Entrecard Economy Weaknesses
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This is a Guest Post by Gary Arndt of Everything Everywhere Travel
If you haven’t heard of EntreCard yet, you will. It has quickly become one of the more popular blog marketing site. The brilliance behind it lies in the fact that for the system you work, you actually have to go and visit another persons website. Unlike networks like BlogCatalog and MyBlogLog, the system is dynamic and doesn’t just rely on creating an ever expanding list of “friends” or “networks”, some of whom probably have never visited your site.
How it works
EntreCard rests on the idea of virtual business cards and earning EntreCredits (ec). When people come to your site, the click on the bottom of a EntreCard widget (aka dropping a card) which you placed on the site. Every member who clicks on a widget earns 1ec. You can earn up to 300ec per day through dropping cards on other peoples sites.
With these credits, you can purchase ads to display a 125×125 image on a members sites which, in theory, will drive traffic to your website. The cost to place an ad is a function of the number of cards dropped on that site. The cost is the five day average of the number of cards dropped on your site, times two. (ie: if you average 50 card drops over a five day period, the cost to place an ad on your site will be 100ec)
The brilliance of the EntreCard system is that it ties value to action. You have to do something to get something. That simple innovation is what makes it a significant advance over the networks and web rings which have come before it.
Before you sign up
Your first few days in the system are the most important. They are the ones which will net you the biggest marginal impact and it is the time where you have to make some important decisions.
Before you sign up, prepare a 125×125 jpg image that will be your card. Put some thought into it. If you don’t have a card ready, you will end up with a default card which is just text. It doesn’t look very original and wont create much attention. I’ve seen so many cards which have no information on them whatsoever. Just a photo of the bloggers face. I have no idea what the blog is about or why I’d want to click on it.
Take a bit of time and do this right, because once you are in the system you will become very popular.
Signing Up
Newbies are extremely popular. With in the first hour you are in the system, you will probably get bombarded with requests to place ads on your website. The reason for this is that everyone starts out with a value of 2ec. No matter how much or little traffic your site gets, someone can purchase an ad for only 2ec. This makes it a great deal and it is why new sites always sell out quickly. If the site gets little traffic, very little is lost in placing an ad (half the cost of the ad can be gained by dropping a card on the website!) and odds are it will give more value then 2ec.
Don’t approve more than one ad immediately after joining the system. Everyone who bids for an ad will be getting the rate at which they placed the bid. You sell up to nine days in advance, so you accept the first nine offers you get, you’ll get a whopping 18ec over the next 9 days and not have any inventory to sell.
Be prepared to reject most of the offers you get in the first day in the system. Remember, you can earn 300 ec per day just dropping cards. What you make actually placing ads is nothing. At the time of writing, the top spot in the system was selling for 237 ec. That means that anyone and everyone can earn more credits from dropping cards than the most popular site can earn from accepting ads.
After a few days, you will probably be around 20-30 ec. If you know you have a very popular site, you might only want to have one ad active and wait as long as possible before you accept the next days ad.
Dropping Cards
You will get more traffic from other EntreCard members than you will from blog readers who see ads which you’ve placed. In that spirit, you should make a plan on dropping cards based on who is most likely to actually read your site. I recommend the following:
1) Drop cards on those who dropped cards on you. On your dashboard will be a list of the latest people who have visited your site. I usually start there and return the favor. I will also drop cards on the sites of people who are currently in my ad queue. Many people, but not all, reciprocate so it isn’t a bad place to start.
2) Drop cards on new sites. New sites will be the ones who will most notice the attention and will be most likely to reciprocate. While everyone is trying to buy their cheap ads, visit their site help them increase their credit value. Visiting new sites is also the best way to discover new sites you might be interested in.
3) Sites with low ec values. On the same theory of visiting newbies, sites which get little traffic will be most likely to notice that you visited and return the favor. Again, when you are dropping cards, your audience are blog authors. John Chow and Joe Blogger are the same in that equation, except Joe Blogger will most likely notice and care that someone visited their site.
4) People who have commented, subscribed to RSS, or otherwise have shown they have actually read your site. Most people dropping cards will spend less than 30 seconds on your site. Reward those who take time if you know what sites they run.
5) Try to maximize the number of cards you drop for at least your first week in the system. Get noticed. Dropping 300 cards a day, every day, longer than that is really boring, but it can be done.
Placing Ads
The strategy for placing ads is opposite for dropping cards. Bigger is usually (but not always better). Some things to consider when buying an ad:
1) There is no relationship between the credit value of placing and ad and the amount of traffic a website gets. If there is a relationship, it is very weak at best. You need to do your homework. As I write this, the top cost for an ad is 240ec on JohnChow.com. The second highest ad costs 233ec on internetdreamer.co.uk. John Chow has an Alexa ranking of 3,000 and Toni’s is around 60,000. Someone can become very popular on EntreCard, but it doesn’t mean they have a similar number of readers. You have to consider this when placing ads. I look for things which will give me an indication of how much traffic a site gets. Some sites will post their Feedburner subscriptions, which is a good proxy for traffic. Other things might be ranks on various blog sites and the number of comments a site gets. Some very good and very bad values exist if you are willing to look.
2) Do exactly what everyone is doing to you when you joined. Go after the new sites. If they are smart they will reject your offer, but there is a good chance they didn’t read this.
3) Don’t take rejection personally. It will happen.
4) Look for quality sites. My best responses on ads have been from sites which weren’t that big. Look for sites which might have something in common with yours or at least might attract a similar type of reader. There are about five sites I will buy ads on as soon as they are available, based on past performance. Some were just 2ec fliers that paid off.
5) Experiment. Occasionally, I will just buy an ad on a site that looks nice an is under 30ec. No big loss if it doesn’t pan out, If it does, I can put them on my “always buy” list.
Ad Placement
You have to decide where to put the EntreCard widget on your site. You don’t have to put it above the fold to get lots of drops. I managed to get an ec value of 130 being below the fold. Many of the top sites have their card below the fold. However, they get lots of traffic to begin with. If you are a small site, you might want to consider putting the widget near the top of the page, at least for your first week in the system. Make it easy for people to drop cards on you. After than, you have to decide if the traffic generated by EntreCard is worth more than what that space might bring in ad revenue or something else. You will probably experience a spike in traffic the first week and it will probably go down after that.
Credit Trading
One of the smart things EntreCard did was allow users to trade credits. This opens up the door for all sorts of creative things like promotions and giveaways. Check member websites for promotions. The largest one to date has been 2,000ec. This is certainly a place you could get creative. It also is a possible loophole for people to abuse the system. They could enter dozens of bogus websites who’s only purpose is to farm credits from people who don’t know what they are buying. These sites could then transfer their credits to a primary account. This is a much easier method of gathering credits than clicking on ads for an hour. As EntreCard becomes bigger, it would be much easier to introduce bogus sites into the system. Because the value of a site has nothing to do with content or traffic, it is entirely possible to generate 20-40 credits a day with a site that has nothing more than an easy to click widget on it. Making it easy for people to click would be value in and of itself.
The EntreCard Economy
As innovative as the system is, it isn’t perfect. One large problem is the low cost which everyone starts out at. I personally would like to see new sites start at the median site value, then sink or swim from there based on performance. This would solve the problem of everyone rushing to get new sites and the need for new sites to reject everyone.
The other big problem is the disconnect between the cost of a site and the value you get from a site. You will quickly notice that many sites are booked solid and the ad slots are picked up as soon as they are available. This is a classic case of shortage, when demand is greater than supply. These situations are created when prices are kept artificially low. You can see similar cases in rent controlled housing markets and gas lines in the 1970s. The 2 for 1 method of valuing sites keeps many sites artificially low, and some artificially high.
The biggest problem however, is inflation. Credits are never taken out of the system and are constantly being created. There is no double entry bookkeeping. There are credits, but no debits. Each day more and more card drops create credits which never get destroyed, they only get passed on. Because prices are not allowed to rise on sites, you wind up with an economy where all ad slots are filled and credits are useless. Credit inflation could be held off if the supply of new websites were greater than new credit production. Unfortunately, so long as each new site costs only 2ec, and you can make 300ec by dropping, new sites do little to prevent inflation.
If the inflow of new sites to EntreCard were to slow down, it is conceivable that every open ad space will be purchased by people just trying to do something with their credits, which otherwise are uselessly sitting in an account. When that point happens, the economy will collapse as there is no long any point in dropping cards because there is nothing to spend them on. Prices on sites will decrease, making the inflation even worse.
EntreCard needs to have some mechanism for taking credits out of the economy. A simple solution would be to auction off ad spaces on EntreCard itself. To balance the enormous number of credits created however, there would have to be a large price associated with the buying of EntreCard ad spaces.
Conclusion
EntreCard is a good idea and a great tool for smaller websites. It is of marginal value however, for larger websites. The largest websites only get an average of 110 drops per day, which would be a rounding error to them. The visits from people who click on their ads is probably even less. I have a small website and I have found EntreCard a valuable tool for boosting my traffic. I have a friend who gets 11 million page views a month. To him, EntreCard would only be taking up valuable space.
Also, it is fun.
As with any good idea however, I have a feeling that EntreCard will have imitators shortly. There are plenty of spots for improvement on the EntreCard system and a competent developer could capitalize on that and score a win. Moreover, given the nature of the system, it would make sense to move on to a new system once most people in EntreCard have become familiar with your website and the opportunity for bring in new readers decreases. EntreCard will have to address these problems if they are to have any long term success.
Technorati tags: entrecard, mybloglog, blogcatalog, blogging
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Comments
First off, great article.
Something needs to be done with users submitting some many ads per day. I think it should be limited to a certain number.
Entrecard has also said they are going to be giving us more things to do with our credits, who knows what exactly that will be or when it will happen. EC has also been having some server issues recently, hopefully this will be solved once they monetize their site and buy another server.
Entrecard has been a success so far, but they need to keep people hooked in order to stay great.
GreatPost, although I am not sure if I understand the title. Is EntreCard meant to be spelled incorrectly? I agree with you on most of the items of topic. We should look at EntreCard as sort of a Small business Chamber of Commerce, you will not see IBM or Microsoft at these chamber meetings as they are designed to foster the relationships of small businesses. Most Blogs are just small time Niche specific sites that cater to their specific readership.
Hallo! A very informative entry! I am a newbie to entrecard myself. As u mention my card is standard b’cos I don’t know how to up load a pic! Oh well I suppose I have to learn!
Have a nice day!
Did anyone notice that the title of this article is wrong? The name of the site is EntreCard not Entercard
@Binh, Guess not Ray noticed it, but I did not get what he was saying. Thanks for giving me a clue. I never claimed to be able to type 
Hi Bruce, I appreciate Gary’s sentiments… he’s just trying to be informative and accurate. And that’s all swell, but I’ve seen so much of this stuff go on, over and over again, and I know, just by taste alone now, whether something is going to make it or not.
I won’t make any predictions aloud since there’s no basis for anyone to believe me either way but I will say that some things are best to get in, work hard, and get out. If you’re there at the critical point when the fascination is building, you can score quite a benefit.
Personally, I’d love to give insight to the developers of such things but they are usually too guarded to tell me what I need to know to give them some exceptional guidance. I spent 30+ yrs in my family’s business where 1 division alone sold for $10M so I do have some “insider” wisdom.
But, in any case, enjoy it while it lasts! Let’s hope someone big picks it up rather than, as you said, a competitor seizing the opportunity to do it better.
Sam
ps. my link above goes directly to all my entrecard articles. You’ll see what I’m getting at there…
As a blogger, I have mixed feelings about this site. Once the Christmas period winds down fully, I’ll be taking it for a test drive, but I have noticed a few things in my travels around the blogosphere so far.
I believe that the point about tying value to action is very true, and an important strength of the idea. However, I also believe that the type of action being given value is not a good long term one.
When it boils down to it, you are mainly attracting other bloggers (hopefully from similar niches to your own). It’s an interesting twist on the classic manual traffic exchange systems of old. It seems to yield similar results, in that a lot of the traffic doesn’t stick around once the card is dropped, but a small percentage might interact (which is a good thing).
But, what the system cannot do, is tie value to the core action of (worthwhile) bloggers - writing! I say this because that is surely the true value a blog has to offer, and so it logically follows that the action should be tied into that value, does it not?
I can’t see an easy way round that problem, given the current banner exchange model.
Right now, it looks to be (as the original article suggests) a good tool for the smaller blogger to get a wave of traffic coming in, where hopefully a few people will stick around. It will vary from blog to blog of course, but since it won’t really engage non-bloggers too often, the value it will give will always be limited.
I don’t want to sound as though I’m totally knocking the system. I’m not, since it is a nice innovation. But whether it will have the staying power of a MyBlogLog, I don’t know. Without the continued support of more prominent blogs, the system could be prone to a lack of interest (only speculation of course).
I’ve enjoyed stumbling across articles on EC though, since it has been a good source of varied opinion.
[…] written 3 part series Submitting your RSS feed to directories Great info about RSS directories. Entrecard Economy Weaknesses A guest post; A very detailed analysis of the Entrecard system in terms of an economy. There you […]
Great post, i know it is a bit outdated but great post anyway.
From a normal bloggers point of view I hope that entrecard can fix its problems soon. If not I hope some new company come out with a betetr system and give entrecard a kick up the ass.
Thanks for the read 
Thanks for the good post! It might be an useful service for those who want to drive traffic to their blog, hope that it will help me too!
Hey Bruce,
Interesting critique of Entrecard. Unfortunately you got a few things wrong that I’d like to take the time to correct.
Inflation: You mentioned that the biggest problem is inflation because credits are never taken out of the system. This is actually quite wrong. As you know, the only thing you can spend credits on are advertisements, and every time you spend credits on advertisements 75% of those credits are deleted from the system, and only 25% are passed on to the the publisher. Thus, our accumulation rate is only 25%, and as we roll out new bells and whistles and upgrades that you can purchase for credits, the accumulation rate will drop even lower.
Bogus websites to farm credits: These would get deleted from the system within about 24 hours. We have a feature that allows people to flag sites as being low quality, and we simply delete these sites after sending the owner an email. We delete affiliate stores as well as low quality blogs on a regular basis. It would be a lot of work to set up 20 widgets on 20 sites every day only to have them deleted, to do it all over again. Much easier to just visit other sites in the network and earn credits that way. The intended use literally becomes the easiest way to earn credits.
The 2 credit entry price: While a few people have been critical of the entry price for new sites, others have been very happy about it. This low price drives the traffic to new sites signing up. If new sites were expensive, people signing up wouldn’t receive that initial rush of traffic.
You mentioned that upon signing up, you get “bombarded with ad requests”. However, it is the case that people have an ad queue of only four adverts, so after four ads are requested, no more people can apply to advertise some of those are either rejected or accepted. If you don’t do that for a day or so, you will never have more than four advertisers waiting for approval to get on your site.
We’ve been listening carefully to everyones feedback, as well as doing some good hard thinking ourselves. We have an incredibly talented and intelligent team behind this, we’re constantly working behind the scenes. We tweek the system regularly to shape it into something that is really going to work long term.
Great things are in store for Entrecard, including a major announcement before X-mas.