RonAmok!

The adventures of an analog engineer and digital storyteller who studies emerging networks and their impact on the great game of business.

This morning, Chris Brogan published a blog post where he revealed that his new joint venture, Third Tribe Marketing has added 2000 subscribers since its launch last month. At $47 per month per subscriber, that’s an annualized revenue stream of $1.128 million.

As an executive, think about this for a minute. Here is a brand new venture that flipped a switch and opened a revenue stream of $1.128 million–instantly. Add the fact that it did so without spending a dime on traditional marketing or advertising and we have an interesting case study for our theory that Audience is an Asset.

Over the past five years, Chris has built an audience that consists of 47,000 blog subscribers, 125,00 Twitter followers, TBD Web visitors, and TBD email newsletter subscribers.  By asking it to participate in Third Tribe Marketing, this aggregated audience responded by producing 2000 subscribers paying $47 per month.

Put another way, Chris has built a financial asset that can distribute a $1.128 million annual dividend. Therefore, if we use a multiple of 10 times earnings, can we assume his audience is worth $11.28 million? Not even close. It’s worth much more because this audience pays more than one dividend.

Consider Trust Agents, the book that he co-authored with Julien Smith, that rumbled its way to the New York Times Best Seller List simply because he asked his audience to buy it? Or what about the business and speaking revenue his asset generates for his company New Marketing Labs? By adding up all of these revenue sources and multiplying the result by whatever multiple you’re comfortable with, we can calculate a real and tangible financial value for an online audience.

The value of your social media investments is calculated through the dividends your audience asset can distribute to you.

And for those fixated on ROI justifications:

Assuming that Chris worked 80 hours per week for five years creating valuable content (a number that I believe is conservative), he invested 20,000 Brogan hours into building this asset. Does the investment justify the return? I think so.

Photo Credit: C.C. Chapman

Filed under: Audience is an Asset

Comments

This is quite interesting. A few notes:

* Third Tribe is split 4 ways, don't forget, so I'm only getting a chunk. Plus, if I'm lucky, we'll get up to 4000 or 5000 members (adjusted to 3500 for churn) and that'll be even more.

If you laid out the various ways I derive money from those assets, it'd be like this:

* professional speaking
* books (two now – Social Media 101 just came out)
* third tribe
* events (new marketing experience and inbound marketing summit)
* ebooks (shortly)

And then the fun part is layering over all the free stuff:

* daily blog post
* weekly newsletters
* daily scouring and sourcing of things from blogs to share
* contributions to other blogs
* videos

See?

But it can be so super fun, and I love this post. Thanks, Ron.

Chris Brogan
March 4, 2010

Thanks for the clarifications, Chris.

The numbers may sway a little, but the concept it solid. Your audience is an asset that pays dividends in many different ways!

ronploof
March 4, 2010

I agree with Ron's thesis here, that while the ownership of Third Tribe may be split four ways, it was still Chris's audiences that produced the $1.128 million (on the low end of the estimate per Chris's note below) in initial annualized revenue. Add the revenue from books, events and more, and Ron's point is even more forcefully illustrated. Ron and Chris, I think you're both exceptional!

Julie Wright
March 5, 2010

You're absolutely right, of course. But we need to add in the opportunity cost/risk that this kind of growth will not provide person X in year Y the same value as it did Chris in 2010 (or someone else five years ago, whatever).

Main point is that the audience is a huge asset, but I suspect that as attention splinters to a wider number of channels the value diminishes. But I'm not sure.

juliensmith
March 8, 2010

You bring up a good point, Julien. 1) All assets are not created equal and 2) the value of assets change over time. I think of audience-assets the same way as financial investments like a stocks and bonds whose values fluctuate over time. Audiences, like financial investments, must be properly cared for in order to maintain and grow their value.

If Chris were to stop taking care of his audience through producing fresh content, the value of that audience would most likely erode through the passage of time.

ronploof
March 8, 2010

[…] should be tracked as P&L. Over time, The theory has been refined through other posts, such as: Valuating Your Social Media Asset, Social Media is a Mutual Fund and Assets Produce […]

RonAmok! » No apreciation…until it’s gone
December 27, 2011

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