Archive | ARPU

Why Churn is a Problem for Digital Media

At what point does churn rate inhibit growth and profit in a digital media business model? Both in the information services and SaaS industries, a churn rate over twenty percent is problematic for the business model. In both of these industries, sustainable profits exist at around ten percent churn. In controlled circulation of print media, a twenty percent churn rate would have been difficult to sustain. In digital media, the lifetime value of audience members is a key success factor to creating a profitable business model. This research note begins to explore the dynamics of the lifetime value of a digital audience. In September of 2011, Scout Research began tracking several audiences on B2B publisher sites to understand the lifetime value of the […]

Profit is More Important than Monthly Unique Visitors

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 […]

Counting Page Views? Don’t Call It A Business Model!

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 […]

Why Online News Revenue will Never Equal Newspaper Revenue

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 […]