Friday, April 28, 2006

How a blog is worth over $9,000 a month.


I'm using the term 'blog' as it's accurate to the subject; however, any source of original syndicated content would apply. To assume that what I present here is limited to the scope of blogging is rather close minded.

The Setup

As folks who know me are aware, I work at a video game development company. About a year and a half ago, I launched Gearblogs. The idea of a developer giving regular updates isn't new. Generally, in the gaming industry, they are called Developer Diaries. I went with Gearblogs just to be a trend whore.

Anyway, we post to our diary/blog at least once a month. More specifically, our average is currently at 1.2 entries a month. The content is syndicated through RSS feeds and referenced in our forum community. Furthermore, each entry generally creates news hits (links) on various gaming websites.

The Traffic

While each entry pulls long term traffic, it's a trickle. The real value comes with the intial posting. Most bloggers are already aware of this. In fact, I think the blog format tends to devalue older information to easily, but that's another topic. Anyway, the other day I decided to really evaluate the traffic that these blogs pull in. The most important number to come from this is the average amount of hits each blog entry received:
11,000 hits per entry
The Analysis

So, how does that relate to $9,000+? Well, here's how I got there... I hit Google Adwords and ran a slew of keyword related to our industry. The average cost per click came to $0.70. Thus, clicks by costs per click:
11,000 x $0.70 = $7,700
Remember from before, we're posting 1.2 entries a month so:
$7,700 x 1.2 = $9,240

So what does this really mean? Simply put, if we were to PURCHASE the same traffic via ads such as Google Adwords, it would cost us an average of $9,240 each month.

There's a lot more to consider here. For example, how much of this traffic comes from our community (already familiar with our brand) vs. new potential consumers? Keep in mind that our website simply serves to communicate with our customers. We do not have ads on our site nor do we directly sell a product on our site. That being the case, why would we ever actually spend money advertising our site?

Still, I thought it was an interesting way to look at the numbers. For a somewhat different website, this kind of thinking could heavily influence the bottom line.


Anonymous said...

This calculation makes no sense. Advertisers buy X traffic for $9000/month so they can attempt to sell to, or otherwise glean value from, that traffic.

Traffic to a content site, on the other hand, is worth nothing by itself. Readers are there because they're interested in the content; if the site were selling something, the readers would not be there. There is arguably value in goodwill created, potential clickthroughs to ads, etc. but that's a far cry from just tallying up $.70/visit.

Another way to look at it: if it's not possible to convert those visits directly into the claimed value (i.e. redirect all of them to an advertiser paying $.70/visit), the comparison is invalid.

This reminds me of the fallacy that if someone makes $100k/year, their time spent at home on hold with the cable company is worth $50/hr. No, their time at home has the same financial worth as the local McDonald's employees when they're at home: NOTHING.

Anonymous said...

Your're totaly wrong.

1000 page views of content website are worth something like $2-$3 in advertising revenues. Therefore your blog is worth somegthing like $25 a month. By the way, if you post more often the marginal value of posts will be smaller since if you had advertising the same people will see the same ads again and again and they are not very likely to click them.

Zaskoda said...

Hello Anonymous and Anynymous. I realize the calcultions are nonsensical in terms of direct ad revenue. Unfortunately, you guys operate with that whole "advertising is the way of the Internet" mentality so you only value a visit if a visitor clicks an ad. There are a variety of other benefits and values from Web traffic. Building a recognizable brand is, in the long run, far more valuable than your ad campaigns. In terms of valuable brand building, repeat traffic can be a good thing.

And you missed the method of the calculation entirely. I never implied that the visitors had value of any kind, I merely compared two different ways of getting those visitors. One way was with original content - what we did. The other way is to pay for those visitors via Adwords - what we didn't do. I merely calculated how much it would cost to get the same traffic gains from an adwords campaign. Very simple.

I'm fairly certain neither of you read all of my post.