I’ve never really been a pro-advertising person. I run Adblock Plus, build ad-free websites, and discourage my friends from putting advertising on their websites. I don’t click ads, with the exception of a person with a really good website that deserves a small amount of money that doesn’t actually cost me. My friends take a similar stance, which gets me thinking. How is money made off of advertising on the Internet? The idea behind banner ads is to get somebody to click on them. If nobody is clicking on them, then it isn’t useful to whoever is paying for the advertisment to appear.

I am even more confused by the post “Who The Heck Is Clicking On Blog Ads?” that states it’s a small group of heavy ad-clickers that support the Internet advertising industry. This makes me wonder who is clicking advertising that is not aimed at this small group of people. By this point, I am in serious doubt that advertising is a good way to make money.

If I were to put advertisments on this website, CodingExperiments.com, the small group of people that click on a lot of advertisments would probably not find my website. The technically-comfortable people would be running Adblock Plus and wouldn’t notice the change. The result? I get no money from advertisments while I annoy the people that do not have Adblock Plus. The people that are putting advertisments on my website do not benefit, and then I eventually remove advertisments to keep the non-Adblock Plus people happy.

In conclusion, I believe that websites on the Internet need to find another way of making money. Here comes the difficult part. How do you make money without resorting to advertising?

The main problem with offering a service on the Internet has to do with supply and demand. The more supply there is, the less you can charge for it. You won’t make money charging more than your competition unless the customer believes that the additional money is worth it. On the Internet, so many services are free that it is very difficult to charge for a similar service and still make a lot of money. As a service cannot expect to charge money and have customers at the same time, that service relies on advertisng.

Now, the problem is to find another way to make money. Having users pay for the service or website won’t work as that’s one of the reasons why advertising was popular in the first place.

Of course, the incentive of money will keep people looking for new solutions.

UPDATE: You can read Steve Hodson’s guest post on Mashable “An Alternative to Advertising for Web 2.0” that suggests donations as a way for Web 2.0 services to make money.