2 posts tagged marketing
2 posts tagged marketing
It’s really hard to build a brand. It’s hard to get the attention of others, it’s hard to get people onto your website, and it’s hard to create something that people will buy and use. We realized early on that the best visitors we get hear about us through word of mouth. Word of mouth is driven by happy people who have a great brand experience.
This is how we’ve focused on building a great brand experience:
Brand is everything. It’s every interaction with someone outside of your business. It’s your company culture. It’s your production process and the way you deal with a bug.
The secret to brand building is to start early and often. Your brand is not your logo or color scheme, it’s how people think about you. It’s the way that you represent yourself.
Today, I was on BuySellAds (a great ad network we use at Wistia) perusing publishers when I was struck by something shocking. I was looking at placing an ad on SuperAwesome (fake name to keep the site anonymous) and wondered how much it would cost to buy all of their inventory.
SuperAwesome does 7 million pageviews a month and sells ads for a $.50 CPM (CPM is the cost for every 1000 people who view an ad). Which means that every month SuperAwesome makes only $3,500. That’s it. 7 million pageviews seemed like a lot to me but I realized that I think about pageviews from a SaaS perspective. It turns out that it’s hard to make a lot of money on a $.50 CPM.
Which got me thinking, what would the CPM for a SaaS app be? Another way to phrase this would be “How efficiently can a SaaS app monetize a pageview?”
Let’s pick out some reasonable numbers and see how things come together. We’ll assume here that the business has some scale but is still relatively early on, just like the publisher we looked at earlier.
200,000 monthly pageviews @ 5 pages/unique visitor
40,000 monthly visitors x 1% = 400 conversions/month
400 conversions x 10% buy = 40 customers/month
40 customers x $40 ARPC (average revenue per customer)/month = $1,600 revenue added a month
In my opinion, these are conservative estimates. But for an accurate representation we need to include the accrued revenue when calculating the SaaS CPM. I’ll assume that the SaaS app has been around for a year and is growing at a consistant rate. So we’ll use $1,600 x 12 which is $19,200/month. In the real world things would be much more dynamic than this, but for now this will do the trick.
That puts the SaaS CPM at $96 ($19,200 / (200,000/1000)) which is 198x times higher CPM than SuperAwesome. These numbers are apples and oranges but it’s still interesting to think what kind of scale is needed to build an ad supported business versus a subscription business.
The next obvious question for me is “What are the different ways that advertising and SaaS businesses reach scale?”