The company I work for has a business model based solely around advertising. It's not 100% banner advertising, we run some bespoke campaigns (e.g. microsites) and do some events, but basically everything that isn't banner advertising is available to us because of the audience we have, and because we can promote it through banner adverts.

A few thoughts from our experience to some of the common concerns about advertising as a revenue stream. These are all based on our specific situation, so may not be applicable to everyone.

It's too hard to make money, you need way too many users

All our brands are content sites, we have around 1.5m monthly uniques and 20m monthly pageviews - with around 700k registered accounts across the different sites. From this we don't have a problem making a profit.

We sell at decent CPM rates (as in, not crazy cheap - once we tried filling spare inventory with Google adverts, we got $70 for the impressions we could normally sell for 100x that), and we handle all sales internally, no agencies involved. For that we have one main guy, our Director of Sales, who's amazing, and then for bigger campaigns I and one other person will often get involved to help out.

Because it is so hard to sell advertising yourself, that becomes the company focus

We have (I think) ten full time employees, and a few part timers as well. Between a few people, I'd say the total amount of time spent directly on the revenue side of the business (i.e. dealing with clients, making sales, and, for the bigger campaigns, then managing those) is the equivilent to two, maybe three, people working on it full time. That leaves us with plenty of work hours between the other people to deal with the business as a whole, technical issues and, most of all, content.

(Side note: we're not a content farm of any sort. Our sites are all based around video games or hardware, and they all started off as small community sites that were built up to have a good following.)

What helps with selling our own advertisements is connections. Because of our very specific audience, we have a good selection of regular clients ranging from smaller companies like Razer and Steelseries up to Activision Blizzard, MediaCom and Dell.

Your users lose out because your focus is not on them, but on advertisers.
(see thenomad's comment on this thread: http://news.ycombinator.com/item?id=2359089)

Editorial independance is very important to us, and we do our best not to blur the line between journalism and sales. We've never, for example, asked anyone to change what they write to suit us or a client, and never even felt the need to.

When it comes to the idea of chosing "how do we get more pageviews" over "how do we make this better", in our experience there's little or no difference. Obviously there are ways to add more page views simply by changing the structure of the site, for example multipage articles, but we feel that, if a change like that has a negative impact on users, then they'll be put off the site, and so it won't end up actually helping our pageview figures.

Actually, on one site we did implement multi-page articles, but only after a couple of years of not wanting to do it - and the reason we ultimately made the change? It kept being requested by users who didn't like seeing one huge wall of text.

Certainly in the case of content websites, if perhaps not others, pageviews is actually a very good indication of how the user experience is. If the quality and quantity of content is rising, so will the stats we care about, so it's win/win for both us and our users.

Edit: one more.

Advertising is a dead model, it doesn't help anyone

Our model isn't to keep finding new people to waste money, most of our clients have been with us for some time, and stay with us because they keep seeing a good ROI with us.

And at the other end, the advertisments are often useful for users to. Because of their targetted nature, a lot of adverts are for products/services that a lot of our readers are interested in. And for the times and people for whom that isn't the case, our adverts are all standard sizes, fit nicely into the pages and are perfectly easy to ignore. We don't do roadblock adverts ("sorry, you have to look at this advert and wait ten seconds before you can see our content") or anything like that. Well, we do have some preroll adverts on videos that we serve (again, we sell them all ourselves, and use our custom video player to display them), but we keep them short and offer users the opportunity to skip right through them if they wish.