I hear this question all the time. After all, traffic is the Holy Grail of the Internet.

People look at a Web site’s traffic ranking as the key metric in predicting a partner’s potential. Both advertisers and publishers fuel this obsession; ‘The more traffic the better’ is an industry maxim.

Therefore, it’s tempting to boost traffic at any cost. A publisher may pad his stats with cheap Asian traffic or trade links with completely unrelated Web sites. He may also use misleading advertising to score more inbound clicks. Unfortunately, it is far easier to measure another site’s quantity than its quality and many Webmasters know this. Boosting traffic also leads to higher bandwidth costs and a lot of time and effort.

In fact, bulking up on traffic may not be the right diet for your site.

The amount of traffic a company controls on the Internet is akin to how much revenue an offline company generates; in both cases there is no correlation with profit! Your goal should be increasing your profit and the solution may surprise you: trim the fat.

Become picky with your traffic. Only work with similar sites. Geotarget. Use search optimized traffic, where you can be 100 percent confident that each user they send you is actively searching for the content you offer.

Also, keep your Web site’s focus razor sharp so that you can pinpoint your target audience. You’ll make a name for yourself as being someone who only has quality traffic, and that feels good. And of course, the major search engines will reward you handsomely for keeping your site so ‘fit.’

You’ll have less traffic but that traffic will be worth a lot more.

Running a lean and profitable site will also free up more time to diversify your revenue streams. For example, imagine owning a celebrity gossip site which pulls in 70,000 unique users per day, with each visitor only interested in a couple of celebrities contained on your site. Now, imagine owning seven sites with 10,000 unique users with each focused on a particular celebrity (Paris Hilton, Britney Spears, etc). Each visitor is going to find exactly what they’re looking for! Also, having seven separate revenue streams makes you far less vulnerable than putting all your eggs in one basket.     

When growing your business remember to keep this simple maxim in mind: more traffic does not equal more profit – so ignore the pressure to bulk up on as much as possible, because shedding those flabby traffic pounds will help you race faster towards the dollar signs.

That’s changing.

The problem is that users have become so savvy at sidestepping banner ads that these ads have lost their effectiveness — the result being that for every thousand visitors to a site, only a few will click on the ad and even fewer of these convert into sales. This leads the Web publisher to ask himself: “how do I optimize ad space on my site?”

Increasingly, industry leaders are realizing that this might not be the right question to ask. The larger question is: “how do I optimize profitability of my site?” Banner ads have their function, but they should not be your only revenue stream. Some Web sites are learning that blurring the line between content and advertising can please ad-resistant users and increase revenue. The company I work for proves that every day attracting tens of thousands of new users through more than 100,000 pieces of ad-supported content, like videos and games, and generating hundreds of thousands of dollars.

Companies are beginning to pay to have their product featured directly in the content. For example, a character on Grey’s Anatomy drinks a Pepsi in a scene or talks about how she enjoyed her vacation in Prince Edward Island; is the viewer watching content or an ad? Well, both. Viewers can’t zone the product placement out like they could a commercial, and in many ways they don’t want to.

The same thing is happening online. YouTube began as a content-only site with zero revenue. Later, they began displaying traditional banner ads around the content but this did not provide enough revenue to support their bandwidth or impending lawsuits. Now, YouTube gives major studios prime placement for movie previews and TV commercials. Although these are ads, users embrace the clips as content. Furthermore, users then post their responses to these previews, creating grassroots buzz for the film. Are these ads or quality user-generated content?

Facebook is also blurring the line by allowing users to interact with and control many of the ads they see. For example, to help promote Spider-Man 3 for Sony, Facebook offered limited edition Spider-Man icons as “gifts” for users to share with one another. Are the users giving their friends content or helping to drive an ad campaign?

Amazon was one of the first online companies to tap the power of blurring content and ads. Early on, they allowed users to post reviews of their products. These reviews fill up whole pages and help to sell the products.

Remember, it’s all about supplying value to your users. Let’s be honest: your users don’t seek out your Web site looking to click on banner ads. Someone shouldn’t be able to look at your page and immediately point out the content and the ads. Content can earn money; it doesn’t have to simply be the means to an end! So get out that eraser and blur that line. Your users will thank you for it and so will your bank account.