Its all about getting more eyeballs and Avoiding VC’s

The sale of Ivillage last year for $600 million following the sale of myspace set off another round of get more eyeballs.  Ivillage had ad sales of $91.5 million with net income of $9.5 million on around 400 million pageviews a month.

Facebook is currently wishing for a sale of $2 billion with its viewership of 3 million uniques which generate around  6 billion pageviews a month.

To date ivillage has been the only company that has been able to extract some really big revenue per visitor numbers.   I expect that once google or some other company builds out their adsense clone taking into account registration data all these mass traffic sites can see a 3 to 7 fold increase in revenues per visitor.

I think the next 3 years will be an exciting time one in which we see a dramatic rise in advertising dollars flowing to large sites.   Given how cheap it is to run a website these days there is really no harm in building a site for the sole purpose of getting as many people to visit you as possible.   My total costs of operations are only around 20k/month  and I can make half of that amount go away by getting ride of my Instant messenger.  Thats not bad for a site with 500 million pageviews a month and no employees.

Now i’m sure that many self appointed web 2.0 experts will say that building a site just to get traffic is crazy.  But you have to ask yourself, since when has anyone got rich listening to the majority?   When you have traffic you have options and there are always many many ways to monitize that traffic.  This works unless you are doing something completely crazy like spending a million a month on streaming free videos like youtube.com.

What all this comes down to is VC’s And professional executives have no future in building/funding most of the new internet companies.  These days you can create a site and launch it with virtually no costs,  assuming you are a programmer and you build it in your spare time.   If you are someone who can’t program you need to hire 2 or 3 people and before you know it you already have a hundred thousand in costs.  The way I see it,  there are going to be 20 to thirty 1-2 person programmer startups wanting to do what 1 VC funded firm wants to do.   A VC funded company has no way of competing when it comes to keeping costs low.

16 Responses to “Its all about getting more eyeballs and Avoiding VC’s”

  1. Brian B Says:

    Damn good post. I like reading numbers. Facebook gets 6 BILLION pageviews a month??? I had no idea they had THAT much traffic.

    Why is it crazy to build a site just for getting traffic? Did anyone ever say it was crazy to start a newspaper just to get readers? Of course not. Why is the web different? Of course, there are sites that do have a purpose (POF being one) other than just getting traffic. But when you have people buying one-off domain names and getting rich from the advertising revenue, then it would be naive to think that people aren’t going to build sites just for traffic. However, if AdSense didn’t exist then everything changes.

  2. Brian B Says:

    Ok, now that I’ve thought about it, how do these numbers make any sense? Facebook has 3 million uniques per month, but 6 BILLION page views. That means that every single user is logging in every single day and hitting the site for 66 pageviews. How is this possible?

    I seriously think that sites that report statistics like this should have their traffic logs hosted by an independent company. Otherwise, I’m just skeptical about the reported traffic of all these websites with off the chart numbers.

  3. Markus Says:

    80% of facebook users visit on a daily basis. They have insane repeat users.

  4. Stevux Says:

    i used facebook and then realized it was more work than my college classes to keep everything organized and stay informed on stuff… i wonder if anyone has made some kind of average bandwidth to cost comparison chart so the small private 1-2 people startups could know what their operation costs might be based on how much traffic they get…

  5. numlock Says:

    “I can make half of that amount go away by getting ride of my Instant messenger. ”

    Do you mean half your bandwidth costs are people sending IMs to each other?

  6. Tom Says:

    Great post and right on the point!

    I especially agree with you regarding 1-2 person startup’s future. Technology is good enough to show the power of brain(instead of headcounts).

  7. Brian M Says:

    Instead of MSN Instant Messenger, wouldn’t something like SKYPE be an option ?

  8. GreatPost Says:

    Markus – another great post.

    I wanted to bring something up you may not have thought of. I work in online advertising, and one thing I know for sure is that not all audiences are created equal. AOLers, for example, has consistently been proven to be a more valuable audience for advertising than other web users. Why? For whatever reason (inexperience, money) older web users click on ads more. Tech-savvy younger web users completely ignore ads. They proactively search for what they’re looking for when they need it. We’ve found this time and time again.

    Think about iVillage’s target audience – older, middle aged women. That is a goldmine for online advertisers, trust me. And that is a big reason of why they have been so successful while facebook & myspace struggle. When the ads don’t perform, the advertisers lower your average eCPM (MySpace’s is around $0.05)

  9. Gopi Says:

    I agree with the previous comment…contrary to the the offline brand advertising which values the eyeballs of 18-36 year olds more than others, i think for online direct response ads middle age demographics particularly women are much more profitable.

    The only problem with creating a website catering to this demo is its much more difficult to create a viral effect when compare to the the younger ones who are much more tuned in to each other

  10. Dima Says:

    I disagree. The argument is well presented but VCs are betting on more than eyeballs. This is also why the numbers don’t jive right away. Too few datapoints to form a solid base for the argument. Its all about monetization in the end. If you get 500M pageviews per month then you’ve already impressed me. Next, a VC would be interested in knowing about your visitors and their interaction with you … depth of experience, amount of time, return rate, etc. What do you think?

    Dima

  11. stuffnthings Says:

    VC’s want to know everything and don’t really care about the user experience, usually because they are not avid users themselves. They also want to own other ideas because they have far to few of them in their stuffy offices and meetings.

    Old money here we come. New money is going to revolutionize our world.

    good job markus, you give VC’s a reason to be worried. If we can do it on our own, we wont need them.

  12. lace wigs Says:

    iVillage has never shown me much. and with new sites like ning, these social networking sites are a dime a dozen.

    http://lace-wigs-knastore.com

  13. cheapwigs Says:

    I def agree
    Lace Wigs

  14. Raleigh Colocation Says:

    Now i’m sure that many self appointed web 2.0 experts will say that building a site just to get traffic is crazy. But you have to ask yourself, since when has anyone got rich listening to the majority? When you have traffic you have options and there are always many many ways to monitize that traffic.

  15. christian louboutin ireland Says:

    I would really like you to become a guest poster on my blog.`

    Your blog has the same post as another author but i like your better

  16. Expense Management Says:

    I think the next 3 years will be an exciting time one in which we see a dramatic rise in advertising dollars flowing to large sites.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: