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 May 26, 2011 in ARPU, Revenue Performance Indicators
Measuring the number of page views as a key performance indicator (KPI), is a growing practice among publishers. In fact, editorial and development teams are increasingly being rewarded for boosting page views, with some publishers even shaping their entire site just to generate page views. That is not a business model! Let me prove it with an extreme example. Any publisher can deploy bots to generate page views for their site. No advertiser will pay for those page views, because the page views have no advertising value. While page views could be used as a KPI by the editorial team to generate more content for bot consumption, no revenue is coming through the door to keep them employed. The right metric for publishers [...]
by Matt Shanahan on April 28, 2011 in ARPU, Attention Economics, Paywall
A publisher’s ability to monetize the news ONLINE is different than their ability to monetize the newsPAPER. According to the Newspaper Association of America data at naa.org, the average user spent 1 minute and 12 seconds with online news last month. That is 0.6% of the 3 hours and 25 minutes an average user spent online in 2010 according to eMarketer. And when compared to average time spent with the print newspaper, online news engagement is 4.1% of the reported 29 minutes per day of Nielsen Media Research Study of 2006. Of course if lost engagement were not bad enough, the Web has both commoditized advertising rates and set an anchor subscription price of free, further crunching the revenue stream [...]
by Matt Shanahan on April 12, 2011 in ARPU, Paywall, Pricing
Here is one way to understand the $195 price of a 12-month digital subscription to the New York Times. The price bridges the 2010 gap between average revenue per user (ARPU) for print vs. the ARPU for online. Here is the calculation of the difference. Print ARPU The Newspaper Association of America Trends & Numbers provides details on audience and revenues for US newspapers. Users of print are determined from the print readership which was 152,245,119 in 2010 according to Scarborough Research. Revenue of print is determined from a combination of the advertising and circulation revenues. The print advertising revenue in 2010 was $22,795,000,000. While 2010 circulation revenues have not been provided, most analysts expect them to remain flat compared [...]
by Matt Shanahan on February 1, 2011 in Advertising, ARPU, Paywall
Given the New York Times earnings call this week and all the chatter about their paywall, my curiosity was piqued about how shareholders should assess the paywall ability to offset low online advertising revenue. The following analysis explores that topic. The assumptions and conclusions are based on both public information from the 2009 Annual Report for The Washington Post Company and Scout Analytics experience. The scenario is hypothetical but representative. As print circulation and revenues decline, digital audiences and revenue have to take their place. Because online advertising has not yielded the same revenue as print advertising, many publishers are looking to paywalls to solve the digital revenue problem. The conclusion below is that the yield from online advertising has [...]
