.75 mil (yes, that’s a decimal)
Max funding: 100 mil (a company from the good old 2000s)

To make the numbers more pertinent to the current trends in VC funding and the type of startups coming up, below stats are related to only the 16 companies that started in or after 2005.

16 since 2005
Funding known: 13
Min funding : 0.75mil
Max funding : 60mil
Avg : 10.92
Excluding the max : 6.83mil (7 of the companies received <=5mil and 10 of the companies received <=10mil)

Min employees : 7
Max employees: 150
Median employees: 27
14 of them rely on advertising and 10 mainly on advertising.

Interesting statistics. Interpret them and feel free to comment.

Typo or near-match words?

When I searched for SAP, I noticed the following ads on Yahoo!

“Hot Spring® Spas
- View the New Hot Spring Aria Spa. Medium-sized, Fully Featured.
www.hotspring.com”

“Hot Tubs by Dimension One
Visit our model showroom and find your local dealer today.
www.d1spas.com”

“Buy an Arctic Spas Hot Tub
Arctic Spas offers hot tubs and Spas designed specifically for cold…
www.arcticspas.com”

and

“Spa Factory Sale: Save 50%
Consumer Guide Best Buy spa sale, Save 50% – Free lifetime warranty…
www.fitnessblowout.com”

With so many non-relavant ads, I would doubt if these advertisers had typo when registering ads. Searching on Google, MSN, AOL and Ask, gives me more relevant ads.

Searching = Playing Lottery?

Hmm, what am I saying? Yes, I am saying what I titled. I just came across this website called http://winzy.com/ which gives prizes randomly for the lucky winners. All you do is keep searching and at sometime in your life you get lucky and win a prize. Ofcourse, one got to be stupid to switch their favorite search engine just to win a prize that may never happen.

Interestingly enough, I keep using gmail and seldom see the ads next to my mails. Same with the ads on the side of the google search. My eyes sort of learn to filter those ad regions. Well who knows, we are at the brink of evolution where the future humans can ignore such regions that are of not interest. But anyway, so, I was thinking just a few days back that one day Google and Yahoo! may have to do exactly the same, do lottery!

So, the idea is to embed some winning lottery numbers into the ads and whoever happen to browse the ad section and note that numbers and send it to the company, will win some huge bucks. All of a sudden, there are going to be a lot of people who will start paying attention to those ads. If you think about it, people are quite used to skipping ads on the TV (unless if it’s superbowl). Same is happening (or will happen) to the internet ads as well.

Given that the same TV program is broadcast to everyone, embedding lottery in between ads is not going to work with TV advertisement since many people may note down the numbers and knock on the network’s door. So, they may reduce the prize money and give it to everyone. But if the prize money is reduced, where is the incentive?

But with the internet, it’s completely different. Each page view is completely unique, and viewed by one user (well, that’s how it should be). So, they can award a million bucks or so and all of a sudden number of people glancing the ad section increases. Companies like Google and Yahoo! are still better off giving away a million bucks because, if more people are browing the ad section, chances are they may find interesting ads and may click them. Which means, revenue to these companies. The companies advertising are also benefitting because they are finally getting more and more eyeballs look at their ads.

Internal traffic & Alexa

I noticed that nextag.com has a rank of 412 with as many as 2200 pages/million. Alexa also provides breakup by subdomain. I noticed that about 11% of the subdomains are internal (because, I can’t get to them from the internet). Looks like many people within nextag.com use Alexa. So, this artificially inflates their traffic rank!