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Summary:

A growing school of thought in online publishing holds that, when you get down to brass tacks, more important than size of audience is scale…

A growing school of thought in online publishing holds that, when you get down to brass tacks, more important than size of audience is scale of revenue.

So a metric telcos and pay TV operators have used for years – average revenue per user (ARPU) – is gaining interest among publishers keen to understand their business, and to change it accordingly.

Seattle-based Scout Analytics, which provides websites with services to track and segment audiences and to calculate the effective income users represent, says it has an idea how much money publishers need to make from readers or advertisers each year…

Our clients are trying to get to that $10 figure,” strategy SVP Matt Shanahan tells paidContent:UK. “We haven’t seen many companies under $6 per reader per year.”

Shanahan had noticed our article last week reporting a rare online ARPU disclosure from Norwegian publisher Media Norge – two Norwegian kroner per month; that

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  1. ARPU is a phenomenal KPI for publishers, but to say “$10 is the magic number” for ARPU is like saying “2% is the magic number for direct response marketers”. Not quite that simple.

  2. Actually, 100 credits should be the magic number. Should not use US Dollar as a metric but instead, use a virtual currency system. 100 credits can mean $10 for one publisher but $50 for another, depending on the content.

  3. ARPU alone is a terrible metric. It does not take into account volume. It’s very possible that Demand Media spends a tenth of their money on production and have 40 times the total readership as People.

  4. nathan kurt johnson Wednesday, August 25, 2010

    Online publishing holds that more important than size of audience is scale of revenue.

  5. Curious how they arrived at the $1.60 per user for Demand.
    Their prospectus has RPM @ $11.

  6. ARPU for publishers is a terrible idea. in telco, the user is actually the one contributing the revenue so ARPU is directly linked user behaviour – i.e. if i can make you speak for longer i get more money. ARPU becomes useful as a mertic to compare user segments and historic earning levels for those segments. in publishing, we earn money from advertisers – revenue metrics should be focused on advertisers. audience metrics are great to increase your traffic and potential for revenue but arent linked directly to revenue.

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