I have lots of people asking me the same questions many times last two weeks. So I will put my answer here again. Not all Web 2.O businesses are suitable for VC they are only interested in those with a high up-side, clear exit options and a real market opportunity. An idea that can quickly turn into at least $50m to $100m in revenue. A strong team with both passion and experience. But most of all, what's the fastest way to get them the $50 or $100m. If you are working on a Web 2.O start-up that relies on ad dollars as primary revenue, you need to show them the calculation. Ad revenue is not an easy solution for not figuring the value proposition of your Web 2.0 site.
If you can get $25m in revenue, you are doing OK. But $50m is the number. $100m you're a player. There are a few ways to get to $50m in revenue as an online media business:
1/ Create a Web 2.O property with a very broad audience reach, say getting to the $1 RPM range (including all 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. This is tough. Not a lot of properties get that.
2/ Create a Web 2,0 property with specific targeting (generally demographics). Let's use 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. If you want to hit $100m in revenue, you are talking about 1.6 billion pageviews per month. This is not unrealistic if you do a couple of things right.
3./ Create a Web 2,0 property with fanatic stickiness which usually means association with a hobby. That would become a must advertise property for certain advertisers. If you have a highly targeted audience (preferably with high income) that is interested in buying a specific product, you can get double digits RPMS. Lets assume a $16 RPM. To get to $50m in revenue you would need around 3 billion pageviews in a year, or just 240 million per month. Even to get to $100m you only need 480 million per month. That's a very achievable target.
Here's some ComScore data if you are interested.
Here's a quick how to if you're interested. First you need to enable it in your settings from within Google Analytics. The first page you see after logging in (which shows your profiles) has a link that says “Edit Account and Data Sharing Services”. After clicking that link, check the box that says, “Share My Google Analytics Data… Anonymously with Google products and benchmarking service”. Then click “Save Changes”. I believe it will take 3-4 weeks to take effect. You will know if it shows up by clicking the Visitors Tab from within Google Analytics and then the “Benchmarking (BETA)” tab. Then you can play with benchmarking your site. It is very useful.
