Posted by: Matt Shanahan Outside of sponsorships and donations, a publisher has to drive revenue from an audience member’s engagement. Whether it’s games, software, information, or media, a digital publisher has a limited audience and limited revenue potential. Some audience sizes are in the hundreds of millions, but the vast majority of audiences are in the hundreds or tens of thousands. The 1,400+ regional news publications in the US are a good example, and so are the more than 1,000+ SaaS firms. The limited size of an audience and the need to be profitable requires a publisher to answer the question: “What is the maximum amount of revenue that can be made from a unique audience member?” That is why Scout Analytics [...]
About Matt ShanahanMatthew Shanahan brings Scout Analytics nearly 25 years of experience in the business transformation. His specialties include business model innovation and new market development.
Posted by: Matt Shanahan Macworld recently posted a membership offer called Macworld Insider. By becoming an “insider”, the user of macworld.com has a “near” ad-free experience (i.e., some sponsorship still allowed). The ad-free experience takes the RPM of a member to essentially zero. The price of membership is $39.95/year (a.k.a., $39.95 ARPU). Macworld Insider was most likely designed for fans of Macworld (i.e., their most loyal audience members). By understanding their fans’ loyalty profile and looking at RPMs, Macworld likely determined the upper end of revenue per unique and then created an offer to compete with that revenue stream. Membership is likely to create better lifetime value for each audience member and reduce volatility in revenue.
Posted by: Matt Shanahan Over the past few weeks, I have been looking at ARPU in isolation. In the upcoming posts, I will examine its composition and its relation to other metrics. Revenue Per Mille (RPM) is the average revenue generated per 1,000 page views. Cost Per Mille (CPM) is the average cost of per 1,000 impressions. Both metrics are commonly used by publishers to describe their business, but rarely do they discuss them together. For example in the Demand Media S1, they discuss an $11.81 RPM for their owned and operated websites such as eHow.com, but there is no reference to CPM. Yet there is a lot to be learned by comparing input (CPM) and output (RPM). RPM is [...]
Posted by: Matt Shanahan In an interview with Robert Andrews of paidContent last week, I reflected on findings from our research on publishing business models. One observation in particular piqued Robert’s interest. From client engagements as well as reading 10Q’s, S1’s, conference presentations, and press releases, it appears a $10 ARPU is a turning point for most digital-only business models into viability. As I am always on the hunt for publically-available information to crunch, Ken Doctor’s recent blog posting on the Texas Tribune prompted me to dig deeper into the their business model. From a quick search through Google, a case example of the Texas Tribune was found in the summary report for “Seeking Sustainability: Nonprofit News Roundtable.” In the case example, [...]