The ARPU Equation for Drive-bys

Posted by: Matt Shanahan

Drive-bys can be a majority or a minority of the audience depending on the publisher’s attitude towards SEO, social networking, and other traffic driving techniques. Understanding the weight and priority of drive-by ARPU versus ARPU of other audience segments can provide insight into a publishers strategy. So this post looks at the ARPU equation for drive-bys.

For most media publishers, the audience can be broken up into four segments: fans, regulars, occasionals, and drive-bys. The qualification of an audience member into one of the four groups is based on an engagement metric that can vary between publishers but is usually time on site.

The Scout Analytics definition for drive-by is that the individual’s time on site is not predictable during a specific month (i.e., a non-zero value for time on site cannot be estimated with a reasonable level of certainty).

If a publisher expects a majority of the revenue to come from drive-bys, the revenue model becomes single dimensional. Drive-bys statistically do not subscribe, attend events, or execute transactions. Consequently, the average revenue from a drive-by has the least potential of any audience segment. It is as follows:

ARPU = (page views)*RPM/1000

By their very definition, drive-bys are unpredictable (i.e., not loyal) and therefore their time on site, page views, and associated revenues can be volatile. Drive-bys are also commodity eye-balls making their CPM value and publisher margins low. The single-demensional nature, unpredictability, and commodity value of the audience tends to make these revenue models tenuous.

If a publisher expects drive-bys to be a minority of the revenue, the focus becomes on building brand value and developing more revenue streams than just RPM. In the minority model, drive-bys are not valued for the current revenue potential but rather their future potential by turning them into loyal audience members. I will look into climbing the ARPU equation ladder in a future post.