It’s quickly become fashionable to speculate that another Internet bubble is quickly inflating. Yahoo’s recent purchase of del.ico.us for $30M just 8 months after VC’s invested ~$1M into what was, to that point, a one man operation, has only thrown gas on the fire. (That’s $100/user for each of about 300K users)
Based on what I saw today when I checked out WordPress.org, I’m inclined to agree. I was looking for info on the beta of WordPress 2.0, what got my attention was a link at the bottom of the page inviting people to advertise on WordPress.org. Clicking on the link took me to a page on Adbrite.com with this information:
$100K for a weeks sponsorship? Estimated clickthroughs: 590. Cost per click $196!
If I’m parsing the other stats they give properly, wordpress.org gets about 17K page views a day. Let’s call round that up to 100K/week. That’s $1 a page view!
Maybe I’m just ignorant in reading these numbers. Maybe there is a hidden thousands multiple somewhere that I’m missing?
Assuming I’m right though, those numbers strike me as nuts. What are your aveage wordpress.org visitors likely to buy that is worth $196/click, especially if you consider that an advertiser would be lucky if 10% of clickthroughs converted to a purchase. Optimistically, that’s an acquisition cost of $1960/customer. More realistically, its probably $19,600/customer. How many products and services have margins to support that?
Even if we assume that the Adbrite numbers are inflated by 50% to make people feel like they get a deal when their hard negotiation cuts the price in half, its still completely bubbiliciously nuts.