Speaking of adventures, Entrecard has decided to take the plunge and attempt to establish the long promised ability to exchange Entrecard Credits (hereinafter eccles) for your local currency, presumably via PayPal. The details are still being worked out, in classic Web 2.0 fashion, via great outpourings of angst over issues both real and imaginary, but the central question "How much per eccle?" has yet to be answered. Let's see if we can't make an educated guess.
In an earlier post on PTC sites, I mentioned that clickworkers were paid an average of $0.0025 per click, and that earning $30 per month was an achievable goal - although at $1/hour, not a particularly interesting one. Now Entrecard isn't directly comparable to your typical advertiser-funded traffic exchange, it really is it's own beast, but I think these rates do set something of a floor. The very fact that Entrecard is a unique hybrid is a strong motivation to both charge superior rates and make superior payouts.
Well I just mentioned the key to unlocking the exchange rate mystery. The exchange rate is going to be advertiser funded, so the exchange rate value will depend strongly on the price Entrecard can charge for ad views, i.e., on the cost per thousand impressions, or CPM, that Entrecard can charge advertisers. So what sort of price can Entrecard charge? Social networks, as a category (Facebook, MySpace, etc), sell most of their ad inventory at a price under $0.25 CPM, or rather that was the rule of thumb for the 4th quarter of 2008. You've probably noticed that global economy has taken a hit of late, and advertising spending is no exception. With more ad inventory seeking fewer dollars, the rates have been pushed even lower. On the other hand, the megatrend of advertising budgets shifting from traditional media to the internet is still in full force. Advertisers love the demographic targeting and immediate feedback they get from the web.
So $0.20 CPM? Maybe in some categories, but I don't think that is initially achievable across the board, for a couple of reasons. First, that's the sort of rate that Adbrite is achieving with its similarly disparate network, and Adbrite has a very sophisticated pricing system that pays publishers anywhere from $0.01 - $0.20 CPM depending on the quality of their traffic (in particular, the click-through rate or CTR). Entrecard doesn't have that sophisticated pricing system in place and won't for a while yet. In addition, a good chuck of Entrecard traffic comes from in-network power droppers who are generally ad-blind. Not quality traffic, as far as advertisers are concerned. So I think $0.10 CPM is a fairer average estimate, particularly since it is difficult for new ad networks to sell 100% of their inventory for the first few quarters at least.
So then at $0.10 CPM, and the quoted 40,000,000 ad views per month, that's $4000/month, with a promised 75%, $3000/month or $100/day allocated to eccle purchase. To clear 1-2 million eccles per day from the Entrecard economy (another stated goal), an exchange rate of 10,000-20,000 eccles to the dollar is required.
Hmmm, something's gone wrong here. A power dropper can earn 600 eccles an hour in drops plus 400-600 eccles in reciprocal drops. At 10,000 eccles to the dollar, that yields just 10% of the baseline $1/hr, $30/month clickworker wage. This is comparable to, say, Adgitize, but earnings of $3/month for a 125x125 ad space is strong motivation to investigate alternative networks like Performancing Ads, Project Wonderful, CMF Ads, and so on. A common expectation for the exchange rate seems to be around 1000 eccles to the dollar, but this would require an average CPM of $1.00, which doesn't seem realistic to me - even those obnoxious pop-up ads don't pay $1.00 CPM. So even if the opening exchange rate is 1000 eccles per dollar, I can't see it being sustainable. I'll certainly be happy to be proved wrong.
Regardless of the sustainable exchange rate, these are exciting times at Entrecard, and I for one wish them the best of luck to them as they try to make the transition to a going concern.
1 year ago
When my connection is fast I absolutely can't get 600 drops an hour. Not even in two hours.
ReplyDeletePart caused by the fact that people have overloaded their sites with graphics, movies, widgets and other stuff that needs time to load.
Add to that that the entrecardwidget often doesn't load.
I have watched what I have been dropping on today. Sooooo many advertisements, that I'm getting bored during dropping.
Maybe the whole thing will work against us in the end.
We'll see.
@Laane - you have to use Flashblock, NoScript and turn off automatic image loading, but you can definitely do 600/hr. However, anyone considering such a feat, should just as definitely examine whether or not that hour could be better spent. Every hour is precious, and once gone is lost forever.
ReplyDeleteThis is one of the most rational responses to the whole EC thing that I have read. Thank you. You did the math... I was just sort of pondering what infinitesimal amount of cash EC might me able to offer. Adgitize click surfing won't work unless the page is fully loaded so at least there is a chance a surfer will see more of the page/ads. EC- all you need is a loaded widget. I joined EC to connect with people who like to read blogs and it definitely has done that for me. We'll see if it coughs up cash too.
ReplyDelete@Ms. Shark - why thank you, I consider that a high compliment. I've been trying to come up with figures that give a better result than 10,000 ec/$, but it all comes back to earning more than $0.10 CPM. Now there are some niche websites that can charge $1.00 CPM, even $10.00 CPM, but they can do that precisely because they've proven to advertisers that they can provide click-throughs that convert into sales in exactly those niches. With an ad network like Entrecard, you have to consider the average CPM across all sites hot and not.
ReplyDeleteThe big risk Entrecard is taking is that right now, people use the 200 ec/$ yardstick established by the buy price - you can see it in the marketplace, there are some incredible bargains there. To see the exchange rate at 10,000 ec/$ might generate reverse sticker shock and a reclassification of Entrecard as a just another PTC site.
Wow, very good post here....i was waiting for someone to break it down for everyone.
ReplyDeleteI don't know what the opening price is gonna be yet...it will be significantly lower than the buy rate...but the buy rate will likely be obsolete or it will change with the exchange rate...buying credits is a very small income for entrecard because its easier just to drop cards than pay 6$/1000EC.
One thing is for certain....prices are now going to start fluctuating on everything...ad spots will change in price, market items will change in price, and it will begin looking more like a real economy, previously there was nothing available to help determine the value of the credit so the system didn't tend to inflate or deflate properly--now it will.
let me ask you a ?...consider it research: What is the lowers amount you would be willing to accept for 1000 EC at first?
Thank you kindly Reverend. Yes indeed, the low buy volume for eccles is a signal that their price doesn't reflect the true exchange rate. I wonder, though, how much motivation there is for Entrecard to transition to a market-determined buy rate? It'll be interesting to see if a demand develops there.
ReplyDeleteAs to your question, it's actually quite difficult for me to answer for several reasons. The first is that I personally won't be trading with Entrecard if they require information more sensitive than my paypal email. For example, I don't think they take security seriously enough for me to entrust my SSN to them. Perhaps after they are hacked the first couple of times.
The second is that, right now, I get a service from the marketplace that I value at around 400 ec/$ (i.e., $2.50 per 1000ec), so I wouldn't sell under that rate. However, as you mention, marketplace prices are likely to drastically inflate when the new exchange rate is unveiled, so this price barrier will likely evaporate. I'll have to wait several weeks to see where the marketplace prices settle to see if a new barrier is established.
A third reason is that, much to my surprise, this make money online thing actually works. At this point, I personally wouldn't accumulate eccles just for the sake of cashing them in unless the exchange rate were significantly above the current buy rate, and this is win-the-lottery unlikely to happen.
Of course, the social rewards of Entrecard participation far outweigh any likely monetary reward. My excitement for the change comes from the fact that it will fund much needed Entrecard infrastructure improvements and will likely attract a large volume of new members, who I look forward to meeting :)
I think my issue with this one is if it's going to affect blogs that have incorporated google adsense in their blogs. Wouldn't it violate the TOS considering that people will start visiting sites just to earn EC points which would mean payment. What's more troubling is that most if not all the blogs I currently drop on have ads by google.
ReplyDeleteThen again, I'm not really that familiar with the policy revolving around this.
Thank you for being my very first EC advertiser on my new blog. The EC economy is definately very confusing for most of us. MMMMMM can I click enough to live off of ECCLES???? probably not! LOL
ReplyDelete@Jared - I think that's a valid concern. See this Adsense FAQ: Can I use traffic exchange programs? It isn't only incentives to click on ads that are prohibited, but also "any means of artificially generating ad impressions." Honestly, webmasters shouldn't put up Adsense until they have significant "natural" traffic. I have an earlier post about this: Why are my Adsense earnings so low?
ReplyDelete@Christina - You're very welcome. You'll find that not all new Entrecard members have blogs as high quality as yours. As the for the Entrecard economy - hang onto your hat, it will likely be a little bit chaotic for a little while. I'm sure things will work out fine though, even if you won't be able to pay the rent with eccles :)
This is definitely the best analysis I have seen regarding EC's new proposal. When I first read the email send out, I did the same back of the envelope calculation and come to the conclusion that the exchange will not be worth it. The value of EC will still be its community and the set of people who are willing to read other people's blogs.
ReplyDelete@plin - kind of you to say so. Yeah, $0.10/hr, $3/month is not such a big incentive. Although, as I mentioned, Adgitize has a similar incentive, and it has hundreds of active members and served up 14 million impressions over the last month. So obviously someone thinks it is worth it.
ReplyDeleteThe EC economy is definately very confusing for most of us. Mostly i am egar about its
ReplyDeleteHi Zack,
ReplyDeleteI'm just gonna sit back and see what Entrecard brings to the table. Not gonna sweat the small stuff (unlike some people who've been giving themselves a frikkin hernia over it re: comments on Entre's blog).
Good breakdown/ reasoning/ speculation on your part. (I don't know how I came across your blog but I'm glad I did. Really like it. Bookmarked it!)
take care...
The last few weeks have been a wild ride. It looked really bad, and then it's been a 5 week ride UP... What's the latest thinking on the rates since this all happened?
ReplyDelete