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Revenue: The Internet Wants to Be Free, but You Need to Get Paid (Andrew Chen, Startonomics SF 2008)

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Revenue: The Internet Wants to Be Free, but You Need to Get Paid (Andrew Chen, Startonomics SF 2008)

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Presentation by Andrew Chen, http://AndrewChenBlog.com, on direct (e-commerce, subscription) & indirect (advertising, sponsorship) monetization strategies for startups.

Presentation by Andrew Chen, http://AndrewChenBlog.com, on direct (e-commerce, subscription) & indirect (advertising, sponsorship) monetization strategies for startups.

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Revenue: The Internet Wants to Be Free, but You Need to Get Paid (Andrew Chen, Startonomics SF 2008)

  1. 1. Revenue The Internet Wants to Be Free, but You Need to Get Paid
  2. 2. Hi. I’m Andrew. My life in advertising:
  3. 3. Revenue Science publisher clients
  4. 4. Direct ecommerce subscription virtual goods brands Indirect ads lead generation affiliate / CPA
  5. 5. Direct ecommerce subscription virtual goods brands
  6. 6. Transact = $$$
  7. 7. Transactions as funnels Users enter Browse Add to cart Buy
  8. 8. 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>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>
  9. 9. 3 steps to max ARPU <ul><li>Identify user funnels </li></ul><ul><li>Increase repeat visits </li></ul><ul><li>Raise average order size </li></ul>
  10. 10. Indirect ads lead generation affiliate / CPA
  11. 11. Ad impressions Clicks Leads Affiliate
  12. 12. <ul><li>ad impressions RPM </li></ul><ul><li>CPM </li></ul><ul><li>clicks RPM </li></ul><ul><li>CTR * PPC * 1000 </li></ul><ul><li>leads RPM </li></ul><ul><li>% conv * CPL * 1000 </li></ul><ul><li>affiliate RPM </li></ul><ul><li>% conv * order size* 1000 </li></ul>
  13. 13. Inventory model Impressions RPM Home 200,000 $1.00 Profile 1,000,000 $0.25 Forum 2,000,000 $0.25 Message 500,000 $0.50 Search 500,000 $10.00
  14. 14. 4 steps to max revenues <ul><li>Grow audiences </li></ul><ul><li>Higher CTR and conv % </li></ul><ul><li>Advertisers </li></ul><ul><li>Optimize </li></ul>
  15. 15. Direct ecommerce subscription virtual goods brands Indirect ads lead generation affiliate / CPA
  16. 16. Questions? voodoo [at] gmail.com http://andrewchenblog.com @andrew_chen

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