For some reason the myth that you can offer your on-line products and services for free and make the money back in ad revenue continues to spread.

The thinking goes something like this: If I offer my service for free, lots of people will use it, and I'll be able to underwrite the costs of operation through advertising. 

Often the solution is Google's AdSense product, which allows Web site owners to insert code to automatically display Google Ads.  Site owners then get a small cut of the revenue derived.

What I'd like to do is debunk the "let's offer it for free" myth, and more specifically, talk about why AdSense makes No Sense.

You Have to Keep the Lights On

At both Swapalease.com and now at Go BIG, both of which are paid services, we get a lot of people that tell us our services should be free.  They tell us in both cases that we should pay for the site through advertising, like using Google's AdSense (which we do.)

But let me tell you - AdSense doesn't generate enough revenue to pay our rent, let alone our payroll and marketing costs.  In both cases, with ads splattered everywhere, AdSense accounted for far less than 5% of our revenues.

The only reason either company is successful is because it can afford to pay for advertising to get the traffic it needs to be successful.  Even if you offered the service for free, which somehow generated more traffic, it still wouldn't pay to have anyone work at the company.

The True Cost of Traffic

Regardless of whether you pay for traffic to come to your site, it still costs money to operate a site.  Whether it's the cost of your time to update the site, like the case of a Blog, or the cost of the servers you need to run it.  Just because you're not writing checks doesn't necessarily mean there are no costs of traffic.

AdSense Doesn't Add Up

When it comes to AdSense, it's a nice way to bring in extra cash, but it doesn't pay bills.  Even the ever-popular blogger Guy Kawasaki earned just $3,350 on 2.5 million page views last year.  Not exactly rolling in cash, and he's got an Alexa rank in the quadruple digits.

You have to Charge for your Product

The bottom line is that if you're going to run a successful on-line business, you're going to have to charge for your product.  There are so few instances of on-line companies that can get by and grow to any significance without charging at least SOMETHING along the way. 

The few exceptions don't change the reality of the majority.