Promise Media

Web site profit is often a choice between high profit margin versus high revenue and audience growth. It is one of the most important choices a publisher or webmaster can make for a Web site financial plan.

It is tempting to chase a high profit margin, but excessive margins are a positive in the short term and a negative in the long term. No business can maintain an unreasonably high margin over time without undermining growth or creating an opportunity for competitors.

Media sites in the early days lost a great deal of money and were seen as a drag on their parent companies. Now the opposite is true for some sites: Their parent companies need to boost sagging profits and are pushing for higher margins out of their Internet operations.

Some media sites are generating 40 percent margins. Even Google has a profit margin of 25 percent by comparison, according to Yahoo! Finance.

Competitive sites need to strike a balance between profit margin and profit growth that suits the demands of the operation, the company and the business environment.

What is the right Web site profit margin? Start with the competition. If the largest and most profitable Internet company on the planet has a margin of 25 percent, it stands to reason that an online media operation should operate with a lower one and reinvest the money in its growth.

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