Dissecting the story of the big money blogger
(Huge web traffic numbers doesn’t always mean huge profit)
Step 1. Start a website
Step 2. Sell advertising
Step 3. ????
Step 4. ????
Step 5. Profit!
If you are involved in Internet entrepreneurship, than at some point you have probably had the PlentyOfFish guy’s story forwarded to you . PlentyOfFish
is a free online dating service which generates about $450,000 in
revenue per month. It is run by one guy (Markus), out of his house.
Most of his advertising revenue comes from Google Adsense.
It’s a great tale. It brings a smile to my face every time it gets
forwarded to me. But I do have a few issues with how the people which
forward me his story tend to interpret it.
Image from Plenty Of Fish Blog
First off, revenue does not equal profit. Without seeing his income
statement, it is impossible to know how much money he is actually
bringing home. If I took out a $100,000 loan from the bank, I could buy
$100,000 worth of advertising for my website. I could then fill my
website up with advertisements, and make $60,000 from Google Adsense. I
could then post a picture of my $60,000 cheque on my blog, and no one
would know I actually lost $40,000 to get that cheque.
Secondly, just because the author of the website believes that his
company is “competing at a level where all the competitors have 600+
servers, 300+ full time staff” (yahoo personals/match.com), that
doesn’t mean that he actually is. A 100% free dating site has a very
different business model than a paid website, which allows it to have
significantly lower overhead costs at the expense of growth and revenue
potential. The owner of PlentyOfFish supports his competition
declaration using his website traffic numbers as proof – but again, the
purpose of the website is to generate money, not have high alexa
ratings. If eHarmony has ½ the traffic of PlentyOfFish, but generates a
net profit which is more than ten times the size of PlentyOfFishes
(remembering that net profit is calculated after all employees and
servers are paid for), is a comparison between the two websites just?
Finally, just because PlentyOfFish did it doesn’t mean you can, and definitely doesn’t mean we
should start a free dating site. The PlentyOfFish guy not only spent
tons of time promoting and optimizing his site, but was also at the
right place at the right time. He should be applauded for the money he
has made and is currently making, as well as his choice not to grow
further because he is happy with what he is doing. But he should not be
seen as an archetype for the future of all Internet businesses.