Behind the Numbers and Hype on Social Networking (Web1.0 vs Web2.0)

Everybody wants to build a Web2.0,Social Networking site these days and get as many users on to it as possible but is that what you want just traffic then think again its the quality of traffic matters not quantity. What is the model do you intend to follow while building a website just placing ads and hope to start making money but not everyone can be a Google it manages to make so much money out of advertising because it is a behemoth and commands an enormous amount of market it may also be enough for bloggers but it is not easy to run a company out of revenues from purely advertising. Even the biggies are grappling with this question and the focus of Venture capitalists are shifting back towards sites which have a model of monetizing there traffic or to put it are more Web1.0 in nature.Recently I came across a hugely popular post by Marketing Guru Seth Godin wherein he questions the kind of traffic that we need to measure take a look

So, here's your choice:
You can have a billboard in Times Square (seen by 2 million people a day), or you can be the keynote speaker at the Allen & Co. annual millionaire media mogul retreat, listened to by about 150 people for an hour.
A no brainer? I hope so.
Of course, it's not just the demographics. I think it's the quality of the interaction.

Here's a comparison between two hot properties (MySpace and Facebook) and Amazon.
Should Jeff Bezos be in mourning? After all, MySpace is killing Amazon in traffic.
Of course, this is all irrelevant. Not surprising, but irrelevant. It's not surprising because it's just human nature to measure a simple metric, and to want to improve it. It's human nature to believe that the more people get exposed to your idea, the better you're going to do. It's human nature to want to 'win', however you define winning.
The problem here is that Amazon users visit to buy stuff, and MySpace users visit to flirt.
Last time I checked, flirting was a fairly unprofitable activity.
There's a long list of high-traffic sites (beginning with theglobe.com and extending to hotmail and many others) that couldn't monetize. They were stuck because the bait that got them the traffic had no room for a reasonable hook. You could use a TV like model and interrupt with irrelevant ads, but it doesn't work so well.
All a long, long way to say something simple:
Whatever your website, I think you want better traffic, not more traffic.
You want to figure out why the right people will come, not build a sideshow that attracts exactly the wrong people.
At trade shows, there's always a few booths with magicians, fire-eaters or bikini-clad models. And post-show, there's no evidence at all to indicate that the noisy attractions did very much to improve the actual metrics of the booth.
So, maybe it doesn't matter how your site does compared to a site in a different category. What matters, I think, is how your site does compared to last week or last month, and what's happening to your conversion.