The metaphor I use with my startup students is this:
PPC (even banner) advertising is like scrounging for scraps at the table of someone successful.
AND, of course, if the ads work -- if the advertisers get their money worth -- then of course the ads are leading your users away from your app, which means of course a lower rate of returns.
Ad-supported biz models are difficult to achieve, fickle, counter-productive and, frankly, more work than charging people.
Nope, you're mistaken. I've made tens of thousands on ads... and hundreds of thousands on products. Products that cost money. It's easier to control, more rewarding intellectually (because your interests & customer interess are in sync), and much more profitable -- without counting on a stroke of luck.
If people pay you a percentage of their cash flow, that's a mere scrap. Sell your own product and you get the lion's share.
If an advertiser is willing to pay you $x then you can be guaranteed they're earning $x * 2 -- or more. If you had the product instead, and were the advertiser, you could be the one making a lot more money.
Advertising expenditure is always a sliver of total expected revenue, except in two rare cases: when a company bets the farm on an ad campaign, and when the advertiser is a startup running on VC.
Therefore, the amount of money the ad generates will almost always be more than it costs. That is indisputable.
Ergo, making products is a better way to capture more money.
You can realistically make a handful of products. You can advertise millions.
Would you rather sell 1 product, or advertise a million different products?
Your logic seems to miss that crucial point.
Look at it this way. Paid subscription = Manufacturing. Advertising income = Retailing.
Would you say there's also no money in retailing? (Which is really just a form of advertising supported).
My argument is that there's plenty of money in both if you know what you're doing. Which you chose is likely a matter of personal preference, and how much risk you like taking.
PPC (even banner) advertising is like scrounging for scraps at the table of someone successful.
AND, of course, if the ads work -- if the advertisers get their money worth -- then of course the ads are leading your users away from your app, which means of course a lower rate of returns.
Ad-supported biz models are difficult to achieve, fickle, counter-productive and, frankly, more work than charging people.