Estimate the ad revenue of a photo sharing social media app.

Estimate the ad revenue of a photo sharing app/social media

• How many DAUs  does this app have?  1 billion
• Which country do the majority of the users live in (ad prices vary by geo) - 40% developed / 60% emerging
• Is this app in growth stage or mature stage - Mature
• What timeframe revenue do we want to compute = Annual
• What type of ad model is used on the app = CPM / CPC / CPA ? - CPM = 70%, CPA = 30%, No CPC

Approach

Revenue = Number of Impressions * Avg price per ad unit

Number of impressions 

DAUs = 1 billion

Number of posts scrolled / user per day = 30 

Total Ad load  = 1 per 5 posts  = 6 ads per user per day = 6 billion ads/day =  2 trillion ads per year 

Ads volume

• Developed  = 800 billion / years
  • CPM 
    • Volume = 600 billion
    • CPM Price = 5$
    • Revenue = 600 bn / 1000 * 5  = 3 billion
  • CPA
    • Volume = 200 billion 
    • Conversion rate = 2% = 4 billion
    • CPA Price = 10
    • Revenue =  40 billion
• Emerging = 1200 billion / year
  • CPM 
    • Volume = 800 billion
    • CPM Price = 2$
    • Revenue = 1.6 billion
  • CPA
    • Volume = 400 billion
    • Conversion rate = 1% = 4 billion
    • CPA Price = 3
    • Revenue = 12 billion

Total Revenue = 3 + 40 + 1.6 + 12   =  55 billion 

This seems in the ball park as FB annual revenue is around 100 billion with 3 billion MAUs and a smaller number of DAUs.