Two interesting pieces of information floated by my screen this week. The first was via Quora, which asked “How much did it cost AOL to distribute all those CDs back in the 1990′s?”. Awesomely, Steve Case answered the question himself.
A lot! I don’t remember the total spending but do recall in the early 1990s our target was to spend 10% of lifetime revenue to get a new subscriber. At that time I believe the average subscriber life was about 25 months and revenue was about $350 so we spent about $35 to acquire subscribers. As we were able to lower the cost of disks/trial/etc we were able to ramp up marketing. (Plus, we knew Microsoft was coming and it was never going to be easier or cheaper to get market share.) When we went public in 1992 we had less than 200,000 subscribers; a decade later the number was in the 25 million range. That helped drive our market capitalization up from $70 million at the time of the IPO to $150 billion when we decided to combine with Time Warner to accelerate our transition to broadband and diversify our revenue mix.
I love when you hear real answers straight from the horses mouth.
The second one was a Business Insider’s Chart of the Day. Figuring out just how much you can expect from each unique visitor is a great way to help you set goals and create a realistic revenue forecast.
At my last company we estimated that each order taken online cost just under $40 to get out the door. Knowing that figure allows us to make a much smarter set of decisions around visitor acquisition, link building, paid search and email campaigns.
What type of metrics are you using that give you the best bang for your buck?
No related posts.