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Advertising

Yahoo website screenshot

The advertising model uses onsite advertising to earn money. This is similar to the approach taken by commercial radio and television stations whose content is funded by advertising revenue.

One classic example is Yahoo, which offers things like free e-mail, information content and travel services to attract users to the site. Yahoo started out as a fairly simple list of favourite web sites. After going public it acquired a number of other online services, including a news delivery service, people-searching facilities and free e-mail as well as web-hosting provider Geocities and video services provider Broadcast.com.

Yahoo management believed that additional features, services, and content would attract more visitors and therefore more advertising. For some time this approach was highly profitable, largely due to technology which allowed the site to monitor the online activity of visitors and select relevant advertising.

By the turn of the millennium advertising accounted fro about 85% of Yahoo's income, but when both online companies and traditional businesses started cutting down on advertising, Yahoo was forced to look elsewhere for revenue and began offering fee-based services like online bill paying to individual customers and e-store management to corporate clients.

However, other websites, including Social Networking sites like Facebook and virtual worlds like Second Life continue to try to attract advertising revenue.

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