My Meneame case

In the case assigned today, we see a story of an outstanding growth of users and number of visits of a well known spanish website. Whether meneame could be turned into an economically sound project, can be generalized into: can you turn traffic into money? The answer is a "yes, sometimes, but...".

In order to capitalize this traffic, you should define a business model that goes well with the service you are offering. This doesn't have a trivial answer, and, in fact, in the early stages of the web, wrong business models were chosen not few times. With time, it seems that for most of online services it is advertising what best results (vs paid content or services that succeed in very few ocasions).

The assumptions needed to be done to monetize traffic through advertising are:
- That you can give advertisers what they need: potential clients' atention. Meneame has a huge number of visits, but probably comming from a wide variety of users, something that makes targeting difficult for non-technological products (a probably shared need of many of meneame users). Also, while other sites get benefit from the theme of their website (traveling sites sell advertising inventory useful traveling agencies, dogs sites sell advertisement space useful to dog food manufacturers), the content in meneame reveals what it's users are interested in reading about, but does not reveal what they are interested in buying or paying for. As targeting will be of poorer performance, click through rates will probably not be outstanding, and therefore, its advertising inventory has less value than the one other kinds of sites would have with the same traffic.
- That you can serve this advertising in a way that doesn't bother your own service (or at least too much). In the case of meneame, they can use advertising, without bothering too much the users if put in the correct place and quantity. (Note that this is applicable to communication services read through a PC, but complicated for some other services, such as the ones that are needed to be served through mobile phones with a tiny screen)

Some quantitative analysis should help us decide how much money one could get. He seems to get at an average about 20M page loads a month (June), multiplied by a click through rate of its ads of about 0.2% and a pay per click of 5 cents (both low, as there is low targetting and an educated audience as bloggers would click through less times), you could expect an estimate of 2.000 euros per month if it is sustained. You also have costs (mantainace, communications), but even without counting them, it is not so much money. I may have been overly pessimistic because of my interpretation of the internet bubble, but I doubt it could be "sound" even with a great growth from June on, and higher KPIs.

The types of proposals they could expect from me would be:
- Begin an advertising program. Compare the offers of the different players (google, doubleclick, ouverture), and choose the one that seemed to give the best offer for the types of ads needed. I would probably end up using adsense (with the advantage of good quality targetting technology), and , paying particular attention to where and how I place the ads so that they don't bother much.
- Research the nature of meneame users, to find out what needs are shared by them, and try to help out targeting by writing in the page the appropriate meta-data for users.
- Research how Digg and Reddit are trying to monetize their traffic (the same thing probably tuenti does with facebook nowadays). Are they selling something other than advertising inventory? Do they have partners to which they redirect some traffic?
- Research on potential buyers that could be interested in my technology: would elmundo.es be interested in it to build a similar page? If so, would I win more money by selling them the technology than the money I might loose because of a traffic outflow if they overpass me?