Teasing out some details

So, I’m thinking about reincarnating an old social networking site idea I had from years back for my first venture. But can my social network achieve sustainability? In other words, can it ever pay for itself or will it always be something I sink money into each month?

Being a broke college student, I couldn’t afford to keep up the first incarnation of this idea and so I eventually had to Old Yeller it. In order to avoid that, I’ll have to be a bit more careful this time around and work through some of the details first.

So, I’m thinking of using Social Engine Cloud for my website. It currently costs $29 per month but it covers all the backend coding, database and server maintenance, etc. This allows me to focus on content production and course correction. My financial objective with this venture is to at least achieve sustainability. In other words, make it so the site pays for itself.

One of the first things people, and I, think of when considering how to monetize a site is ad revenue. The go-to service for website advertising is Google AdSense, in which Google (or somebody) pays you for every impression and click-through that an advertisement on your website receives.

Frustratingly, most of the ‘how to calculate ad revenue’ articles seem to rely on numbers earned from test ads or even a years worth of site data.

As someone that doesn’t want to use my very limited disposable income (grad school loans, lol) to run some test ads, I’ll stick with an estimate for now.

I read that a Revenue-Per-Impression (RPM) rate of <$1 is bad, while a RPM of >$2 is really good. I’ll stick with an estimated RPM of $1 to keep it simple and adequately humble.

So, let’s say I earn $1.00 per 1000 views. In order to make $30 (the cost of the website per month), I need 30,000 views per month. Now, let’s say the average visitor checks out 1.5 pages (the landing page and maybe one other before leaving), then 30,000/1.5 = 20,000 visitors per month.

So, I’ll need an average of 20,000 monthly visitors to make $30 per month (pay for the site). That breaks down to an average of 667 visitors per day. So, let’s estimate that I’ll gain 17 unique visits per day–I have no idea how naive this may be. That give us an easy figure of 650 consistent members that should be visiting the site every day.

Now, this number reminds me a lot of the famous “1,000 True Fans” article. The author defines a ‘true fan’ as “someone who will purchase anything and everything you produce.” In other words, someone who is so into your product/site that they’ll fly across the country to attend a convention for it. Now, I have no idea how to please everybody, which is why this article is so helpful in focusing my efforts. To quote the article:

One thousand is a feasible number. You could count to 1,000. If you added one fan a day, it would take only three years.

So, what I really want to aim for with the site is not 1 million daily visitors, or 100,000 members. I want to achieve 1,000 true fans of the site. People who will visit it every day because they love it. Assuming my 1000 true fans visit the site, and at my $1.00 per 1000 views figure, that’ll earn me 1 dollar a day, which comes out to about $30 a month. Enough to pay the ‘rent’ for the site.

And that, for now, is my only goal: make an awesome social networking site that pays for itself by proving its value to its members every visit.

I should be launching it soon, like next week, so stay tuned!


– Eric


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