One Step Forward, and
Two Steps Backward.
In a rather stunning blog post yesterday morning, Adgitize announced that it would be increasing monthly advertising rates from $14 to $24 a month beginning November 1st 2009.
This is a 71.43% increase in rates and is rather substantial for a service that is only 1 year old. Adgitize understands the magnitude of this increase and expects a number of publishers to be irate, complain, or leave. However, since they anticipate membership and ad publishing to quadruple next year, they need more money to handle this increased demand.
Like everyone else, we have embraced Adgitize as a low-cost Entrecard and advertizing solution to increasing readership. While we cannot critize Adgitize's action, it is necessary for us to re-evaluate the pros and cons of: staying or leaving this great company; and, paying the increased advertising prices.
On Leaving or Staying
- The Pros: The only satisfaction of leaving is that we have made a statement. Other than that, nothing is gained.
- The Cons: Should we leave, we would lose potential income and readership. During the past year, we have made many friends. Several have commented on our posts implying that folks are indeed reading our content and finding it interesting. In leaving, we would let these people down.
Our advertising situation is slightly different than most. For the past 2 months, we have been purchasing two ad spots which cost us $28 per month. Since rates haven't increased this month of October, we have renewed both which will expire in November. But, next month we need to decide whether to buy 2, 1, or no ads.
Our Adgitize Habits
We try to publish a new post every day and visit the maximum number of sites. Since points are awarded for Writing Articles and Clicking, we can pretty much count on receiving 200 points per day. This is appears to be the minimum number of points needed for earning $0.15 per day, and $0.24 after rates are increased.
Because we are advertisers, we receive 160 extra points for advertising (because we have 2 ad spots) and are on the Preferred Publishers List.
Additionally, we have earned additional points for both Ad and Page views which we attribute to advertising. The sum of these points contributes another 100-120 points per day.
In total, our daily points are around 460-470, which means that we earn approximately $0.63 daily. Translating this to the new payment schedule, we would receive $1.03 each day.
Should We Continue to Buy 2 Ads?
Purchasing 2 ads has only increased our total site visits by a little and our income has underperformed that of a single ad. Last month, we were about 8th on the Leaderboard but our income was slightly less than $20. We have not recruited any advertising members, so we don't receive any other affiliate income. Since ads run for 31 days, we are paying $0.9032 per day and receiving only $0.63/day. This is a daily loss of $0.2732 or $8.47 per month. When the new payment schedule becomes effective, two ads would cost $47/month which equals $1.5161 per day. For this, we would receive $1.03 per day, meaning we lose $0.4861/day or $15.07 monthly.
Our conclusion is that the loss of $15 monthly ($180/year) is not worth the benefit we receive in additional page view traffic or ad views.
Therefore, we will not purchase 2 ads in the future.
Should We Buy One Ad?
If we buy only 1 ad at the higher rates, our daily expense will be $0.7742. We will lose 50 points for the 2nd ad and a few page views. This will bring our total points to 370-400/day but we will still be a Preferred Publisher. In return, we will receive $0.86 per day, meaning that we will earn a profit of $0.0858 or $2.66 for the month.
But Will Everyone Continue to Advertise at the New Rate?
All of our calculations are based on the assumption that the number of advertisers remain the same as today. But since rates are increasing by over 71%, we believe that many Advertisers will drop out. Several factors reinforce this assumption:
- Many Advertisers are located in the Asia/Pacific region,
- Much of the world economies are suffering,
- Money is tight,
- Unemployment is high,
- Taxes are being raised across the board, and
- The Holidays are coming.
So What Will We Do?
Based on the uncertainty of breaking even, we have concluded that our best option is to:
Buy NO Ads.
In doing this, we will drop down into the 2nd lowest tier of payouts. If we continue to Click and Write Articles, we will receive 200 points, which currently qualifies for payouts of $0.15/day or $4.65 per month. If advertising levels remain the same, then we could expect to receive $0.24/day or $7.44/month. Either way, Not Advertising is a NO RISK solution to earning a small bit of money.
How Will We Replace the Lost Traffic?
In one word: Entrecard! Although we have critized Entrecard for forcing members to display paid ads, their advertising network remains free of charge. By ramping up our EC Advertising campaigns and clicking on member banners, we will replace the 50-100 visits that we lose from Adgitize. This means that we, as Adgitize members, will continue to be awarded points for both Ad and Page views. With this replacement traffic, our Adgitize points may increase by another hundred, bringing our total points to 300/day and qualifying us for much higher payouts.
So What Should Have Adgitize Done?
To raise income flows, we believe that Adgitize should have CUT the monthly advertising fee from $14 to $10 per month. In doing this, members would be earning less, but Adgitize would be earning more. Why? Because we believe more people would find this attractive. New members would embrace the lower cost basis, and immediately begin to advertise. Existing members would also consider purchasing 2nd ads for their sites. So, all around, we believe this would have been the best alternative. (But, this is only our opinion).
To summarize, our course of action beginning November 2009 will be that of a "Wait and See". We will:
- Stay with Adgitize,
- Remain Calm and NOT become Mad,
- Stop all Advertising on Adgitize,
- Ramp Up Our Entrecard Campaigns,
- Hope that All of You Continue to Follow Us,
- Wait and See what Other Advertisers Do, and
- Reconsider Our Decision in January or February 2010.
One Step Forward
Two Steps Backward.
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