Customers AND content drive revenue growth for platform companies
Successful platform companies deliver explosive, sustained customer growth on a global scale. This customer growth draws high valuations as platform company investors typically focus on customer measures such as user growth, engagement per user and revenue per user.
Often valuation models estimate likely attrition and engagement over time to arrive at the lifetime value of an average customer. But volume and quality of content are also crucial to platform company success—and are often overlooked as a valuation metric. Companies typically see an accompanying growth in content under management that even eclipses customer growth.
Evaluating the lifetime value of content
The net value of content is a function of four levers: the quality of the content in the inventory, the costs associated with managing it, the utility that the platform drives from the content and the speed with which it is published. In order to maximize value, platform companies need to manage all four levers simultaneously, recognizing that the operational imperatives within each one varies.
Toward a tiered approach to content management
The four-lever equation provides perspective on ways to maximize the overall content value on the platform. But, platform companies need to recognize one more aspect to take this to the next level: just as customers are not equal, neither is content.
Some content—either a content type, or from a particular source, or on a particular topic—drives inherently more utility on their platform. If the other value levers can be managed successfully, then that content will, by definition, be more valuable. Said another way, every platform will have a segment of highly valuable, engaged users. It will also have a sub-set of highly valuable, engaging content.
Going forward: Managing the lifetime value of both content and customers
How platform companies should take action on their content value levers is a function of where they are with their content operations. If it is clear that one or more levers of content value are deficient, that is a clear place to focus. If it is not clear how the platform is operating across the four levers, an assessment could provide a roadmap for improvement. Finally, if content operations are mature, it may be time to try to understand the differential value of the platform’s content and build a strategy for segmenting and prioritizing content to maximize its lifetime value.