Rev-Share Trends

A couple days ago I went to a panel on revenue-share deals.  The event was organized by the Columbia Business School Alumni Club, and companies represented on the panel were GoogleTV, Kaboose, Thumbplay and KickApps.  Below are some of the key takeaways from the discussion:

  • Ad inventory share is preferable to a revenue share because each side controls its allotted inventory and thus its cleaner
  • KickApps migrating to subscriptions and away from rev share, due to declining ad market
  • These days you line up a sponsor prior to paying for licensing content
  • Thumbplay has spent $40m per year acquiring customers
  • Google TV sells the inventory that is not sold in bundle with internet and product placement
  • Rev share deals should be boiler plate and standardized, particularly for unproven publishers; standard payment terms; deals can get renegotiated once performance is proven
  • Audit language is not a contentious topic; there’s a lot of trust-based accounting
  • Google pays every 30 days like clockwork; they haven’t mastered working capital tricks
  • Promotion in exchange for exclusive content is a fair trade (e.g. Coldplay on iTunes commercial)
  • CPA is the same as PI (per inquiry) advertising on TV
  • Do whatever it takes to get a reference account
  • The app is the new hit single; Apple’s commercials are all about apps now and not music
  • Now over 50% of ad campaigns have custom integration work; it ussed to be 20%; the reason being that you now have to do more work to maintain the same level of CPM
  • Advertisers won’t take on small affiliate sites on CPM basis; rather will put them on affiliate program
  • 2 million pageviews per month is the baseline for a small publisher to make money from advertising
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