Sexy Widget

Is Facebook and Twitter Referral Traffic Wildly Overhyped?

There was an interesting (and grossly underreported) bit of referral traffic data posted by ad network Chitika about a month ago.

Chitika looked at referral data for more than 120M impressions across 60,000 sites and concluded that Search remains the undisputed king of traffic referrals - and it's not close:

According to Chitika, search accounts for all but a rounding error of referral traffic.  Social (sites like Facebook, StumbleUpon, and Twitter) are growing as a referral segment, but accounted for only 0.55% of referrals in September.  Twitter referrals actually fell, leading Chitika to suggest that "Twitter users appear to be becoming link-blind."

Another interesting tidbit is that after a buzzy launch, Bing is starting to slip as a referrer.

So let's digest this.  Search represents nearly 98% of all referral traffic and its share is growing.  Twitter referrals are tiny and getting tinier.  Bing is slipping.  StumbleUpon is the top social site referrer.

Does anyone else see a disconnect between the hype and the data?

I've heard reports of early adopter focused sites whose social referral traffic has started to matter.  But it certainly doesn't seem to be a mainstream phenomenon.

So the implications of this in no particular order:

- All bow down to the Google God
- Think hard about committing resources to social optimization over search optimization
- Don't let Silicon Valley's love affair with social media fool you: search is showing no signs of getting dethroned any time soon.
- Flat traffic and eroding referral share are troubling signs for Twitter

Thanks to Chitika for exposing this fascinating data. 

Note: One possible explanation for why this data might be skewed in favor of search - sites that use Chitika might be more search friendly than social friendly, due to this product.

Go Big, Go Horizontal

A few years ago, I was running my site, RateItAll, out of a coffee shop.  It was profitable, and had about 600K users but I was having a really hard time keeping the site up.  Despite the help of some very good contract developers, and an affordable host who was trying their best to help me, I just didn't have - or know people who had - the technical skills to scale the site.

I had reached a plateau.

So I went out to try and raise some money and get some help.  I got meetings with a bunch of big name venture capitalists - Sequoia, Battery, MDV, Hummer Winblad, Trinity, etc, and got to hear feedback on my site from a lot of smart folks, some of whom had built web businesses.

The feedback that I heard repeatedly was that RateItAll shouldn't try and do consumer reviews for everything.  That I should pick one vertical like Digital Cameras, do a really good job with it, and then consider moving on to other verticals. 

I would always fire back with "yeah, but we are Rate It ALL, and our site has unlimited shelf space, and 'look at Wikipedia!', and the costs are almost negligible to add more coverage, and people / users think horizontally, not vertically, etc, etc, etc."

They weren't buying it.  It just didn't make sense to them to cover everything, to be so radically horizontal that your target market was "people who had or were looking for opinions."

Things ended up working out for RateItAll - I hired a killer CTO, and together, we were able to raise some funding and get the site growing again.  But it was more despite our horizontal focus than because of it.

Flash forward a few years, and there seems to be a bit of a shift in conventional wisdom around horizontal Web businesses.

The horizontal content companies that I have been tracking for a while: Hubpages, Squidoo, Wikia, Associated Content, and of course RateItAll - we are ALL growing.

Perhaps the most aggressively horizontal content play of all is Demand Media.  In a recent (and brilliant) article by Wired (The Answer Factory: Fast, Disposable, and Profitable as Hell), author Daniel Roth describes Demand's methodical answer content generation business as follows:

The process is automatic, random, and endless, a Stirling engine fueled by the world’s unceasing desire to know how to grow avocado trees from pits or how to throw an Atlanta Braves-themed birthday party. It is a database of human needs, and if you haven’t stumbled on a Demand video or article yet, you soon will. By next summer, according to founder and CEO Richard Rosenblatt, Demand will be publishing 1 million items a month, the equivalent of four English-language Wikipedias a year.

How is this working out for them?  Demand is apparently profitable with $200M in revenue, reaching 80M monthly uniques, and considering an IPO.

And then there is AOL.  In a recent TechCrunch article called "Tim Armstrong's Secret Project is to Turn AOL into a Low Cost Content Machine," writer Erick Schonfeld details AOL's methodical snapping up of journalists to create content about everything on AOL's vast array of content properties.

Prior to AOL, and in addition to running Google's ad business, Tim Armstrong co-founded Associated Content - a huge network of amateur content on any topic, created by anyone.  To me it sounds like Armstrong is trying to replicate this model on a much larger scale with AOL, but with better domains, and better writers.

Critical to the horizontal content business is the ability to keep content production and distribution costs down.  There are different ways to do this - on the production side, UGC, revenue sharing / pay for performance, aggregation, and assembly line content production are all tactics that are in play.  On the distribution side, it's still all about Google organic search.

Can you go horizontal and keep content quality high, or is it a race to the bottom?  I'll save this discussion for another day.

For now, let's just say that there is growing, compelling evidence that "Go Big, Go Horizontal" is not bad advice.