Should Internet Marketers Copy Adult Entertainment Sites?
By Anna Johnson on November 27th, 2008I sometimes hear Internet marketers pointing to adult entertainment as an industry at the leading edge when it comes to Internet marketing strategies and tactics.
But is adult entertainment really so cutting edge? Is it really worth emulating? Well, if you go on things like conversion rates… maybe not.
Last year, Penthouse Media Group Inc., publisher of the well-known men’s publication, Penthouse Magazine, acquired Various, Inc. which owned the leading adult meeting site, Adult FriendFinder, for $500 million in cash and securities.
Was this a good deal for Penthouse? Without knowing exactly what Various, Inc’s profits were – its projected 2007 revenues were $340 million – nor Penthouse’s expected return on investment (ROI) and time frame for achieving that ROI… ONE simple calculation reveals that the FriendFinder network presented an extraordinary opportunity.
Here were the key statistics from Penthouse’s press release at the time…
- The FriendFinder network had around 260 million free members.
- The paid members numbered 1.2 million.
For simplicity’s sake, let’s assume that each of the paid members was also a free member. What that means is that Various had been able to convert a whopping… 0.46% of free members into paid members! If we consider paid members to be additional to free members, the conversion rate was even lower.
So if the average conversion rate of 0.46% translated into $340 million in revenues overall… what would increasing that conversion rate to 1 percent mean? I don’t have enough data to know, but you can be sure that it would have a MASSIVE impact on profits.
Make no mistake. Various, Inc. appeared to have been a highly successful company. But with just a 0.46 percent conversion rate, it was arguably leaving a lot of money on the table. If Penthouse has done nothing more than focus on increasing conversion rates across all the Various, Inc. media properties… it would have made a very good acquisition indeed.
Of course, whether Penthouse has done that… is a completely different story…
In any case, it’s important not to assume that what seems to be good for one industry, is necessarily good for OUR industry or niche.
Who knows? Maybe a 0.46 percent conversion rate for adult entertainment was a terrific result when compared with the conversion rates of other adult companies. But it doesn’t mean we should necessarily go out and use the same tactics and techniques for our online business…
