Finding the revenue hidden in a huge audience.

The situation

The company ran a heavily trafficked map site with millions of monthly visitors. Ad rates kept falling as traffic grew, and its online store sold little. With a small US operation and no senior hires planned, every idea had to be simple, inexpensive and manageable from the other side of the world.

What I found

The company had mistaken volume for value. Its ad inventory was undifferentiated, and its store had basic faults that cost it customers: product images that didn’t match the products, an ad hoc inventory mix, and almost no marketing inside its own network. The audience was the real asset, and it wasn’t being monetized.

The decision

The founder was weighing the purchase of a long-established US bricks-and-mortar retail store. I analyzed it against the company’s three real challenges and recommended against it. Retail was the wrong business for the company: it would be run from 6,000 miles away, for little benefit. The argument was arithmetic: at about $2 per thousand ad impressions to market products online, and a $20 sale at 50% margin, one sale was worth roughly 5,000 impressions. The company had far more inventory than it needed to test that. The numbers had to pencil out.

What I recommended

• Run fulfillment in-house with one part-time person.
• Fix the online store’s product images and category structure, and rank products by popularity.
• A 30-day plan of ten prioritized changes that left core ad revenue alone.
• Test demand for new products cheaply before building them, and measure every step from click to purchase.
• Higher-margin products, partnerships with school suppliers and furniture makers, and a long-term sales program for the company’s mapping services.

The result

The founder did not buy the retail store. The company ran fulfillment in-house, redesigned its online store, and the overhauled store was very successful. The company was later sold.

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