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 […]
Archive | 2011
Move Over Monthly Uniques, Time To Track Engagement
One of the next logical evolutions in audience buying and selling is understanding engagement. While it is common industry practice to state monthly unique visitors and page views, it is rare to find a report that combines the two statistics to breakdown page views by audience member. When monthly uniques remain separated from page views, a distorted view of engagement is created that hurts advertisers and publishers. Through a recently conducted a study of audiences in B2B and B2C media, we found a common theme: a minority percentage of the audience creates a majority percentage of the impressions. Some publishers were surprised and some were not surprised. In either case, their operations acted as page views were generally evenly distributed […]
3 Metrics Publishers Must Manage to Optimize Revenue
Posted by: Matt Shanahan Managing capacity, load and yield are critical to optimizing revenue and profits. Airlines, hotels, rental car agencies, and others have employed revenue optimization strategies for years to remain competitive and in business. Facing radical change and deregulation, it was the airline industry’s ability to manage revenue capacity (number of seats), load (percentage sold), and yield (revenue per passenger per mile) that allowed incumbents to fight off upstarts. To optimize digital media revenues, publishers must adopt and adapt similar capacity, load and yield practices within their revenue operations. For digital publishers: Revenue capacity is the number of impressions for sale on a monthly basis. Load is the percentage of impressions sold. Yield is the average revenue per […]
Increasing ARPU Is The Fastest Source Of Profits
Posted by: Matt Shanahan In Q4, Scout Analytics published research that showed publishers on average have 20-30% untapped revenue potential with their existing users. How attractive is that untapped potential? To examine that question, we did further analysis on the relative value of those revenues compared to increasing sales volume or cutting sales expense. In each scenario we modeled, increasing average revenue per user (ARPU) increased profits more than the other tactics. While each publisher’s model will vary slightly, here is an example scenario to illustrate the point. Let’s assume a publisher has a $100M online business with a 15% profit margin and 40% cost of sales. In this model, the publisher is generating $15M in profit annually. Impact of […]
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