One of the most popular and least successful models I see in new business plans for startups is the so-called Facebook model, providing free services to users while collecting revenue from ads to offset costs and grow the business. To make this work, you need heavy traffic on your site -- probably at least a million page views per month -- which most sites never achieve in their lifetimes.
That’s an especially tough challenge in your first year or two of operation, even if you use every technique known to get traffic flowing. While you are doing all this work, of course, you need deep pockets to fund all your efforts, content and growing website hosting fees. When Facebook did it a few years ago, the company used more than $100 million in venture capital funding before it became profitable.
Related: The Web's Most Effective Ads
It helps to understand how online advertising really works. When I first took a look at it, I was overwhelmed by all the terminology and acronyms, so I spent some time sorting it out and simplifying it for aspiring entrepreneurs and the rest of us: