Tuesday, October 23, 2012

Follow The Money

Facebook's latest report to analysts contains this stat:  the social networking giant is only able thus far to generate about 40 cents per user per month in spite (or perhaps because of?) having more than a billion users!

As a result, Facebook is considering offering a gift-buying retail online store for its users as a means of getting their ability to monetize the 14% of the world's population who are using Facebook.

Also this week, the Wall Street Journal is trying to sell a $3.99 ebook to the people who already paid $2 to buy the newspaper.

Disney "and almost every major media company has had a difficult tangle with the Web or gaming. Time Warner and AOL. News Corporation and Myspace. Viacom and the Rock Band game maker, Harmonix."

Is that our future too as we go online?  If so, just how much should a smart businessperson with solid profits and good revenues risk?

The Facebook report makes no claims about how often that average user comes back to the social network, but in spite of that fact I did a bit of back of a napkin number crunching using radio weekly cume and annual revenue estimates from Country Aircheck's June 2012 "Ratings And Revenue" issue and even taking note of the fact that the radio "revenue per average weekly user" probably understates what would be radio's monthly or annual cume vs annual revenues, it's easy to see why it's so difficult to radio and other old media to chase the smaller revenues of the internet when we're doing such a good job compared to Facebook.

Just a few randomly-chosen stations in various size markets, ranked by their ratio of revenue per user in 2011, compared to Facebook's:
  • WZZK, Birmingham - 9.4:1
  • KFDI, Wichita - 8.5:1
  • WGNA, Albany - 7:1
  • WBCT, Grand Rapids - 6.5:1
  • WUBE, Cincinnati - 4.7:1
  • WGH, Norfolk - 4.4:1
  • KEEY, Minneapolis - 4.3:1
  • WUSN, Chicago - 3.4:1
  • WXTU, Philadelphia - 3:1
Do your station's own math (divide your annual revenue by your cume), using your own napkin, but I bet you'll find out that your local analog radio is converting your users to revenue MUCH better than Facebook is.

Our medium may be "old," but it seems like out-billing Facebook on a per-user basis from 3 to 1 to more than 9 to 1 is pretty "cool."

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