1. Business plan of the site. Short Investment Memorandum
The goal of the project is to create a city site on the CitySites platform.
CitySites is an Internet portal with complete and up-to-date information about the life of the city. The content published on the portal is interesting to all its residents aged from 20 to 45 years, which ensures constant high traffic and makes the site in demand among advertisers.
Internet advertising is currently in second place in terms of market share in the market as a whole and demonstrates positive growth dynamics, unlike other segments of the advertising market.
The main source of income CitySites – selling ads on the site.
List of promotional products:
- Advertising Articles
- Banner advertising
- Placement of the company in the directory of enterprises
When working with client-advertisers, an integrated approach is used that distinguishes the CitySites project from competitors – local news sites and similar Internet portals of the city, whose offers are limited to banner advertising and advertising articles.
To promote the project among the residents of the city, various partner and barter programs, online and offline campaigns are used.
The launch of the project and the full preparation of the media portal will take 35-40 days.
For the further functioning of the project it is necessary to recruit staff in the following positions:
- Project Manager,
- journalists,
- editor,
- sales managers.
Initial investment in the launch of the project will average 615,400 rubles.
Net profit for the first 12 months will be 526,940 rubles.
2. On what topic to create a website?
Description of business, product or service
CitySites is one of the largest Internet projects working on the Internet advertising market, which claims to be the number one in the segment of regional Internet advertising.
The first site of the company appeared in 2006 in Ukraine, and in 4 years there was a franchising development direction, after which the company’s branches began to appear not only in Ukraine, but also in Russia, Belarus and Kazakhstan. To achieve such successes, the company was successful thanks to the right niche.
The CitySites concept is a city site. CitySites positions itself as an Internet resource with the most complete information about the life of the city. Therefore, all content is aimed only at its inhabitants, thereby creating always a sufficiently interesting advertisers regional traffic.
Such projects are interesting and accessible to a fairly wide audience of Internet users, first, due to the high dynamics of the development of the Internet, and secondly, a clear and accessible concept. The advantages of CitySites over other direct and indirect competitors in the advertising market is independence from circulation, as in the print media, for example, and the absence of territorial boundaries, since the main language of the CitySites project is Russian, which makes sites accessible to the entire post-Soviet space.
The target audience of the site are young, active Internet users aged 20-45. Since quality and interesting content is claimed by both women and men, the share of female and male audiences is not disproportionate and almost identical.
Business with CitySites assumes opening in the city of a site on system of franchising.
With the competent use of the tools provided by CitySites to its partners, and following the developed and proven eight-year business model, the city’s website can become «Internet Media No. 1» as soon as possible, bringing the franchisee the degree of influence in the city of presence, as well as a permanent source of income.
Sources of income
Source of income – sale of advertising.
Each partner has a «bundle» of promotional products developed by CitySites. The main ones are paid packages of the directory of enterprises, banner advertising and advertising articles.
Advertising Articles
News advertising is a great way to bring information to a potential buyer, the opportunity to position the brand and goods, according to the goals of the advertising company.
Advantages of news advertising:
- Positioning of the client brand.
- The article can be illustrated with photos and video materials, and also contain a link to the client’s official website.
- The article remains in the archive forever.
- Hidden marketing.
- Advertising articles are displayed in the «News» and «Main» section of the non-profit news on the site. Thus, the client will be able not only to tell about himself to thousands of potential customers.
- A lively response to the proposal in the form of comments.
Banner advertising
Banner advertising is an animated advertising picture with information about the client’s company, when clicked on, the user goes to the client’s official website.
The goal of the banner is to attract potential customers and increase brand recognition and popularity through visualization and «selling» text.
Banner advertising is needed to notify a wide audience about the actions, goods and services of the client’s company and attract potential customers, for additional PR and information.
Advantages of banner advertising:
- Image advertising,
- Attracting a wide audience in a short time,
- Receiving an immediate response for a client’s announcement,
- Providing clicks and impressions to the customer,
- Efficiency of making corrections in the advertising layout,
- Increase traffic to the client’s site,
- Obtaining a targeted audience.
Placement of the company in the directory of enterprises
The service of placing information in the directory of enterprises on the city site CitySites enables the client to use advertising packages as a direct sales tool (online storefront / online store), while providing full information about his company. Accommodation packages provide views only to the target audience. Subject links will raise the client’s site in search engines. And when registering for the Premium package, the client automatically reserves the place of the flagship company in its segment, among the companies that are already located on the City’s website.
Accommodation in the directory of enterprises is a «package» service. The client can choose the advertising package «Standard», «Suite» and «Premium». From the selected package depends on the reach of the audience.
Placed in a paid package of the directory of enterprises, the client company also automatically enters the mobile application of the city site to the priority position. This will allow the client to receive additional returns from a quality, solvent audience, while potential buyers are always at hand – literally in one click.
Advantages of placing in the directory of enterprises:
- Getting the target audience,
- The possibility of online sales of goods and services of the client,
- Getting your own site in a certain city on your own subdomain,
- An increase in the reference mass,
- Saving time on the promotion of goods and services of the client,
- The thematic link from the trust site («Site of the city») promotes the client’s main site in search engines on the query «word» + «city».
There are also additional products that are used in combination with the main ones, to increase the return on placement. In other words, on the city site there is an opportunity to hold an advertising campaign for each client.
3. The Internet advertising market in Russia
Description of the market
According to analysts, in 2012 the volume of the advertising market was estimated at 8.76 billion dollars, while in 2013 it more than doubled. In 2014, he could eventually reach $ 31.45 billion, 75% more than a year ago, and make up almost a quarter of the total digital advertising market, and by 2018 reach $ 94.9 billion, predicts in eMarketer. However, the growth rate of the market will inevitably decline – from almost 120% in 2012 to 22% in 2018.
The Association of Communication Agencies of Russia (ACAR) estimated that in the first quarter of 2014 the Russian advertising market grew by 9% to 77 billion rubles. without VAT. At the same time, the entire segment, apart from advertising in print media, has demonstrated growth.
The Internet became the second (after television advertising) in terms of the size of the advertising market segment: its volume in the first quarter grew by 25% – to 16.6 billion rubles.
Evolution of advertising in the main market segments
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The table shows the market share for each segment in billions of rubles. The Internet is also divided into a display and context.
| Segments of the market | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 |
| TV | 95.90 | 117.71 | 96.36 | 110.80 | 131.00 | 143.20 | 156.20 |
| the Internet | 12.70 | 14.91 | 17.80 | 26.76 | 41.80 | 56.30 | 71.70 |
| Display | 5.70 | 6.27 | 7.51 | 10.50 | 15.30 | 17.90 | 20.10 |
| Context | 7.00 | 8.64 | 10.29 | 16.26 | 26.50 | 38.40 | 51.60 |
| Press | 55.90 | 63.81 | 35.59 | 38.00 | 40.00 | 41.20 | 37.00 |
| Outdoor advertising | 33.64 | 38.81 | 23.14 | 29.70 | 34.40 | 37.70 | 40.70 |
| Radio | 13.60 | 12.71 | 8.94 | 10.30 | 11.80 | 14.60 | 16.50 |
| Other Media | 2.00 | 2.71 | 2.20 | 3.10 | 4.10 | 4.90 | 5.70 |
| Entire market | 213.74 | 250.67 | 184.07 | 218.66 | 263.40 | 297.90 | 327.80 |
| Segments of the market | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
| TV | 45% | 47% | 52% | 51% | 50% | 48% | 48% | 48% |
| the Internet | 6% | 6% | 10% | 12% | 16% | 19% | 22% | 25% |
| Display | 3% | 3% | 4% | 5% | 6% | 6% | 6% | 7% |
| Context | 3% | 3% | 6% | 7% | 10% | 13% | 16% | 18% |
| Press | 26% | 25% | 19% | 17% | 15% | 14% | eleven% | 9% |
| Outdoor advertising | 16% | 15% | 13% | 15% | 13% | 13% | 12% | eleven% |
| Radio | 6% | 5% | 5% | 5% | 4% | 5% | 5% | 5% |
| Other Media | 1% | 1% | 1% | 1% | 2% | 2% | 2% | 2% |
| Entire market | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
2008 – the Internet – the only one did not reduce the growth / share in the ice age.
2009 – 2013 – the Internet «eats up» the audience and the budgets of the press.
2013 – 2014 – on outdoor advertising «a meteorite fell.» Part of the budget went to the Internet.
2009 – 2014 – the share of the Internet increases («ate» the market of newspaper ads)
2013 – video advertising on the Internet begins to compete with the TV market.
2014 – the share of Internet advertising reaches 25% of the advertising market in Russia.
4. Website Marketing
Sales and marketing
Throughout the life of the company, one of the main topics for discussion is the content of the site, how to make it unique and fresh?
First of all, do not forget that the project is an Internet media and a priori can not give originality of content in the city in relation to other sources, but it is necessary to try to conduct a comprehensive search for content. For this purpose, CitySites developed a stylebook for journalists, this guide allows you to create information guides yourself and find new interesting topics for writing articles.
The competitors of the CitySites site project in a single city are local news portals that attract traffic due to news feed. Many are afraid of competitors, but practice shows that launching a project in a formed market allows you to quickly develop the project and bring it to payback.
This happens for the following reasons:
- The inhabitants of the city are accustomed to the portals, all they need is a new and fresh project that will be convenient and accessible in any place.
- Advertisers have already been placed on such resources or at least received a proposal for placement.
- Often, we are faced with a situation in which local players offer only a few types of advertising, and they have to share one client with each other, this is the result of «cloning» the project based on the competitor’s model, which was the first one on the market.
Earlier it was mentioned that the approach to advertisers is complex, and offers are not limited to banner advertising or articles.
The target audience of clients is small and medium business in the city. To facilitate the search and work with potential customers, our department collects and pours for each project the base of enterprises when starting projects, and in the future, franchise managers work with this database.
To promote the project, various online and offline advertising programs are used.
For online promotion, partner programs and barter work have been developed.
In offline mode, the advertising company of the site itself and its sections are initially launched, mobile applications are advertised following it. The CitySites company develops an advertising company (source codes) individually for each franchisee. Placement of advertising in the city is conducted on the same basis for barter, which saves investment.
5. Creating a site from scratch
Production plan
Seasonality of the project is absent. The launch of the project takes 35-40 days from the moment of signing the contract.
After buying a CitySites franchise, signing a contract, transferring funds to a company account and selecting a domain name for a city site, preparation of a media portal begins. The site is prepared within 30-40 days, the necessary sections are filled in, the site is transferred to the owner, from the moment of transfer the site owner starts paying the monthly payment, after the site is filled in all sections, a mobile application is developed for 2 platforms-Android and iOS.
When starting a project, it is first of all necessary to decide whether the business owner will directly participate in the project or instead, the hired manager will manage the processes, and the entrepreneur will only manage the system.
In addition, in the first month of work, it is necessary to find an office space for rent, to purchase the necessary furniture, office equipment and office.
After this, it is necessary to start recruiting and hiring staff.
6. Employees for the site
Organizational structure
The staff includes:
- The project manager (this can be both an employee and an owner),
- journalist and editor (depending on the city’s population, the number of employees may vary),
- sales managers (at least 5 people) regardless of the city’s population. This is due to the high turnover of personnel at the initial stages of the project, the explanation of the number of managers is described in more detail in the business model.
7. How much does it cost to open a website
Financial plan
Initial investment in the launch of the project will average 615,400 rubles.
An example of calculating the initial investment for an office is 58 sq.m. with 14 employees
| Object of expenditure | Cost, rub. | Number of | Total, rubles. |
|---|---|---|---|
| Furniture, office equipment, office supplies | 30 000 | 14 | 420 000 |
| Rent office | 650 | 58 | 75 400 |
| All-inclusive payment | 120,000 | ||
| Total | 615 400 |
Monthly expenses
In the future, the main part of the running costs will be connected primarily with the salary fund.
The structure of expenses in the first and second month of work:
| Object of expenditure | Amount, rub. | Number of | Total, rubles. |
| Journalist’s ZP | 20,000 | 2 | 40,000 |
| ЗП manager | 10,000 | eleven | 110,000 |
| ЗП the head | 30 000 | 1 | 30 000 |
| Rent office | 650 | 58 | 37 700 |
| Total: | 217,770 |
The structure of expenses starting from the third month of work:
| Object of expenditure | Amount, rub. | Number of | Total, rubles. |
| Journalist’s ZP | 20,000 | 2 | 40,000 |
| ЗП manager | 10,000 | eleven | 110,000 |
| ЗП the head | 30 000. | 1 | 30 000 |
| Rent office | 650 | 58 | 37 700 |
| Royalties | 60,000 | ||
| Total: | 217,770 |
Annual turnover of a site in a city of 1 000 000 population
| January | February | March | April | May | June | |
| Manager Sales Plan | 0 | 15,000 | 20,000 | 20,000 | 30 000 | 40,000 |
| Sales Manager | 0 | 15,000 | 15,000 | 20,000 | 30 000 | 40,000 |
| Qty. managers | 0 | 12 | 12 | 12 | 12 | 12 |
| Income | 0 | 180,000 | 180,000 | 240,000 | 380,000 | 480 000 |
| ЗП manager | 0 | 110,000 | 110,000 | 110,000 | 110,000 | 110,000 |
| % of the manager | 0 | 18,000 | 18,000 | 24,000 | 36,000 | 48 000 |
| ЗП the head | 20,000 | 30 000 | 20,000 | 30 000 | 30 000 | 30 000 |
| Royalties | 0 | 0 | 60,000 | 60,000 | 60,000 | 60,000 |
| Journalist’s ZP | 20,000 | 40,000 | 40,000 | 40,000 | 40,000 | |
| Rent office | 37 700 | 37 700 | 37 700 | 37 700 | 37 700 | |
| Profit | – 635,400 | -35,700 | -105,700 | -61,700 | 46 300 | 154 300 |
| % of the manager | 6,945 | 23 145 | ||||
| Net profit | – 635,400 | -35,700 | -105,700 | -61,700 | 39,355 | 131 155 |
| Net profit for 6 months | – 667,990 |
| July | August | September | October | November | December | |
| Manager Sales Plan | 40,000 | 40,000 | 50,000 | 55,000 | 60,000 | 65,000 |
| Sales Manager | 40,000 | 35,000 | 50,000 | 55,000 | 60,000 | 65,000 |
| Qty. managers | 12 | 12 | 12 | 12 | 12 | 12 |
| Income | 480 000 | 420 000 | 600,000 | 660 000 | 720,000 | 780 000 |
| ЗП manager | 110,000 | 110,000 | 110,000 | 110,000 | 110,000 | 110,000 |
| % of the manager | 72,000 | 63 000 | 90 000 | 99,000 | 108,000 | 156 000 |
| ЗП the head | 30 000 | 30 000 | 30 000 | 30 000 | 30 000 | 30 000 |
| Royalties | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 |
| Journalist’s ZP | 40,000 | 40,000 | 40,000 | 40,000 | 40,000 | 40,000 |
| Rent office | 37 700 | 37 700 | 37 700 | 37 700 | 37 700 | 37 700 |
| Profit | 130 300 | 79 300 | 232 300 | 283 300 | 334 300 | 346 300 |
| % of the manager | 19,545 | AND 895 | 34 845 | 42,495 | 50 145 | 51 945 |
| Net profit | 110,755 | 67 405 | 197 455 | 240,805 | 284 155 | 294 355 |
| Net profit for 12 months | 526,940 |
The amount of investment may be less if the site went to the breakeven point earlier than the sixth month of work.
8. Risk factors
Several factors can be classified as risk factors:
- Lack of investment when the project is launched (the investment package is described in business plans that is provided to its partners by CitySites), but also the investments are calculated individually, starting from the initial data of the new franchisee.
- Avoiding the proposed strategy and business model, the desire to «reinvent the wheel», the franchise implies a clear compliance with all the recommendations of the curator and clear work on the business model.
The most basic risk and, at the same time, the guarantee of CitySites business is the strict adherence to the business model that the partner transfers to the partner. It takes into account all the nuances and strategies of running this business and it is aimed at making a profit by the partner in the shortest possible time. The deviation from it can lead to the fact that the business will develop longer than the specified deadlines.
