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VPNs are very high margin products (50% of revenue is cashflow, the author points out). But they suffer from higher churn rates than most SaaS businesses. Switc
by missedthecue 4y ago
VPNs are very high margin products (50% of revenue is cashflow, the author points out). But they suffer from higher churn rates than most SaaS businesses. Switching costs are essentially free, it's hard to differentiate your product from someone else's in a meaningful way, discounts and promos abound, and achieving any kind of lock-in is next to impossible.
Therefore, they advertise a lot. We here on HN probably get a lot of sampling bias because we are more likely to listen to tech related podcasts. If we listened to fashion podcasts, we'd hear different ads.
VPNs also have a unique problem where the people that really need their product don't have the facilities to subscribe to one. To illustrate this, most of the countries in Africa censor the web to varying degrees, but the credit card penetration rate on the continent is only at 4% right now. So VPNs have to advertise to the people who don't need VPNs, but can afford them. And that's why you hear them talking about how everyone at Starbucks is snooping on your web traffic as if https isn't 30 year old technology or hyping up their "military grade" encryption (i.e. AES-256 run of the mill stuff).
Source: I work for a VPN company.
- zwkrt 4y agoI particularly like the spin that the Youtube channel We're in Hell uses to advertise their VPN. Example: https://youtu.be/H_JQAx5uXB0?t=308 https://youtu.be/H_JQAx5uXB0?t=308 "You're still not sure if you are as cheap or as evil as you could be. That's where SurfShark comes in!"
- lloydatkinson 4y agoMany youtube videos not even aimed at tech audience are sponsored by node vpn
- piva00 4y agoI see VPN companies sponsoring YouTube videos with a segment in the video itself, it's not targeted ads, it's a literal 2 min segment inside an edited video.
- runnerup 4y agoThey choose which videos and content creators to sponsor. They're more likely to sponsor Linus Tech Tips or MKBHD than Christen Dominique's "Clean Girl On The Go Makeup Tutorial". That's still "targeting" certain demographics.
- missedthecue 4y agoRight. You'll see them sponsoring creators like Wendover Productions, Kurzgesagt and others. Not tech channels, but have a tech adjacent audience who are more likely to convert into customers than someone who doesn't know what VPN stands for.
- bakuninsbart 4y agoThe biggest actual market proposition for mainstream arguments is unlocking region locked content, so it isn't really 'techy' people that are targeted here, but younger consumers of international media.
- iancmceachern 4y agoYeah but that's mo different than choosing to advertise on this old house or another TV show. It's just advertising, not targeted.