Henry Blodget isn’t telling us the most important thing about Business Insider

Henry Blodget

Business Insider founder Henry Blodget has pulled aside the curtain — or the kimono, as he likes to call it — to tell us all about how well the site is doing, courtesy of a presentation he put together for Folio magazine. In true Business Insider fashion, it’s basically a 90-item slideshow featuring a host of details about the site and its growth, including its traffic numbers (both in aggregate and by individual writer) along with favorable comparisons to other players such as Forbes and Mashable. But for someone promoting transparency for media entities, there’s a lot he’s not saying.

There’s no question Business Insider has grown substantially since the last time Blodget opened up about his company’s performance: almost two years ago, he released some public numbers, and at that point the site — which was then about three years old — was pulling in 8 million unique visitors per month and had revenues of $5 million. The site even turned a minuscule profit in 2010, Blodget said, of about $2,000 (that’s not a typo).

In the latest update, the Business Insider founder says the site has boosted its traffic substantially, and now gets an average of 23 million unique visitors per month, or more than a million on the average day — growth that he says puts it ahead of giants such as Businessweek, Mashable and TechCrunch.

BI unique visitors

While that’s impressive, however, Blodget hasn’t provided us with some of the most important data a media company needs in order to prove its health: namely, revenue and/or profitability metrics. It’s probably safe to assume that revenues are higher than they were almost two years ago, or the site would have shut down by now — and they may even be dramatically higher, since pageviews and unique visitors are still popular measurements used by many advertisers to determine success.

But as Blodget himself notes in his presentation, the profitability of digital advertising has been plummeting over the past few years. The amount of advertising is still growing rapidly, and ad revenues are also increasing, but it’s a little like the Red Queen’s race in Alice in Wonderland: media companies are having to run faster and faster just to stay in the same place — every incremental pageview is worth less and less.

BI ad revenue

This is the same dilemma that almost every media entity is facing, from traditional players such as the New York Times to newer stars like BuzzFeed and The Huffington Post. Some of the newer entrants like BuzzFeed — and even the more entrepreneurial of the old guard, such as The Atlantic and Forbes — are trying to use more “native” advertising formats such as sponsored posts and marketing-related content to combat this problem.

It’s not clear from Blodget’s presentation whether Business Insider is doing much of this, although he does say that social “is not the be-all and end-all” for digital news sites, and that the importance of social as a referrer of traffic is “grossly overstated.” And it isn’t clear what the site is doing instead of social or native advertising — which makes it almost impossible to say whether the company is financially healthy or not.

Huge pageview or readership numbers are nice to have, but they are not enough for a business in and of themselves (just ask Tumblr, which has 20 billion pageviews a month and yet is still facing questions about its business model) unless of course you are planning to flip your business to someone much larger who already has a business model. Business Insider is going to have to answer those kinds of questions somehow, whether Blodget wants to tell us the answers or not.

Post and thumbnail images courtesy of Flickr / TechCrunch

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