Adsense in client desktop software - business model questions

Discussion in 'Google AdWords' started by cnxn, Aug 6, 2007.

  1. #1
    Hello folks,

    Forgive me for this post being a bit lengthy, but I think it will provide for some interesting discussion.

    In our company we're tossing around a business model for ad supported desktop client software. We believe this has some serious potential if it works according to plan, but since this is a big "if", I'd like to glean some info from this forum before we take this leap. (looks like many top Adsense pros here so I thought it would be a good place to start).

    Now before you say that this won't fly because it violates Google Adsense Guidelines, https://www.google.com/adsense/support/bin/answer.py?answer=48182&sourceid=aso&subid=ww-ww-et-asui&medium=link&hl=en_US , take a look at this company: www.spiceworks.com Their software is supported entirely by Google Adsense, confirmed by their VP of Marketing to me in an email. Although this was a special partnership deal, it is possible for Google to allow it.

    So, the following is my analysis to estimate monthly revenue per user from Google AdSense.

    Assumption 1: AdSense revenue range = 1 to 10 cents per unique visitor per month for websites.

    The websites analysed ranged from some that are for sale on this forum to plentyoffish and digg. I've calculated a range of between less than a penny, to up to 10 cents per unique visitor, per month.

    Assumption 2: Client software running Adsense will garner a higher monthly revenue per user than revenue per unique visitor to a website.

    Here are some scenarios:

    1 - Conservative:

    Average EPC (Click Revenue): $0.05
    Average CTR (Click Through Rate): 1%
    Monthly Adsense $ per User: $0.20

    2 - Realistic:

    Average EPC (Click Revenue): $0.10
    Average CTR (Click Through Rate): 2%
    Monthly Adsense $ per User: $0.80

    3 - Ballistic:

    Average EPC (Click Revenue): $0.20
    Average CTR (Click Through Rate): 3%
    Monthly Adsense $ per User: $2.40

    So I'm forecasting anywhere between 20 cents to $2.40 per user, per month of revenue from Adsense.

    This begs the question, how do I justify such a multiple over unique visitors? The answer is, I believe that a user will see many more ad impressions in the client software than a unique visitor would in a website.

    In scenario one for example, my worst case, I would only need a user to click on 4 ads in a month to make 20 cents. If he's using it all month, does this seem like a high CTR? Check out the following data:

    Average software accesses per day: 5
    Number of ads (impressions) shown in the software per use: 5
    average impressions per user per day: 25 (5 X 5)
    number of days software is used per month: 16 (4 days per week, 4 weeks per month)
    average impressions per user per month: 400 (25 X 16)

    So this works out to an EPM (earnings per 1000 impressions) of 5/100ths of a penny for scenario 1. I've not been able to find any comparison data on EPM, but unless I'm way off here, this seems entirely doable.

    I also believe that the software we're building will allow for much better targeted ads than a website and hence a higher CTR (more on this later).

    One thing worries me though; I've seen data that shows that EPC increases in proportion to unique visitors, ie. I will earn a much higher EPC if I have 100,000 users than if I have 1000. The logic here is that Google would rather have a lot of people see a few ads than a few people see a lot of ads. Ad supported software will be catering to the latter.

    That said, Google's Gmail is ad supported, and also caters to the latter (I know, an extreme form of the latter with their 100 million users :p ) Would any of you have an estimate of what their revenue per user is for Gmail?

    Well, this post is probably getting long enough. Let me know if this passes the sanity check.

    Thanks!
     
    cnxn, Aug 6, 2007 IP