Entrecard For Sale

Entrecard users are all talking about Entrecard being for sale. In some of the posts some details emerge. Let’s look at the Entrecard model and try to make a little more sense of offering. In many ways, Entrecard is like BlogAds with a little bit of MyBlogLog thrown in. It is like BlogAds in that the user places an ad on the site and receives compensation. It is like MyBlogLog in that it is community based and you can see who visited you and return the visit.

Each time a user clicks on an Entrecard, they receive a credit, as does the person whose card is clicked on. A user can click on up to 300 cards for every blog that they have in the system. There is also a limit to the number of clicks that can come from a single IP address. Currently, there are 3 million such clicks a month. In addition, to place a card on another person’s site, you need to buy an ad slot. Currently, the price rises exponentially based on the number of ads in queue. Unknown sites cost two, four, eight, or sixteen credits. Well know sites go for thousands of credits. The person whose site the ad runs on gets 12.5% of the revenues.

Various suggestions are offered on how to monetize the site. The first suggestion is “Credit Transfer Tax: millions of credits are transferred daily through Entrecard. If you charged $1.00 for every thousand credits transferred, you'd be rich.”

Well, not exactly rich. For every million credits transferred, you would make $1000, do depending on how many millions of credits per day you are talking about, it ends up being some multiple of $30,000 per month. That should be enough to keep an early stage startup burning through money too quickly.

However, how much of that is the six million credits paid to people clicking, and however much is paid on advertising revenues? If you include that, I’m probably transferring at least a thousand credits a day. That means I would be charged at least a $1/day to use the system, or $30/month. If I were to be hit with that, I’d leave. It just isn’t worth that much. If there are other transfers, and the charge was on that, it might make sense.

The second idea is to have 25-33% of the ads be to paying clients. With 80 million Entrecard impressions each month, that could be 20 to 25 million impressions. Depending on the CPM charged this could be beneficial.

Currently, Entrecard is making about $2000/month. While it isn’t described where that is coming from, my guess is that it is advertising revenue. The site is currently getting 3,250,000 visits per month. At that rate, it would seem like the CPM rate for Entrecard must be around sixty-two cents. That is over four times base CPM rate that Facebook charges for their ads. At a CPM rate of sixty-two cents, for 20 to 25 million impressions, that could bring in around $15,000 per month. This seems like the most reasonable approach.

Option three is to implement a credit exchange. “If you built an exchange where people buy and sell their credits exclusively through the site, and you take a commission, you would make a ton. “ In a lot of ways, this seems like a variant of the first option which would handle the issue of credits from Entrecard better. Yet there are a few problems here. People are likely to rebel and find ways of working around the system. However, to the extent that a voluntary system that was easy to use were set up, this could be beneficial. Personally, I would like to see credits handled by a third party. There were a few at the gaming show, and connecting to a large micropayment system, ideally one that connects into the gaming world could be beneficial. However, that would probably cut into the profits.

The fourth option is to place a listing fee for items in the market place. There isn’t a lot of business done in the marketplace right now, and if there was a listing fee, I suspect the market would be even less likely to gain traction. There would also be the concern about micropayments. The suggested listing fee was something like twenty-five cents. Instead, using Entrecredits, ideally tied into a micropayment system as talked about in option three would make more sense. However, I don’t see this bringing in much revenue.

So, the only option that seems all that viable is to bring in outside advertising into the system. There are various issues that this would raise. Would the users have the choice about which ads would be displayed? Who would do the marketing to bring in clients? It might make the most sense for Entrecard to investigate a deal with a site like BlogAds or Chitika.

With this, let’s say there is $20,000/month in total revenue. I don’t know what the current expenses are, but that should be enough to cover server expenses and the expenses of a few employees. If things were run on a shoe string, the company could grow organically and build a track record of being able to meet expenses while growing. This would make the company more valuable for investors some point down the line, perhaps when the markets are a little more stable.

Of course, this doesn’t address any immediate cashflow needs that the company might have. Yet to address these needs, it might be better to find angel investors willing to put up enough to tide the company over until it is profitable. Finding a bridge loan or a small business loan might be another good option.

It seems like this should be a viable business if approached properly. That said, there may be other issues, I don’t know about. There are areas where I think the company is not performing well right now, particularly in terms of pricing ads, making sure that the Entrecard credits are stable and less prone to hyper-inflaction, and thinking about how community is built and maintained. However, that is a completely different set of issues.

So, if you’ve got the money, think out the plan and see what you can do with Entrecard.