Re: Estimating ad revenue potential

From: Joshua Karp <jkarp_at_markettome.com>
Date: Mon 13 Dec 1999 15:23:23 -0600

JANE NEUBAUER WROTE:
> Is there anyone who can provide some advice or places
> to look on the web (or otherwise) for some general
> information about rates for banner advertising at
> various user levels?

Jane,

I have developed a revenue model that predicts income
for a site that largely relies on advertising for its
revenue. The components of the model are:

Banner Ads (non rotating because this will simply
dilute the price per thousand)

Marquee Ads (key locations like home pages and start
pages for major functionality)

Site Sponsorship (site wide advertisers whose banner
appears on (al)most every page)

Content Sponsorship (businesses that sponsor particular
content. I break these out because I don't put the
standard banner ads on these pages because they are
specifically sponsored)

Permission Email (the volume of email that I can send
based on registered users (with a profile) who grant
permission for email)

I've had the greatest success modeling page views (and
thus impressions) using a scenario approach. I have
modeled 10 "main line" scenarios, 5 for registered
users and 5 for guests because they have different
functionality available for them. I then predict the
number of page views for each scenario.

I also tried to model (in a different spreadsheet) page
views for results of a search. This became very complex
because the number of pages depends on the type of
search (category, keyword), the number of possible
returned items, the number of items displayed on each
page, etc. Even though I did develop a model, I decided
that the scenario approach is the best way to normalize
the predicted page views.

What I do is start with predicted users of both types,
registered and guests for a period of 5 years. I also
predicted the number of registered users granting
permission for email as a percentage.

Then I model the scenarios. I multiply the page views
in each scenario by the number of users of each type. I
do the same for marquee ads and sponsored content. I
add the number of marquee views, and suddenly I can
predict the number of page views for each type of ad.
In my assumptions I model number of banner ads per
page, cost per thousand, costs for marquee ads, site
sponsors, and sponsored content. I also have an
assumption for the possible emails to send out per
month and the cost per email for an advertiser. I add
it all up, and voila, I have the foundation for a
revenue model. The model assumes that each of the
registered users will visit exactly once per month.

I built the model in Excel and every field
automatically updates based on changes to the
assumptions. If you (or anyone else, for that matter)
wants a copy of a cleaned up version, reply off list,
and I'll send it to you. It still needs some work
before it is presentable to a client or a VC, but it is
a start.

In your particular case, you could easily back in the
number of page views into the model and get the
results.

Josh

-

Joshua Karp
Founder
Market To Me
www.markettome.com
jkarp_at_markettome.com





Received on Mon Dec 13 1999 - 15:23:23 CST