revenue: the internet wants to be free, but you need to get paid (andrew chen, startonomics sf 2008)

Revenue The Internet Wants to Be Free, but You Need to Get Paid

Hi. I’m Andrew.

My life in advertising:

Revenue Science publisher clients

Direct

ecommercesubscriptionvirtual goods

brands

Indirect

adslead generationaffiliate / CPA

Direct

ecommercesubscriptionvirtual goods

brands

Transact = $$$

Transactions as funnels

Users enter

Browse

Add to cart

Buy

ARPU = average revenue per user

ecommerce ARPU• new users• % browse• % add to cart• % who buy• average order size

virtual items ARPU• new users• % register• % buy currency• purchases/month• average order size• churn %• month2 revenue

subscription ARPU• new users• % register• % subscribe• month1 revenue • (1-churn %) *

month2 revenue• …

3 steps to max ARPU

• Identify user funnels

• Increase repeat visits

• Raise average order size

Indirect

adslead generationaffiliate / CPA

Ad impressions

Clicks

Leads

Affiliate

ad impressions RPM• CPM

clicks RPM• CTR * PPC * 1000

leads RPM• % conv * CPL * 1000

affiliate RPM• % conv * order size* 1000

Inventory modelImpressions 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

4 steps to max revenues

• Grow audiences

• Higher CTR and conv %

• Advertisers

• Optimize

Direct

ecommercesubscriptionvirtual goods

brands

Indirect

adslead generationaffiliate / CPA

Questions?

voodoo [at] gmail.com

http://andrewchenblog.com

@andrew_chen