Entertainment Portal Revenue Model

Transcription

1 Entertainment Portal Revenue Model Outline I. Entertainment Portal Logic II. Revenue Model III. Model Segments a. Sponsorships b. Advertisements c. Affiliates d. Subscriptions e. Websites IV. Forecasted Revenue Stream Distribution Logic An Entertainment Portal that is both geographically and demographically targeted can dictate a higher CPM for each revenue stream than other entertainment sites. The combination of a portal site with targeted entertainment content drives this value. According to the Nielsen//NetRatings, portals top the visitation charts. Sixty percent of Internet user sessions include a visit to a portal, compared to twenty two percent on entertainment sites, twenty percent on news sites, seventeen percent on shopping sites and five percent on sports sites. Not only are portals visited more often, but users also spend an average of 4.5 hours per month on portal sites, which is three times more than on entertainment or shopping sites. Developing a site that is a portal provides users with a service that can both drive traffic and keep them there. Both of which are critical elements for maximizing revenue. Entertainment sites were listed second in the Nielsen/NetRatings, which makes for a perfect combination to a portal site. This combination has appeal to the young urban population. The targeting of entertainment will also help to increase CPM. According to Chris Beasley in an article entitled A Publisher s Introduction to Internet Advertising: Current State of the Advertising Market, published in April 2003, targeted advertisements can still bring in a $10-$20 CPM, but untargeted advertisements can bring in as little as $.5 CPM or less. Therefore, the more opportunity we give our advertisers to target their advertising, the higher CPM we can expect. With an entertainment site it allows us to provide such targeted marketing and will even let us pin point advertisements to certain sections of the site in accordance to their target consumer. Our geographic target allows for the same. Although, in the short term targeting one geographic region could make national advertising a challenge, advertisers will appreciate the ability to customize and target ads by city as we expand. Additionally, Denver and Colorado have national appeal because of tourism, and we will have the ability to show national advertisers a greater reach with our Convention Center plans. Lastly, the shopping sites were mentioned third in the Neilsen/NetRatings. Our site will have this appeal through one of our revenue streams, our affliliate programs. These programs are addressed in detail later in this document.

2 Revenue Model Entertainment Portal Sponsorships Advertisements Affiliates Subscriptions Websites Sponsorships Presenting Sponsor Entire Site Section Title Sponsor (one sponsor for each section) Advertisements Ad Networks Nexus Media

3 Affiliates National Nexus Media Partners National Electronics Books CDs/DVDs Online Casino Dating Astrology/ Psychic Clothing Sports/ Outdoor Flowers Nexus Media Under $10 $10 + Video Clips Music Clips CDs/ DVDs Event Tix Concert Tix Event Cover Subscriptions Web Sites VIP Card Subscriptions Interactive Invites

4 Partners Zuvo Colorado Concierge Airline Bank Wireless Mtn. Resort Subscriptions Restaurants/ Bars/ Night Clubs User DJ/ Band Web Sites Restaurants/ Bars/ Night Clubs User DJ/ Band

5 Model Segments Sponsorships A much needed, new business model is emerging in the Internet world. It is a model that gives credit and power to the increase in brand awareness that takes place through Internet advertisements. CPMs for Internet advertising have drastically decreased since According to Chris Beasley, because the Internet has a unique measurement feature that can track the number of people that take immediate action upon seeing an advertisement, advertisers have unrealistic expectations on their campaigns, relying heavily on click through rates as a measure of success of their ads. What they do not credit is the brand awareness being built through these advertisements. Sponsorships offer a powerful way to build this brand message. Through sponsorships, companies can attach their name to appropriate parts of the entertainment portal. Our sponsorship packages should offer a rich media packet and should also include complimentary advertisements on our other media, thus increasing potential for extended advertising in these mediums. Sponsorship Categories: Presenting Site Sponsors (1 total) Section Title Sponsors (1 per section) Section Title Sponsor Example: Section- Athletic Activities Sponsor- Gart Sports Name of Section- Gart Sports Extreme Scene Rich Media- Open section and streaming media opens and plays a short second spot in the media section of the page. Additional Perks: two months of advertising in 5 locations and 50 cabs; prime placement ad on homepage; ad development with quarterly updates. Term: initially 6 months; once traffic is built look for long term sponsorships 1 year minimum. Gart Sports Extreme Scene Gart Bros. Streaming Ad Rotating Ads Ski Scene Hiking Scene Biking Scene Rock Climbing Scene Rafting Scene Kayaking Scene Soccer Scene Volleyball Scene Softball Scene Flash Banner Ads

6 Advertisements Ad Networks: Although CPMs have steadily decreased over the past five years, ad networks still provide a base revenue stream with minimum time requirements, and will add national advertisers to the site. A pitfall to watch out for is that advertisers will place ads that have a high CTR (click through rate) in the CPM payment category and will place ads with a low CTR in the CPC (cost per click) payment category. To avoid this pitfall, we need to carefully select our ad networks and choose approximately three to feed from. I ve obtained reviews on many ad networks and have been evaluating them. The only CPC I would suggest is Google s AdSense, as they target ads to content automatically, thus increasing click throughs. They have a fantastic reputation, and I think they will provide consistent revenue for us. I will make recommendations on CPM networks over the next two weeks. Realistically, we can expect a very modest amount of revenue from these networks, but they will help us fill ad space until we can fill with our own higher paying advertisers. We will need to be generating approximately 5,000 impressions per month before we can sign up for many ad networks. Though ad networks will not provide a significant amount of revenue, affiliates will be a significant and critical revenue generator. Nexus Media: We will generate a higher CPM if we sell the advertisements ourselves. Time is of course a consideration, but since advertising sales is already one of our primary functions, we should try to maximize this revenue source. Eventually, I would like our site s advertisements to be 80-90% sold by Nexus Media, with ad networks only supplying a minimum amount of ads. We can offer our advertiser a unique form of advertising, as well as package deals with our other advertising mediums, so we can customize an advertising campaign for them. The goal to generating a high CPM is going to be targeting, avoiding excessive advertisements and providing innovative, visually appealing advertisements. Affiliates Affiliates will most likely become our primary revenue stream as we grow. Fairly quickly, we will require an affiliate manager to supervise these programs and ensure we are capitalizing on this opportunity. National: Targeting and placement is going to be the key to make money here. For example, if we have a flower affiliate, our first inclination may be to put their ad on the dating site. Although this may drive some purchases, a better placement would be in the restaurant guide, where a man will go to look for a place to take a date. Also, instead of linking a user directly to Best Buy, we would link him directly to the address containing the CD of the DJ we reviewed or a link to other CDs that have a similar genre (ex. if you like this DJ s sound you should buy this ). Here are some examples of affiliate programs:

7 Amazon- Pays % dependent on the number and type of product sold. BestBuy- Pays 1-3% dependent on product sold. 3%: Consumer Electronics, DVDs, CDs, Games 2%: Home Essentials 1%: Computers and Photo Imaging Match.com- Pays monthly bounty fees per subscriber: Monthly Total 50 or Less Total Over 50 1 Month $10 $ Months $20 $ Months $30 $ Months $40 $70.00 Example- 94 Total Subscriptions: 55-1 month, 25-3 months, 10-6 months, 4-12 month Total Bounty Fees: $2, Gambling Affiliates- I need to research this a little more but initially this looks very lucrative. The key is in marketing and promoting the affiliate. We will need to have a Colorado Casino Scene section to generate target traffic. We should also include it on the cartoon site. CasinoRewards.com- Offers 3 billing options: o $.10 per click o $50 per join o 35% casino profit IntegrityCasinos.com- Offers 2 tiered program: Commission Level Revenue Level 25% For the first $15, % For the next $15, $30, % For $30, and above Captain Cooks Poker Flat 25% commission Affiliate Referred Rates: Level 1 2% Level % Level 3 1% Level % Level %

8 Nexus Media: From videos to events, Nexus Media will have a wide range of products and services to sell on the Entertainment Portal. I have classified these products and services into two different categories: under $10 and $10 and over. Anything under $10 should not require shipping. Payment options should be Pay Pal or Peppercoin. We should promote these products and services in the same way we promote other affiliates, as well as specialized promotional sections such as Seen in the Scene? (video clip section), Scene Services (website, interactive invites), and In Scene (VIP Card, subscriptions, special event tickets). Partners: We already have revenue sharing deals in place with some partners. These deals should extend to any business generated from the Entertainment Portal. Additionally, one negotiating point with prospective partners could be an affiliate agreement. This would be a higher risk for Nexus, but would provide a much higher return if we drive affiliate sales through the Entertainment Portal. For our prospective partners that are teetering on the edge of signing, but do not want to front as much cash as we are requesting for the deal, we could offer an affiliate program for part of the agreement. The ability to track these transactions will be critical to the success of any of these programs. Airline Partner Example- Deal Total: $250,000 Cash: $100,000 Trade: $125,000 Affiliate Program: 15% revenue Sell 50 airline tickets at $300 each. Total Monthly Affiliate Revenue: $2,250 Annual Affiliate Revenue: $27,000 Subscriptions Subscriptions represent a new shift in website revenue models. In order to generate revenue from subscriptions, we have to be prepared to show that the value we provide outweighs the cost. I have identified three different segments that are potential revenue generators from subscriptions for the Entertainment Portal and addressed the value we can bring to each segment. If marketed and implemented properly, I believe this can be a strong revenue stream. The key here will be structured flexibility, especially considering the segments we re approaching. Restaurants, Bars and Nightclubs- Two levels of membership. o Basic listing in online guide with link to website all special events listed in special events sections and in Mile High Minute text Minimum of one Nexus Media special event at location. This event will be marketed and advertised on website, and other marketing mediums. minimum of one video visit per month two requested video visits rights to all footage filmed development of one complimentary banner ad 4 weeks complimentary advertisement on respective web page One complimentary interactive invite

9 20% off all Nexus Media advertisements 20% off all content services 20% off interactive invites complimentary DJ/Band review and postings complimentary classified ads o Elite premium placement listing in online guide with link to website premium placement listing all special events listed in special events sections and in Mile High Minute text Minimum of two Nexus Media special event at location. This event will be marketed and advertised on website, and other marketing mediums. minimum of one feature in either MHM or Nexus segment minimum of 2 video visits per month four requested video visits rights to all footage filmed development of 4 complimentary banner ads complimentary development of a mini webpage 8 weeks complimentary advertisement on respective webpage 2 weeks complimentary advertisements on home page 2 complimentary interactive invites development of one 15 or 30 second mid grade ad two months of advertisements on the Nexus 30% off all Nexus Media advertisements 30% off all content services 30% off interactive invites complimentary DJ/Band review and postings complimentary classified ads DJs and Bands o listing on DJ and Band page with link to website o performances listed in special events section and MHM o complimentary upload of music onto site o ability to sell CDs, products and songs on site (based on a rev share model) o complimentary membership to interactive invite o 50% off interactive services o 50% off website o 20% off all Nexus Media advertisements o 20% off all content services o complimentary DJ/Band review and postings o complimentary classified ads DJs and Bands are poor. We need to recognize this and offer alternative payment options to selected, talented DJs and Bands. It would be a Nexus Media sponsored DJ and Band program. We would increase revenue share on all music and items sold on site to cover the risk.

10 Users o access to premium member section, listing exclusive events o complimentary membership to interactive invite o 50% off interactive services o 15% off Nexus Media advertisements o 15% off all content services o 15% off all Nexus Media merchandise/ services o 15% off all Nexus Media special event ticket purchases o complimentary entry to some Nexus Media events o exclusive premium member events o 4 free CD compilations (does not include shipping and handling) o 25 free video clip downloads o 25 free music downloads o treasure hunt advantage (TBD) Websites The same segments that were identified for potential subscription clients are the same segments that would benefit from our website services. The goal is to provide an affordable website service that provides the client with easy access to be able to update their site in a user-friendly environment. These sites should be template based, so creation of the site is quick. Also, the client should be able to select the templates online and upload their graphics online. Finally, we should offer a hosting service that provides both an intra- and inter- net site. We need to ensure that search engines will catch the clients sites with their own key words and that the site can be reached without going through our site.

11 Forecasted Revenue Stream Distribution First Six Months Websites Subscriptions 5% 10% Sponsorships 10% Affiliates 15% Advertisements 60% Beginning Year Two Websites 10% Subscriptions 10% Sponsorships 30% Affiliates 35% Advertisements 15%