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Digg: I'm Actually Kind of Impressed

With the holiday schedule I've been slow in blogging and definitely late to the party on this one, but a couple of days ago somehow/ someway Digg's financials became public. As you probably heard, the numbers are smaller than people thought:
the company had 2007 revenues of $4.8 million and losses of $2.8 million. The first three quarters of 2008 Digg had revenues of $6.4 million and losses of $4 million. That implies total 2008 revenue of $8.5 million, with $5.3 million in losses.
This should be measured against Digg's audience size, which according to Comscore, is not small: they have 16 million monthly uniques and 58 million page views. Techcrunch correctly notes that these audience numbers, like most Comscore numbers, are likely smaller than the actual numbers.

People jumped all over this report, calling Digg's business model all sorts of nasty names. But the truth is that, compared to most others in the publishing world, Digg is actually doing pretty good. By my math, the reported revenue numbers show that Digg's earning a CPM rate of somewhere around $12. That's pretty good for the news business. Of course, we don't know how much of this is being artificially propped up by Digg's ad deal with Microsoft.

But still, in a world where most news sites are lucky to eek out $1 to $5 CPM, $12 CPM is very good. Especially for a site like Digg which is not verticalized or segmented. A few years back I met with the head of the online group of a major newspaper and asked him his CPM rate. He quoted $25 - their rate card. Then we did the math - adding up their total page views and revenue for the month and dividing.

Turns out this particular news site was making $.25 CPM, not $25 CPM. Sure they sold some pages (like real estate) for $25, but that was a tiny, tiny fraction of their sites total page views. Add it all up and the earnings on a CPM basis ended up amounting to little more than remnant prices.

So scoff all you want at Digg for not selling out when they should of or for having too many employees, but if you're in the publishing business its probably not wise to throw stones at their revenue numbers. Most publishers live in glass houses themselves.

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Comments (2)

Nik:

Mike,

I presume you did 58m Page views X12 Months=696m Page Views
and then $8.5m/(696m Page Views/1000) to arrive at the $12 CPM number.

But isnt that an RPM number and there maybe more than one banner on the page and also probably includes CPC stuff as well?

mike:

You are correct - that is more of an RPM number than a single position CPM - and as I noted, it's probably artificially propped up by the deal with Microsoft. With that, the $1 - $5 that I referenced in the article that most news sites make was an RPM number as well, so by this measure Digg is still hitting it out of the park.

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