That's a tough one that I'm looking at too.

My thoughts on advertising is you need A LOT of traffic to make it worth your while. Or extremely good targeting. Which makes the ad model work for targeted blogs and sites with loads of content with some good SEO.

This is a great article on the topic in general: http://onstartups.com/tabid/3339/bid/170/Startup-Pricing-Mod...

This is also a fantastic video:

http://www.omnisio.com/startupschool08/david-heinemeier-hans...