I have to write a business plan and I'm stuck on the revenue and business projection part.
We're building a platform that is all about user-generated-content concerning a certain topic. It also has a social component. The platform is free to use, all revenue comes from advertising.
So first I'd have to know how much revenue is generated through one user. I know there are tons of factors to this, (how much time does the user spent on the site and how much pageviews does he generate, what kind of ads are displayed, etc). But I just need ANY KIND OF BASE AMOUNT for this, like a rough rule of thumb. Anything is better than nothing here.
And secondly revenue is of course tied to the amount of users using the site, and thereby the growth of the userbase. Now I know that it is probably even more impossible to predict this, let alone for three years, but again, I need to write SOMETHING in the business plan.
We have a very big overall target audience, maybe about 100 million, so it could become potentially very big at some point. We have almost no marketing budget (say 10k max) but will create a lot of hype and are sure to be featured in lots of blogs.
So what would/could the user growth development in the first 6/12/36 months look like? What kind of percentage of growth per month is realistic. I know it's hard to say, seeing as some apps just take off and get millions of users within months whereas others just never get off the ground and fail eventually...
Is it common practice to lay out a best, worst & average case scenario for these types of businesses (social media / social network startups)?
Thank you for any help you can give me!
I guess the business model can be roughly compared to a recommendation/review site. Obviously there are powerusers and users that just read and never contribute. So I need to find out, how much revenue is generated by the average user (divide revenue by amount of users).
Concerning user growth, I get the impression that with recent social apps there isn't much marketing at all, it's either hit or miss. Instagram for example is a huge success. Our service can potentially be used by millions of people as well. We don't have a huge marketing budget where we can just 'force' new users by heavily investing in googleAds and the like. It's more about virality, so what am I supposed to write in my business plan, when the best case is ridiculous success and the wost case is complete and utter failure...?
I think numbers/statistics from startups like yelp, instagram, oink, etc. could be very helpful. But it's really hard to get these, especially for the timeframe right after launch.
If you're only revenue source is advertisements, I wouldn't expect much (little to nothing on a per-user basis). You can find much information about this online:
http://marugaticreative.com/Documents/Google_AdWords_Campaign_Case_Study.pdf http://certifiedknowledge.org/blog/google-adwords-case-study-improving-landing-page-quality/ These are just a couple of quick examples from a Google search. For you're business plan you should put together your own case study, specific to your platform (which we don't have enough information about to give an accurate answer). You should also consider PPC vs CPM (income per 1000 views), and using targeted advertisements.
As for your second question, you said yourself it is hard to estimate, and seen as we have no information about this idea, your marketing strategy, your experience, etc. it would be impossible to give any useful information, it could range from 1 to 10 in the first year, or 1 to 10 million in the first year, I can't give a more accurate answer on the details you've provided.
It would be useful to lay out a WCS/BCS situation, but make them realistic. If you're WCS shows you will not turn over profit, then maybe you need to rethink your advertising / revenue generating strategy.
P.S. Do you have any other means of generating revenue other than advertisements?