by Matt Shanahan on May 14, 2012 in Retention, Subscriptions, Yield Optimization
In subscription-based services, revenue comes two sources: customer acquisition and renewal acquisition. Once renewals become more than 50 percent of the revenue, sales and marketing costs associated with the renewal process begin to become a larger factor in managing profitability. The interesting dynamic is that while the acquisition phase occurs once during the lifetime of a customer, renewal acquisition is an annual event. The multiplier effect of reducing renewal acquisition costs can increase customer lifetime profits substantially. The best way to measure sales and marketing contribution to profits is to measure the ratio between gross-margins generated and the associated sales and marketing costs. So for calculating the customer acquisition cost (CAC) ratio, it would simply be the revenue from new [...]
by Matt Shanahan on April 11, 2012 in Advertising, ARPU, Audience Development, Behavioral Analytics, Digital Revenue Optimization, Loyalty, Revenue Optimization
Through 2015, much of the B2B media revenue growth forecasted by Veronis Suhler Stevenson shows a substantial portion will come from events — both live and virtual. Most notably, over 70% of clients are increasing investment in geographical events that can be replicated in multiple locations – geo-cloning, as one client called it. And because events require longer lead times, extensive production and marketing investment, optimizing event revenue becomes dependent on trade-offs – specifically, trade-offs between the revenue potential of various events. So how do you measure revenue potential of an event? Event revenue mainly comes from two sources: vendors and attendees. In the case of vendors, their revenue directly correlates to the number of attendees to which they gain [...]
by Matt Shanahan on March 19, 2012 in Advertising, ARPU, Digital Revenue Optimization, Loyalty, Metered Model, Paywall
From following the paywall hashtag on Twitter over the last 18 months, there has been a steady increase in the debate about paywalls, both pro and con, but mostly without any data or revenue models. Our previous research (http://blog.scoutanalytics.com/advertising/the-digital-drop-off/) showed that the move from print to digital significantly reduces the revenue capacity of a publisher. The reality is this: Without a fundamental change in digital ad units and their revenue production, publishers have no choice but to pursue alternate revenue streams. So where do publishers go when advertising revenue becomes unsustainable? Higher-margin marketing services and subscription revenues are quickly becoming the answer, also known as a metered paywall. Not all publishers will be able to implement a full subscription model. [...]
by Matt Shanahan on March 2, 2012 in Advertising, ARPU, Revenue Performance Indicators
Do publishers measure what matters for digital? If profit is the goal, then monthly unique visitors and page views are not relevant performance indicators. What matters most for profit is revenue capacity and contribution from the loyal, profitable audience. When a Fly-by is worth less than $0.20 and a Fan is worth 250 times more, it’s hard for publishers to make profitable revenue off Fly-bys. Unfortunately, few publishers put a monetary value on their audience members or develop strategies to build and reward loyalty that yields profits. The monetary value of an audience member is defined as the combination of advertising and direct revenue (e.g., subscriptions, events, e-commerce, etc.). However, analyzing the relationship between loyalty and advertising revenue demonstrates the [...]
by Matt Shanahan on February 3, 2012 in Advertising, Audience Development
The anonymous audience is a revenue anchor that pulls down business performance for media publishers. A behavioral analysis of fly-by visitors highlights just how much of a drag they are on the revenue model. A robust revenue model creates multiple streams of revenue from an audience member. The revenue potential of an audience member is defined by both the engagement behavior with media (i.e., advertising revenue) and the purchase behavior for events, daily deals, commerce, or subscriptions (i.e., direct revenue). To quantify the revenue drag of the anonymous audience, Scout Research analyzed the revenue potential of an anonymous visitor compared to a registered visitor at every level of loyalty (i.e., fly-bys, occasionals, regulars, and fans). The infographic to the right [...]
by Matt Shanahan on January 13, 2012 in Behavioral Analytics, Subscriptions, Yield Optimization
While trials are a common mechanism for generating paying subscribers, trial conversion rates for most publishers are in the low single digits. The majority of users starting a trial do not have the budget or authority to convert into paying subscribers. Often times, the trial user is exploring or investigating, and most trial users become fence sitters whom without sales help don’t convert. Because the sales force doesn’t have the capacity to contact every trial user, focusing efforts on the right fence sitters becomes the key to increasing conversion rate and revenues. Research shows that focus on the most engaged trial users is the same as focusing on the right fence sitters and increases conversion rates by 100% or more. In [...]
by Matt Shanahan on December 16, 2011 in Subscriptions
In paid content, one of the challenges for corporate sales is finding demand for content that can be monetized – finding a good lead. Our research shows one of the best sources for leads is within existing individual subscribers where several individuals are sharing the access to the paid content. The charts below show a typical example of how to identify an individual subscriber that is a lead for an up-sell to a corporate or group agreement. The first chart shows the daily use profile for two different individual subscribers by graphing the total number of reports accessed over a 90-day period. Each daily use profile is color coded based on the unique devices used to access the reports. The [...]
