Eccles to The Dollar: The Entrecard Credit Exchange Rate

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.

Why are my Adsense earnings so low?

Sandy has just started working with Adsense, and she's quickly noticed a couple of things:

1. Her Adsense earnings are really low
2. The Adsense ads link to bizarre pseudo search engines

What is going on?

Well first of all Sandy, don't give up on Adsense yet. In all honesty it isn't going to be bring in the big bucks for quite a while yet, but it really is one of the best programs out there, so you're well advised to take good care of that account.

To see what is going on, let's take a look at the situation from Google's point of view. Google earns its (billions of dollars in) revenue from advertisers, so it wants to take good care of them. Whenever an advertiser pays Google for a click-through, Google wants to be sure that they are delivering a viewer who is honestly interested in the advertiser's product or service - it's up to the advertiser to take it from there. In the ideal scenario, an Adsense ad attracts one of Sandy's long time loyal readers, and they click on the ad. Loyal readers together with perhaps more casual readers interested in the topic of Sandy's blog are thought of as "natural" traffic.

There is also unnatural traffic. As you can imagine, Google is concerned about traffic, bought to a particular place with the express purpose of clicking on the ad. Things like "click exchanges" (you click my ads, I'll click yours) and robot traffic (in which another computer simulates a human browsing your blog and clicking your ads) are outright fraud: "click fraud." But the line between natural and unnatural traffic is not a sharp, and this creates a problem for Google. Traffic from "paid to click" (PTC) sites is probably towards the unnatural end of the spectrum. Where does Entrecard traffic fall?

Entrecard is a topic all on its own but, depending on how someone chooses to participate, the traffic pattern can look a lot like PTC traffic. In particular, it can have a high "bounce rate." If someone clicks through to your site, looks for nothing else but your Entrecard widget, clicks to drop their card and, woosh, clicks on to the next site, that's a bounce. You didn't convince them to stop and read. Google is quite suspicious of such traffic and, to prevent their advertisers being harmed by torrents of non-buying customers, they "Smart Price" the Adsense account. That is, they severly limit the amount per click you, the publisher, can earn. When they do this, Google is telling you in no uncertain terms that they suspect you of buying cheap traffic from somewhere just to boost your Adsense earnings.

It isn't really personal. Google's traffic pattern analysis algorithms do this automatically. But, you should take steps to amend the situation. Adsense has been tightening its policies lately, and you don't want to be at the top of their "to be reviewed" list. In Sandy's case ...

Sandy, you should remove the Adsense boxes until you've dealt with the drop and run traffic. Does that mean you have to stop using Entrecard? Not at all. But it does mean that you can't include blogs with Adsense on them in the nightly drop-and-run free for all. (Note that if one blog is Smart Priced, then your entire Adsense account is Smart Priced until the situation is dealt with). Entrecard can also be used in a very gentle, natural way. You might even want to sign up with a second email address to pursue the more leisurely style of socialization that Entrecard facilitates. Obviously this isn't going to get you 6,000 uniques per month, but honestly, if it gets you 60 new loyal readers, you've done really well. Word of mouth really is the best advertising. Once you're back to 20-50 "natural" unique visitors per day, put the Adsense back up. Then you'll be delivering the kind of click-throughs that keep Google and its adverisers happy. (Not to mention that your earnings per click will increase 10 fold :)

What about the bizarre pseudo search engines? Actually, these guys are being a little bit naughty. Talk about an internet grey area. Since Sandy had been Smart Priced. Her clicks-throughs are very inexpensive. However, other ad networks are still paying premium prices for the click-throughs for those same Smart Priced keyphrases (e..g, "crocheted mittens" and "learn to knit"). Shopping.com, for example, is buying Sandy's click-throughs and presenting viewers with a very bland web site that encourages them to ... well ... keep clicking. In effect, they are buying cheap clicks from Google and selling them at a higher price to a competitor network. This is known as PPC Arbitrage, and is at least frowned upon by all major ad networks. Both Google and Yahoo have declared it to be a violation of their terms of service (to sell them cheap clicks, not necessarily to buy their cheap clicks), so it is definitely not a newbie friendly area. Tread carefully if you want to be earning those Adsense dollars a couple of years from now.

Sandy, when you're ready to put Adsense back up, drop me a line and we'll go searching for some suitable keyphrases for your blogs with high per click earnings. Get ready though, we'll be writing up a dozen or so 400-500 word articles about those keyphrases and asking all the net to link to them :)