CandidCapital

Facebook may have been caught out by the row over its new advertsing program, but the challenges it faces are shared by many, if not all, web businesses.

The recent spat over opt-in or opt-out for users from Facebook's new Beacon program is symptomatic of the challenges facing all social networking and community content sites and most other content-based websites as well. The question is: how exactly do you make money out of all those millions of users benfitting from the rich user experience your site offers but who are paying you zilch?

Most often advertising is the way to generate revenue: principally by using that new Leviathan of the advertsing world - Google AdSense. Don't think I'm knocking Google - we benefit from AdSense here at CandidCapital (look right) and it's really smart that it delivers advertising relevant to the content and, where applicable, geography of the website. However, the actual level of income achievable with AdSense is modest unless you have a site that has traffic measured in the hundreds of thousands or even millions - and the primary beneficiary of any growth in its use is Google ($1.45Bn of Google's total Q3 2007 revenues of $4.23Bn came from AdSense alone). From this you'll have gathered that I think it unlikely that CandidCapital and AdSense will finance my dotage.

So what alternatives are there? One is to join affiliate programs of companies relevant to the content of one's website, where the lack of fine-grained ad to content matching is more than compensated for by higher levels of pay-out for specific action (more than merely click-through). We're starting to carry ads for financial services products having signed up for membership of Commission Junction the biggest aggregator of affiliate programs. Almost all the affiliate programs are for retail financial products - so far I've not come across any for business lending or venture capital. I'm not clear whether this will useful, irritating or neutral for our users - but it would be helpful to hear your thoughts.

In the longer term, the one really sustainable way to make CandidCapital, or any other website, 'sticky' is to give it compelling content and useful features. I've been thinking of a tool that would enable an entrepreneur to plug-in the key characteristics of their business, the finance they're looking to raise and other factors to enable a sensible range of recommendations on what sources of finance might be feasible and what each might cost. However, given the complexity of this, and the regulatory and potential legal liability issues surrounding it, CandidCapital may be relying on advertising revenue alone for quite a while longer.

10 December 2007

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