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 <ul><li>ecommerce ARPU </li></ul><ul><li>new users </li></ul><ul><li>% browse </li></ul><...
Maximizing ARPU <ul><li>Track, track, track </li></ul><ul><li>Understand user funnels </li></ul><ul><ul><li>Increase repea...
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 pric...
Calculating Revenue Per Thousand (RPM) –  The standard unit for measuring ad revenue <ul><li>Fixed Price Ad Impressions </...
What Will It Take to Win? <ul><li># users </li></ul><ul><li>user growth </li></ul><ul><li>activity of users </li></ul><ul>...
No One Said It Was Easy <ul><li>SEO Publisher of Lyrics </li></ul><ul><li>Low Value Content </li></ul><ul><li>16 Different...
An Imperfect World You Have (1) Message Find Out Right Now Who. Hint: They Are On Your Friends List myluvcrushmsg.com Is I...
Monetizing Your Inventory Option Pros Cons In-house Sales Team Better Rates, Full Control Pricey, Need Staff Ad Networks Q...
Maximizing Ad Revenue <ul><li>Test, Test, Test </li></ul><ul><li>More eyeballs </li></ul><ul><li>Increase CTR and/or Conve...
When East Meets West From Ads CPM CPC CPA / affiliate, leads From Users ecommerce subscriptions virtual goods Ad Payment P...
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: Th...
Flow Social Media – App Developer Digital Goods – Consumer Proposition Source: Trialpay.com Source: OfferPal Media Source:...
Maximizing Ad Platform Performance <ul><li>Test Among Platforms </li></ul><ul><li>Tweak Offer / Point Matching </li></ul><...
Mix And Match From Ads CPM CPC CPA / affiliate, leads From Users ecommerce subscriptions virtual goods Ad Payment Platform...
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 # Adver...
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Jay Weintraub, Startonomics LA

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Jay Weintraub on how to generate revenue and monetize your website at Dealmaker Media's Startonomics LA Conference on Feb 6/09

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Jay Weintraub, Startonomics LA

  1. 1. Revenue The Internet Wants to Be Free, but You Need to Get Paid
  2. 2. How I Got Here Andrew Chen
  3. 3. How Online Companies Make Money From Ads CPM CPC CPA / affiliate, leads From Users ecommerce subscriptions virtual goods
  4. 4. From Users ecommerce subscriptions virtual goods
  5. 5. The Basic Model
  6. 6. Transactions as funnels Source: Andrew Chen User enters Browses Adds to cart Buys
  7. 7. ARPU = average revenue per user <ul><li>ecommerce ARPU </li></ul><ul><li>new users </li></ul><ul><li>% browse </li></ul><ul><li>% add to cart </li></ul><ul><li>% who buy </li></ul><ul><li>average order size </li></ul><ul><li>* frequency of purchases </li></ul><ul><li>virtual items ARPU </li></ul><ul><li>new users </li></ul><ul><li>% register </li></ul><ul><li>% buy currency </li></ul><ul><li>purchases/month </li></ul><ul><li>average order size </li></ul><ul><li>churn % </li></ul><ul><li>month2 revenue </li></ul><ul><li>subscription ARPU </li></ul><ul><li>new users </li></ul><ul><li>% register </li></ul><ul><li>% subscribe </li></ul><ul><li>month1 revenue </li></ul><ul><li>(1-churn %) * month2 revenue </li></ul><ul><li>… </li></ul>Source: Andrew Chen
  8. 8. Maximizing ARPU <ul><li>Track, track, track </li></ul><ul><li>Understand user funnels </li></ul><ul><ul><li>Increase repeat visits </li></ul></ul><ul><ul><li>Increase visit to purchase ratio, etc. </li></ul></ul><ul><li>Lower threshold for purchase (“Freemiums”) </li></ul><ul><li>Raise average order size </li></ul><ul><li>Close off any holes </li></ul>
  9. 9. From Ads CPM CPC CPA / affiliate, leads
  10. 10. Understanding Risk Advertisers Publishers Risk CPM CPC CPA CPM CPC CPA Equal Risk. Not surprising CPC became dominant pricing method.
  11. 11. Calculating Revenue Per Thousand (RPM) – The standard unit for measuring ad revenue <ul><li>Fixed Price Ad Impressions </li></ul><ul><ul><li>RPM = CPM (Cost Per Thousand Impressions) </li></ul></ul><ul><li>CPC Based Ads </li></ul><ul><ul><li>(CTR * PPC) * 1000 </li></ul></ul><ul><li>CPA </li></ul><ul><ul><li>Lead based: ((CPL * # leads) / Imps) *1000 </li></ul></ul><ul><ul><li>Sale based: ((Gross Revenue * Rev Share) / Imps)) *1000 </li></ul></ul>Click Through Rate (CTR) - Clicks/Impressions * 100 (%)
  12. 12. What Will It Take to Win? <ul><li># users </li></ul><ul><li>user growth </li></ul><ul><li>activity of users </li></ul><ul><li>content </li></ul><ul><li>no more me too’s </li></ul>
  13. 13. No One Said It Was Easy <ul><li>SEO Publisher of Lyrics </li></ul><ul><li>Low Value Content </li></ul><ul><li>16 Different Ad Spots </li></ul><ul><li>Spans Thousands of Pages </li></ul>
  14. 14. 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
  15. 15. 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
  16. 16. Maximizing Ad Revenue <ul><li>Test, Test, Test </li></ul><ul><li>More eyeballs </li></ul><ul><li>Increase CTR and/or Conversion Rate (CVR) </li></ul><ul><li>Focus on quality / value to advertiser </li></ul><ul><li>Automation / technology </li></ul>
  17. 17. When East Meets West From Ads CPM CPC CPA / affiliate, leads From Users ecommerce subscriptions virtual goods Ad Payment Platforms Ads Instead of $
  18. 18. Ad Payment Platforms
  19. 19. 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
  20. 20. Flow Social Media – App Developer Digital Goods – Consumer Proposition Source: Trialpay.com Source: OfferPal Media Source: Super Rewards Social Media - Integration
  21. 21. Maximizing Ad Platform Performance <ul><li>Test Among Platforms </li></ul><ul><li>Tweak Offer / Point Matching </li></ul><ul><li>Integrate Look and Feel </li></ul><ul><li>Push for Margin </li></ul><ul><li>Focus on The Value Proposition </li></ul><ul><li>Track Performance Carefully </li></ul>
  22. 22. 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
  23. 23. Questions? Jay Weintraub jay.weintraub[at]gmail.com Blog: jayweintraub.com @jayweintraub @leadscon
  24. 24. Four Factors Affecting RPM Impression Count/Person RPM # Impressions Targeting & Placement Level of Targeting RPM # Advertisers Advertiser Base RPM Content / Ad Relevance Relatedness RPM
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