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How Digg can double its revenue (and not piss off it's users)

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As seen on Silicon Alley Insider's "How to fix Digg" contest here:
http://www.alleyinsider.com/2009/1/five-plans-to-fix-digg----vote-here

Explained here:
http://innonate.com/2009/01/05/how-to-double-diggs-revenue/

Published in: Business, Technology

How Digg can double its revenue (and not piss off it's users)

  1. Digg’s Revenue Problem Possible Solution Nate Westheimer
  2. Premise <ul><li>Users come to Digg to discover new content </li></ul><ul><li>Publishers and brands desire high ranking for press releases and articles </li></ul>
  3. The TechMeme Model <ul><li>Brands and publishers will pay premium eCPMs to have their “article” (or press release) show up in-line with top stories on Digg. </li></ul>
  4. In-line Sponsored “News” Sponsored Article: Intel Now Has More Inside: http://intel.com/
  5. Phase 1 <ul><li>All sponsored articles appear to non-registered / logged-out users. </li></ul><ul><li>Only sponsored articles “Dugg Up” appear to logged in users. </li></ul><ul><li>Hybrid PPC + CPM model </li></ul><ul><li>Targeted per vertical </li></ul><ul><li>Continue to sell low-performing banners </li></ul><ul><li>DIY ad buying </li></ul>
  6. Phase 2 <ul><li>Sponsored articles appear to all users </li></ul><ul><li>Sponsored articles are more targeted to users </li></ul><ul><li>Narrowed to PPC or CPM model </li></ul><ul><li>Advertisers can target per user behavior/interest </li></ul><ul><li>DIY ad buying & supported by sales staff </li></ul><ul><li>Continue to sell low-performing banners </li></ul>
  7. Business <ul><li>Assume 30M monthly uniques </li></ul><ul><li>Assume 90% non-RUs </li></ul><ul><li>Assume 2PVs/unique </li></ul><ul><li>Therefore, assume 54 Million Page Views available inventory </li></ul><ul><li>Assuming $10 eCPMs for sponsored articles (higher than banners) </li></ul><ul><li>= $540,000 monthly revenue </li></ul><ul><li>= … </li></ul>
  8. Additional Yearly Revenue $6,480,000 / yr (new revenue)
  9. Cash Flow Positive $6,400,000 (existing banners) + $6,480,000 (new revenue) - $8,480,000 (operating) = $4,400,000 (profit)

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