Supernatural Agency: Online business tales

Running the numbers on a developed site can be a little confusing but understanding how they work can really help you value a site and determine where to spend your time and money.

We track Adsense on quite a few sites. Here’s how I parse the data:

• Make sure you set up channels for each site and ad unit. This is absolutely essential.
• Look at your thirty day totals by channel/site to determine highest performing site(s)
• Remember that Google measures by impression not page view. Three units per page (the max they allow) means 3 impressions per page view
• Google eCPM rate is your earnings per 1000 impressions. If you have three units per page then you have to triple that number to get your average revenue per page view

An example: We have a top performing site that, using the tools above, returns 4.8 cents per page view or $48 per 1000 page views. This was surprising to me but the knowledge meant that we needed to focus a lot more attention on driving traffic to this site since even a slight daily bump adds up really fast.

The same site averages 2.9 page views per visit so a visit is worth an average of $.14. A thousand visits a day is worth around $140 so spending anything up to that amount daily to drive traffic is worth it, remembering that sites generating $50,000 in annual revenues (which is about what those 1000 visits per day gets you) are worth a multiple of those revenues to a buyer, probably at least $300k. You could argue that spending far more to drive traffic makes sense because you’re losing in the short term (aka, investing) but building equity in the long term.

Know your numbers- you can easily set up a spreadsheet to track them.

BTW, the site I’m using as an example is in an enormous, information-hungry consumer market involving a lot of spending. I’ve also left affiliate revenue out of the equation to simplify things.

Supernatural Agency is a virtual company. Both of us have full time jobs at Software as a Service (SaaS) companies. Mike works at a hosted email company called BlueTie and I have recently joined Techrigy as Director of Marketing. We run Supernatural in our ’spare’ time, (not a lot of that) which fits our business plan of no customers, no employees, 8-10 hours a week of work.

Techrigy is a social media search and discovery company. Our SM2 service allows brand marketers and PR pros to track conversations and sentiment across blogs, wikis, online video, microblogs like Twitter and other social media in real time. As a domain owner, entering this vast universe of user-generated content (UGC), brings up something very interesting. This social media eco-system has millions of participants, members and users and very little of it rests on unique domains. In fact it is an entirely different iteration of the web. Nothing is static, communities form and dissolve constantly, opinions and ideas spread way too fast for conventional search to index and track, and these trends and memes can make or break a candidate, a product or a reputation overnight.

Unlike sites on domains, social media resides in a sphere of reputation that is fickle at best. Concepts like the social graph which (as I interpret it) attempt to map where you and your ideas reside in a three axis grid, are not fixed- they change as relationships change. Other concepts like semantic search attempt to understand the context of a query so they can improve the relevancy of results, the never-ending Holy Grail of search.

As you might understand the challenge of marketing this new universe of ideas is both irresistible and daunting. It took me months to be able to write the sentences above and feel that they made sense to me. Now I have to explain them to others and help them see why they should care about what people are doing and saying in that universe. Pretty cool or should I say Dyson?

It is increasingly apparent to me that we curently have two distinct business models on the web. Online applications including search, e-commerce, productivity and information management are replacing the antiquidated desktop proprietary software model. The challenges with this model are monetization and scale.

The other model is content delivery or media property development. Here we create sites that either deliver news or vertical-interest information including social components. Monetization is naturalized due to the relevancy algorithms used by ad networks and search advertising. The challenge is the creation of highly relevant and profitable content combined with developing traffic.

Semantic search is going to combine these two models in ways that will make them indistinguishable to the user. A query involving a potential shopping decision already combines search, reviews, specifications, pricing and transaction-capability, vis a vis Amazon. Hundreds or even thousands of web resources are utilized in these semantic searches and combined to create an idealized response, one that completes the search in one destination. Understanding and building these semantic destinations will be the new Internet business model.

I still don’t own an iPhone but today I’m a lot closer to making the move. I’ll be waiting for the 3G version because with today’s announcement of the Software Development Kit (SDK) and Exchange compatibility iPhone will really be able to benefit from the faster network.

So what does all this mean to a non-techie? It means that Apple just reinvented the way we use the web and devices. Completely reinvented it. They’ve set up a system, with huge incentives (70% revenue share, $100 million VC fund for developers), easy as pie software distribution model, and a very complete kit for building applications fast. That means that the users of iPhones are going to see a flood of cool stuff you can do with the phone including business tools like CRM access, games, VOIP calling capability (free calls on your mobile phone anyone?) and a lot of stuff we can’t even imagine.

The Safari mobile browser has an incredible 70% of all mobile browsing after less than a year of existence and with a fraction of the installed market for mobile browsers. They just blew by the competition because the competition was awful crap. As others have noted, this should kill off .mobi. You simply don’t need it with Safari.

There are a couple of cool new technologies in iPhone that have been underutilized because developers could not access their capabilities without an SDK. These include multi-touch and the accelerator that ‘knows’ which way your phone is oriented. It turns out that this accelerator is a 3D sensor so it can be used as a controller for games and other applications. We’re going to see some wild stuff being developed that uses this. I’m imagining people walking down the street making Wii-like moves with their iPhones or being able to ‘aim’ their iPhone at an ad or building and receive info wirelessly based on geotargeting and motion detection. Multi-touch is a new interface that developers have had a year to think about and now they can get in there and make stuff that uses this UI.

But the big news is Exchange compatibility and a leap past RIM/Blackberry’s server-based sync mode. Corporate IT types now have no reason to object to their people using iPhone in their corporate networks and they may, in fact, have good new reasons for wanting them to. As any Crackberry user knows, you are dependent on RIM’s server farms in Canada to be up and running. If they go down, you go down. Microsoft and Apple worked together (!) to create a system that doesn’t require messaging to go through a dedicated central server which should greatly cut down on downtime while increasing speed.

The other corporate plus with the iPhone is that this thing is a major productivity tool that is just going to get cooler and cooler and more and more powerful as new apps start appearing almost daily.

Finally, anyone with programming skills, an idea and $99 can now start an iPhone software company. The 99 bucks gets you into the Apple AppsStore which automatically gives you a global distribution channel directly targeted at every iPhone user on the planet. And Apple deals with the money, takes a fair 30% cut and you get the rest which, because it’s software, is pure profit. You better believe that a lot of sixteen year-old geniuses are already writing code as I write these words.

Apple is amazingly adept at designing whole systems. The announcements today covered practically every concern the rumor mills were generating in the past few weeks. They will even allow developers of free applications to use the AppStore without incurring any charges. The brilliant thing about this is that there is no reason not to use their channel unless you are doing something underhanded or dirty (they won’t allow porn applications, however the porn business will simply optimise their websites for iPhone content delivery). Like iTunes, which will soon be the largest distributor of music in the US, AppStore will be the conduit that makes owning an iPhone as necessary as owning an iPod a few years ago.

One more thing, then I’ll stop. The same functionality is going to be available for the iPod Touch which is basically an iPhone without the cellular phone. Those who want to make calls without paying cell plan bills may have an option with a VOIP enabled Touch…

Cool stuff.