Revenu e
The Internet Wants to Be Free, but You Need to Get Paid
How I Got Here
Andrew Chen
How Online Companies Make Money
From Users
ecommerce subscriptions virtual goods
From Ads
CPM CPC CPA / affiliate, leads
From Users
ecommerce subscriptions virtual goods
The Basic Model
Transactions as funnels
User enters
Browses
Adds to cart
Buys
Source: Andrew Chen
ARPU = average revenue per user
ecommerce ARPU • new users • % browse • % add to cart • % who buy • average order size • * frequency of purchases virtual items ARPU • new users • % register • % buy currency • purchases/month • average order size • churn % • month2 revenue subscription ARPU • new users • % register • % subscribe • month1 revenue • (1-churn %) * month2 revenue • …
Source: Andrew Chen
Maximizing ARPU
• Track, track, track • Understand user funnels
– Increase repeat visits – Increase visit to purchase ratio, etc.
• Lower threshold for purchase (“Freemiums”) • Raise average order size • Close off any holes
From Ads
CPM CPC CPA / affiliate, leads
Understanding Risk
Advertisers
CP M
Publishers
Risk
Equal Risk. Not surprising CPC became dominant pricing method.
CP M
CP C
CP C
CPA
CPA
Calculating Revenue Per Thousand (RPM) –
The standard unit for measuring ad revenue
• Fixed Price Ad Impressions
• CPC Based Ads
(CTR * PPC) * 1000
Click Through Rate (CTR) - Clicks/Impressions * 100 (%)
RPM = CPM (Cost Per Thousand Impressions)
• CPA
Lead based: ((CPL * # leads) / Imps) *1000 Sale based: ((Gross Revenue * Rev Share) / Imps)) *1000
What Will It Take to Win?
• • • • • # users user growth activity of users content no more me too’s
No One Said It Was Easy
• SEO Publisher of Lyrics • Low Value Content • 16 Different Ad Spots • Spans Thousands of Pages
An Imperfect World
You Have (1) Message Find Out Right Now Who. Hint: They Are On Your Friends List myluvcrushmsg.com
Is It Love? Take The Quiz Enter Your Names To Check This Is So Accurate, It's Scary! NewCrushAlert.com
Monetizing Your Inventory
Option
In-house Sales Team Ad Networks Ad Sense Affiliate/CPA Programs
Pros
Better Rates, Full Control Quick set-up, Great Reporting Strong Adv Base, Solid Yields Flexibility, More Integration Options
Cons
Pricey, Need Staff Limited Ads, No Guarantees Restrictive Terms, Ad Crack Hit or Miss, More Manual
Maximizing Ad Revenue
• Test, Test, Test • More eyeballs • Increase CTR and/or Conversion Rate (CVR) • Focus on quality / value to advertiser • Automation / technology
When East Meets West
From Users
From Ads
CPM ecommerce CPC subscriptions CPA / affiliate, Ad virtual goods Payment Platforms leads
Ads Instead of $
Ad Payment Platforms
What Is It
The Problem: They Don’t Want To Pay with Cash Users Want Something
Social Media Apps
Software
The Solution: They Will “Pay” Through Ads
Movie Tickets
Source: Trialpay.com
Flow
Social Media – App Developer
Social Media - Integration
Source: OfferPal Media
Digital Goods – Consumer Proposition
Source: Trialpay.com
Source: Super Rewards
Maximizing Ad Platform Performance
• • • • • • Test Among Platforms Tweak Offer / Point Matching Integrate Look and Feel Push for Margin Focus on The Value Proposition Track Performance Carefully
Mix And Match
One Style Does Not Fit All
From Users
ecommerce subscriptions virtual goods Ad Payment Platforms
From Ads
Ads Instead of $
CPM CPC CPA / affiliate, leads
Questions?
Jay Weintraub jay.weintraub[at]gmail.com Blog: jayweintraub.com @jayweintraub @leadscon
Four Factors Affecting RPM
# Impressions Targeting & Placement
RP M
Impression Count/Person
# Advertisers
RP M
RP M Relatedness
Advertiser Base
RP M Level of Targeting Content / Ad Relevance