I think that pg was making a point...a company with only $15,000 investment was able to compete with a company with $10,000,000 in investment. Is the company with 650x the amount of resources going to have more traffic in the long run? Yes. And I don't think anyone is surprised.
The idea is that the overall funding environment has changed. Companies don't need to raise millions of dollars, because you can often get a similar result with far less capital. If you look at this compete graph, his point stands. 1/4 the traffic for 1/650 the investment.
The main thing this says to me is that someone should pump more money into ticketstumbler.
Is the company with 650x the amount of resources going to have more traffic in the long run? Yes.
I think that question should be: Is the company with 650x the amount of resources going to have a better chance at more traffic in the long run? The answer is probably yes but the more interesting question is 'by how much?'
If you spend enough on ads, you can make your traffic whatever you want. But that kind of traffic doesn't prove anything (except the initial premise: Fansnap has a lot of money). A more meaningful comparison would be organic traffic, which Compete doesn't break out.
The traffic might not prove anything, even if it were reliable, but the bottom line might. It may prove that sometimes its better to raise a bunch of money and spend it on ads.
At the end of the day it's all about profits. If they're spending $1m on ads that bring in $5m in revenue, and TicketStumbler is getting only a fraction of that organically, then Fansnap will come out way ahead in the end. And users you buy from ads frequently have a higher RPU than organic ones, and the difference is often more than enough to offset the increased acquisition costs.
Not saying that's the case in this particular instance, but I think it's a mistake to say organic traffic is necessarily a more meaningful metric than overall traffic when the end metric is money.
Organic traffic is not necessarily the best predictor of a mature company's revenues, but it is a more meaningful way to compare two newly launched companies.
The impression you get from the traffic graph is that Fansnap is leaving Ticketstumbler behind, while in fact it is entirely possible (indeed likely, under the circumstances) that it reflects mainly a gradual ramping up of ad spending. I.e. that what you're seeing is a graph of increasing losses rather than increasing profits.
I personally believe it's too early too tell, either 7 months ago or even now. Consumers will decide in the end who they prefer, even if it's not one of these two companies.
I would be incredibly surprised if Fansnap's advertisements were immediately ROI positive. Otherwise, the Ticketstumbler guys could use a credit card and do the same thing.
"revenue(traffic) does not equal profit. Without income
statements, it is impossible to know how much money they are 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 (or 60K visitors) , and no one
would know I actually lost $40,000 to get that cheque. (or visitors) "
No it's not. As long as they're buying well qualified traffic, then there is no difference. I don't care who's paying more for their traffic. Organic traffic isn't 'better' in any sense except that it's free.
The devil, as it were, is in the conversion rate. If I have a $1M/year ad budget, and I'm successfully converting that budget into $10M in revenue. Well, then I'm a successful business.
If I spend $0/year in revenue, and convert my purely organic traffic into $1M... well I'm also a successful business, but (likely) less so than my more aggressive counterpart.
At the end of the day, it's about the bottom line. I have no idea which company is in better shape based on their traffic numbers. But to blithely say 'well, fansnap isn't successful because they gaspbuy/gasp their traffic' is lunacy. It's about making money... nothing else.
This is not a criticism of PG's submission OR of TicketStumbler, just an interesting observation that I hope will generate some debate.