Using a business model where people were paid to watch advertisements, Brightspot.tv thought they had a winner on their hands. About 14 months from their launch, they've shut down the site.
According to Adweek, sources say the company has almost run out of cash, and has no potential venture leads to generate a new round of financing. The sources also say they have been looking for a third party to license their technology platform to.
Their business model was also built around an impression-based model, rather than fee-based, with companies only paying when someone viewed the ad. The company had actually drawn some big advertisers in AIG (AIG), Miller, Ford (F) and McDonald's (MCD).
It wasn't so much the impression-based aspect of the model that was the problem here, as that's the way many companies are still going, rather I think it was the pay-to-view part that was the issue.
This is nothing new in Internet marketing, as some companies have been paying people to view advertisements for years which are opened within emails.
I think what the problem was is the type of people willing to pay to view ads really aren't that many. They start to take on the idea of making some extra money, rather than actually wanting to view the ad from a legitimate interest. That has a lot of shortcomings inherent in the business model.
Part of the problem can also be seen in the response of Brightspot CEO Aaron Martens, who blamed advertisers saying, "Advertisers have been relatively slow to adopt new models when it's so clear they absolutely need to change their thinking."
All the research I've seen actually contradicts what Martens says, where the majority of people are more than willing to view ad-based content in exchange for it being free.
The other side of it is even the most faithful in watching these ads won't end up making that much, as it comes out to about a minimum wage pay. That would make some sense to people not able to get out or those staying at home that want to make some extra income; but most people aren't going to get too excited about this model, as seen by the results.
The other thing is people that have discretionary income aren't going to spend their time earning a few nickles and dimes to watch advertising online. It wouldn't pay for them. In other words, those taking part in the deal would be the least desirable to most advertisers as it is.
Others are trying to make a go of it in this space, and there may be a limited amount of success, but most people will want to simply go to a web site to see content they're interested in, and the price to see it being some type of advertising included with it.
The majority aren't going to go to some site built for the purpose of being paid a little bit to only view an ad. It's not a surprise that those offering this model are struggling so much.
Again, I'm not saying someone, somewhere, may not ever be successful in this space, but I don't see an awful lot of people entering into this kind of deal.
The entire model is based on the assumption people don't want to see an ad on the Internet. Like I said, when people are given the choice of paying or viewing content for free with an ad model, they overwhelmingly say they prefer the ad model.
What else has changed rapidly from when marketers thought these models would work, it the growing amount of professional video online, which is already changing everything as far as online advertising goes. That didn't exist when decisions were made to adopt a model where people were paid to watch online advertisements, like Brightspot did.
I could see a few companies or marketers making something of this, like a few do that pay people to open email ads and get paid for it. I don't see very many people being able to have much success with this model.
Web surfers are already understanding that viewing ads are simply the reality they face if they want to consume the content they're interested in. MySpace (NWS-A), Facebook and many others are proving you can't do this for free for long.
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