Posted by: Matt Shanahan This media announcement published by Fairfax Media breaks out each division in terms of revenues, expenses, and profits. Their online segment had revenues, expenses, and EBITDA profit in FY2010 of $212.4 (A$), $101.4 (A$), and $111.0 (A$) respectively. The online segment had a very respectable gross profit margin of 52.3%. I was curious both about their breakeven ARPU and what was driving their margin. Figuring out the breakeven point on ARPU turned out to be relatively easy. The online business segment is the combination of Fairfax Digital and Trade Me businesses. From information on both sites, Fairfax Digital is an aggregation of 30+ websites with 8M uniques/month, and Trade Me is essentially 1 site with 6.8M uniques/month. Breakeven […]
Archive | September, 2010
Attention Economics: The Publisher ARPU Equation™
Posted by: Matt Shanahan Outside of sponsorships and donations, a publisher has to drive revenue from an audience member’s engagement. Whether it’s games, software, information, or media, a digital publisher has a limited audience and limited revenue potential. Some audience sizes are in the hundreds of millions, but the vast majority of audiences are in the hundreds or tens of thousands. The 1,400+ regional news publications in the US are a good example, and so are the more than 1,000+ SaaS firms. The limited size of an audience and the need to be profitable requires a publisher to answer the question: “What is the maximum amount of revenue that can be made from a unique audience member?” That is why Scout Analytics […]
Macworld Fan = $39.95 ARPU
Posted by: Matt Shanahan Macworld recently posted a membership offer called Macworld Insider. By becoming an “insider”, the user of macworld.com has a “near” ad-free experience (i.e., some sponsorship still allowed). The ad-free experience takes the RPM of a member to essentially zero. The price of membership is $39.95/year (a.k.a., $39.95 ARPU). Macworld Insider was most likely designed for fans of Macworld (i.e., their most loyal audience members). By understanding their fans’ loyalty profile and looking at RPMs, Macworld likely determined the upper end of revenue per unique and then created an offer to compete with that revenue stream. Membership is likely to create better lifetime value for each audience member and reduce volatility in revenue.
When ARPU = RPM = CPM, Everybody Wins
Posted by: Matt Shanahan Over the past few weeks, I have been looking at ARPU in isolation. In the upcoming posts, I will examine its composition and its relation to other metrics. Revenue Per Mille (RPM) is the average revenue generated per 1,000 page views. Cost Per Mille (CPM) is the average cost of per 1,000 impressions. Both metrics are commonly used by publishers to describe their business, but rarely do they discuss them together. For example in the Demand Media S1, they discuss an $11.81 RPM for their owned and operated websites such as eHow.com, but there is no reference to CPM. Yet there is a lot to be learned by comparing input (CPM) and output (RPM). RPM is […]
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