Meebo is getting into the real-time election chatter game that Current and Twitter (story) have been in with the debates. The company is announcing that it will power the chat rooms for Comedy Central's Indecision2008 Election Day coverage. Comedy Central will also be live blogging the election.
I am a big fan of Meebo's products, although its chat service does have limitations. Only 80 people can enter a chat room, after which the service opens up additional rooms for the overflow crowds. Meebo can handle an indefinite number of these shadow rooms, but they are all separate parties: if you and a friend both log into the same crowded chat, there's no guarantee that you'll end up in the same room. On the other hand, limiting the number of users in a room does keep the conversation manageable; a single chat room with thousands of Comedy Central wannabe pundits would be not just unbearable, but physically unreadable.
Although I like Meebo's services, I've been skeptical of its business model. So I took this announcement as an opportunity to talk with Meebo COO Martin Green (a former CNET employee) about it. The executive summary: Volume. Here's how Meebo works:
First of all, the Comedy Central thing is a branding play. There's no money changing hands. Meebo makes its money by selling performance-based (click-through) advertising, like Google does. And like Google, Meebo works only if it has a large volume of users. Through its embeddable products and its partner deals, it reaches "tens of millions of users," Green says, which is "big enough to matter." (Twitter, please pay attention to this.)
Meebo also learns about its users, both by watching keywords and by gathering demographic information. So if the company wants to package a group of users to advertisers that are, say 18- to 24-year-old males who like action movies, it can do that. And those ads drive engagement, not just passive viewing. "This is where most social networks fall down," Green says. "They have tremendously low click rates. We've just started and we have a very high engagement rate. Our average click rate across all our products is just under 1 percent. And we haven't turned on targeting yet."
Meebo sells performance advertising: clicks, not impressions. It is, in a nutshell, the Google advertising model. At scale, it works.
So I have to admit that it's a good story, and that's not counting the social network effect (where users actively share ads with other users; Green says it happens thousands of times a day) nor Meebo's relatively lean cost structure. It has fewer than 50 people.
If there are things to worry about in Meebo, I would say they are maintaining the clickthrough rates and dealing with big properties that want to use Meebo but don't want Meebo's ads appearing on their sites. But overall, I found Green's business model pitch compelling, especially in an economy where many advertisers should be moving to trackable, measurable ad vehicles over standard image advertising.