Digital Insights

Can Ello Survive Without Ad Money?

Published: November 6, 2014

Just in case you missed the buzz, Ello is the latest social media upstart to hit the Internet, and its claim to fame is every bit as perplexing as it is promising: Ello doesn’t accept advertising and it won’t sell user data.

Exactly how, you might be wondering, does Ello plan to keep its doors open and servers humming? By charging users for access to future enhanced account features. Otherwise, Ello’s basic social media product will remain totally free for everyone.

The Ello platform was created as a private networking site by a tightly-knit group of artists and programmers; a public beta version was released earlier this year to the delight of scores of disaffected Facebook users eager for an excuse to dump the social media giant.

Why Facebook Users are Jumping on the Ello Bandwagon

  • The present reach of organic Facebook posts has dropped to an average of 6 percent and appears to be headed straight for the sub-basement, upsetting users as well as business owners who are rightly wondering “Where’s the content?”
  • Facebook’s demand that users use their real names has angered thousands of transgendered users as well as artists and others who wish to retain an alias for their Facebook activities.
  • Facebook was recently embarrassed by the revelation that some 700,000 users were secretly subjected to a psychological study without their knowledge or consent.
  • A new Facebook social media ad platform has just been released that will more invasively track its users even when they switch to different devices.

Is Ello Doomed from the Start?
As commendable as Ello’s anti-advertising stance is, the fledging social media platform may have inadvertently taken that first step down a slippery slope when it accepted $435,000 in venture capital from Fresh Tracks Capital.

Entrepreneur and blogger Aral Balkan has categorized Ello’s infusion of venture capital money as “the nail in its coffin” that will sooner or later force management to choose between principles and solvency. According to Balkan, “When you take venture capital, it is not a matter of if you’re going to sell your users, you already have. It’s called an exit plan.”

Every venture capitalist expects to see a return on investment, and Ello could be forced to accept ads or sell user data to generate that return.

Ello’s Future Depends on its Users
Lacking the deep pockets normally associated with a product launch of this magnitude, Ello is clinging to the one clear-cut advantage that is has going for it – a massive amount of media hype. The techno and social media communities are singing the praises of Ello, and the perception of scarcity isn’t exactly hurting things either. Access to the platform is currently by invitation only – and new users are reportedly signing up at the rate of 31,000 per hour, forcing Ello to impose a limit of 5 invitations per user.

Ello’s “freemium” model of offering free basic service is workable as long as users are being offered features that they would be willing to pay for. In the final analysis, Ello will need to come up with a bigger core advantage than simply being “ad free” if it hopes to survive in the social media jungle.