For Internet and mobile applications, the transaction path is like the West Wing floor plan around the Oval Office – power is measured by proximity.   The valuable apps are those closest to influencing a transaction decision.  Google is the strongest example:  many purchase events start in the search box, making AdWords an extremely important point of influence.

As you move away from the transaction path, value drops off exponentially, as demonstrated by the very low effective CPMs for many apps and properties (esp. when factoring in un-sold inventory).   This leads to a frustrating realization for many projects:  it’s possible to have significant user volume & activity, while generating very little value.  For examples, consider the challenges IM apps, Twitter, and even Facebook (to some extent) have had builting profitable businesses.

Bottom line:  it’s difficult to build valuable stand-alone businesses with ad-centric revenue models, if the app usage is not near the transaction path.