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How To
Convert Underpants
    Into Profits
     by Alex Calic
Who Am I?
• Chief Revenue Officer @ The Media Trust
• 10+ years in tech (internet/software)
  – adtech, social, video, ecommerce, mobile
• Previously @:
  – Clearspring: Bus Dev, Sales, Finance
  – InPhonic: Corp Dev, Bus Dev, Product
  – Coremetrics: Bus Dev
  – InTouchPOS: Strategy
• Wharton MBA
South Park Season 2: http://www.southparkstudios.com/clips/151040/the-underpants-business
Option #1




Selling To Your Users
Selling To Your Users

              Transaction   Subscription
Consumer

Enterprise
Option #2




Selling To Your Users
Selling Your Users


• Attention
• Data (email, behavior, personal information)
Best of Both Worlds




• Monthly subscription fees
• In-program advertising
Figure Out Thanks!
Your Unitized        TEST
Economics
Income Statement Basics
      PER USER
      Revenues
    - Cost of Sales
      Gross Margin
    - Marketing Expense
      Operating Margin
Business Levers
Matching Revenues to Cost
 • Fixed vs. variable cost structure

       Seat License   Project Based Pay Per Use
Cost




                         Time
Some Thoughts on Freemium

                       Reallocating
                       cost of sales &
                       marketing expenses


                    Paying
                    Users




Total users x avg. cost per user per period       Total Cost Supported
% of total users that pay                     =   By Each Paying User
User Acquisition Costs
• Inbound (free)         Free and cheaper
  – Organic              acquisition cost
  – Referral             channels can drive
  – Search (free/paid)   down revenue
• Outbound (paid)        requirements and
                         enhance the user
  – Email
                         acquisition loop.
  – Display
  – Sponsorship
Cash Flow Considerations
• Sales cycle
  – Consumer vs. enterprise (short vs. long)
• Payment cycle
  – Upfront vs. arrears (fixed vs. usage pricing)
• Churn
  – Monthly billing vs. contracts (variable vs. fixed costs)
Advertising Model
• First leveraging standards (ad units/ sellers)
• Native advertising requires scale
  – 10MM active users as a starting point
  – 100MM for audience targeting
• What you’re up against
TEST
Ways to Find the Right Pricing
•   Competitors
•   Comparable business models/industries
•   A/B testing
•   Step-up pricing
•   Just ask!
•   Most importantly: KISS
Thanks For Having Me!
• alex@themediatrust.com   TEST
• @alexcalic
• www.alexcalic.com

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How To Convert Underpants Into Profits

  • 1. How To Convert Underpants Into Profits by Alex Calic
  • 2. Who Am I? • Chief Revenue Officer @ The Media Trust • 10+ years in tech (internet/software) – adtech, social, video, ecommerce, mobile • Previously @: – Clearspring: Bus Dev, Sales, Finance – InPhonic: Corp Dev, Bus Dev, Product – Coremetrics: Bus Dev – InTouchPOS: Strategy • Wharton MBA
  • 3. South Park Season 2: http://www.southparkstudios.com/clips/151040/the-underpants-business
  • 4. Option #1 Selling To Your Users
  • 5. Selling To Your Users Transaction Subscription Consumer Enterprise
  • 6. Option #2 Selling To Your Users
  • 7. Selling Your Users • Attention • Data (email, behavior, personal information)
  • 8. Best of Both Worlds • Monthly subscription fees • In-program advertising
  • 9. Figure Out Thanks! Your Unitized TEST Economics
  • 10. Income Statement Basics PER USER Revenues - Cost of Sales Gross Margin - Marketing Expense Operating Margin
  • 12. Matching Revenues to Cost • Fixed vs. variable cost structure Seat License Project Based Pay Per Use Cost Time
  • 13. Some Thoughts on Freemium Reallocating cost of sales & marketing expenses Paying Users Total users x avg. cost per user per period Total Cost Supported % of total users that pay = By Each Paying User
  • 14. User Acquisition Costs • Inbound (free) Free and cheaper – Organic acquisition cost – Referral channels can drive – Search (free/paid) down revenue • Outbound (paid) requirements and enhance the user – Email acquisition loop. – Display – Sponsorship
  • 15. Cash Flow Considerations • Sales cycle – Consumer vs. enterprise (short vs. long) • Payment cycle – Upfront vs. arrears (fixed vs. usage pricing) • Churn – Monthly billing vs. contracts (variable vs. fixed costs)
  • 16. Advertising Model • First leveraging standards (ad units/ sellers) • Native advertising requires scale – 10MM active users as a starting point – 100MM for audience targeting • What you’re up against
  • 17. TEST
  • 18. Ways to Find the Right Pricing • Competitors • Comparable business models/industries • A/B testing • Step-up pricing • Just ask! • Most importantly: KISS
  • 19. Thanks For Having Me! • alex@themediatrust.com TEST • @alexcalic • www.alexcalic.com