Jay Weintraub, Startonomics LA

Revenue The Internet Wants to Be Free, but You Need to Get Paid

How I Got Here Andrew Chen

How Online Companies Make Money From Ads CPM CPC CPA / affiliate, leads From Users ecommerce subscriptions virtual goods

From Users ecommerce subscriptions virtual goods

The Basic Model

Transactions as funnels Source: Andrew Chen User enters Browses Adds to cart Buys

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 Publishers Risk CPM CPC CPA CPM CPC CPA Equal Risk. Not surprising CPC became dominant pricing method.

Calculating Revenue Per Thousand (RPM) – The standard unit for measuring ad revenue

Fixed Price Ad Impressions

RPM = CPM (Cost Per Thousand Impressions)

CPC Based Ads

(CTR * PPC) * 1000

CPA

Lead based: ((CPL * # leads) / Imps) *1000

Sale based: ((Gross Revenue * Rev Share) / Imps)) *1000

Click Through Rate (CTR) - Clicks/Impressions * 100 (%)

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 Pros Cons In-house Sales Team Better Rates, Full Control Pricey, Need Staff Ad Networks Quick set-up, Great Reporting Limited Ads, No Guarantees Ad Sense Strong Adv Base, Solid Yields Restrictive Terms, Ad Crack Affiliate/CPA Programs Flexibility, More Integration Options 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 Ads CPM CPC CPA / affiliate, leads From Users ecommerce subscriptions virtual goods Ad Payment Platforms Ads Instead of $

Ad Payment Platforms

What Is It Users Want Something The Problem: They Don’t Want To Pay with Cash Social Media Apps Software The Solution: They Will “Pay” Through Ads Movie Tickets Source: Trialpay.com

Flow Social Media – App Developer Digital Goods – Consumer Proposition Source: Trialpay.com Source: OfferPal Media Source: Super Rewards Social Media - Integration

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 From Ads CPM CPC CPA / affiliate, leads From Users ecommerce subscriptions virtual goods Ad Payment Platforms Ads Instead of $ One Style Does Not Fit All

Questions? Jay Weintraub jay.weintraub[at]gmail.com Blog: jayweintraub.com @jayweintraub @leadscon

Four Factors Affecting RPM Impression Count/Person RPM # Impressions Targeting & Placement Level of Targeting RPM # Advertisers Advertiser Base RPM Content / Ad Relevance Relatedness RPM