How to build an online media business to $50m in revenue – 3 suggestions

Here are three ways to get to $50m in revenue as an online media business; indulge me in some math:

1. Be a site with a broad reach (say general social networking, communications, news). At large scale, without a great deal of targeting possible, a startup’s “run of site” or “run of network” advertising might be able to get to the $1 RPM range (Revenue per thousand impressions, including CPM, CPC, and CPA models). To get to $50m in revenue you would need 50 billion pageviews in a year, or just over 4 billion per month. According to Comscore, Bebo had the 10th most Pageviews in the US in Janurary 1007, with 3.4bn, so you would need to be bigger than that.

2. Be a site with demographic targeting (say a Latino portal, or a sports site (targeted at men) or a social network targeted at baby boomers). Although in TV and in magazines, demographic targeting can generate double digit CPMs, online at scale, RPMs tend to be in the low single digit range. Lets assume a $5 RPM. To get to $50m in revenue you would need 10 billion pageviews in a year, or just over 800 million per month. According to Comscore, Microsoft had the 22nd most Pageviews in the US in January 2007, with 792 million, so you would need to be bigger than that. [Microsoft isn’t a demographically targeted site – i just use it as a comparison point for overall traffic size.]

3. Be a site with endemic advertising opportunities (say a site about movies that movie studios will want to advertise on, or a site about cars that auto manufacturers will want to advertise on, or a site about travel that hotels and airlines and online travel agencies will want to advertise on). If you have a highly targeted audience that is interested in buying a specific product, you can command RPM’s well into the double digits. Lets assume a $20 RPM. To get to $50m in revenue you would need 2.5 billion pageviews in a year, or just over 200 million per month. According to Comscore, Adelphia.com had the 125th most Pageviews in the US in January 2007, with 198 million, so you would need to be bigger than that. Adelphia isn’t an endemically targeted site – i just use it as a comparison point for overall traffic size.

Admittedly, all these Comscore #s are US only, and all businesses will have international traffic as well, but the principle still holds.

Jeremy Liew is a partner at Lightspeed Ventures and wrote this article in Feb. 2007. I felt it was worth another look.

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One comment on “How to build an online media business to $50m in revenue – 3 suggestions

  1. Pingback: Bebo » How to build an online media business to $50m in revenue - 3…

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