Online Marketing Revenue Models

silverdollarI was recently invited to present in front of a panel at the Ultra Light Startups in January. I’ve been to these meetups in the past (ie Open Source CMS),  but this is one is different. I’ve been selected among 5 other presenters to the Revenue Model Workshop. At this event they selected 5 startups to give a brief presentation of their business, focusing on their revenue model. A panel of experts will provide insights, suggestions, and helpful alternatives for the entrepreneur to consider as methods to generate more revenue from their business more efficiently.

This is a great chance for me to learn how to monetize it RezRedo.com (advertisement to the left of this blog). VC Fred Wilson said on his blog, “Most web apps will be monetized with some kind of media model. Don’t think banner ads when I say that. Think of all the various ways that an audience that is paying attention to your service can be paid for by companies and people who want some of that attention.” The question is which model to choose?

Chris Anderson of Wired.com, put together a strong Media Business Model list of revenue models you can find in the media industry, all based around a core of free or almost-free content:

  • CPM ads (“cost per thousand views”; banner ads online and regular ads in print, TV and radio)
  • CPC ads (“cost per click”; think Google ads)
  • CPA ads (“cost per action”; pay only if the customer performs a certain action)
  • CPT ads (“cost per transaction”; you pay only if the customer brought to you from a media sites becomes a paying customer.)
  • Lead generation (you pay for qualified names of potential customers)
  • Subscription revenues
  • Affiliate revenues (think: Amazon Associates)
  • Rental of subscriber lists
  • Sale of information (selling data about users–aggregate/statistical or individual–to third parties)
  • Licensing of brand (people pay to use a media brand as implied endorsement)
  • Licensing of content (syndication)
  • Getting the users to create something of value for free and applying any of the above to monetize it. (Like Digg or our own Reddit)
  • Upgraded service/content (ed: aka “freemium”)
  • Alternate output (pdf; print/print-on-demand; customized Shared Book style; etc.)
  • Custom services/feeds
  • Live events
  • “Souvenirs”/”Merchandise”
  • Co-branded spinoff
  • Cost Per Install (popular with top Facebook apps who can help others get installs)
  • E-commerce (selling stuff directly on your website)
  • Sponsorships (ads of some sort that are sold based on time, not on the number of impressions)
  • Listings (paying a time based amount to list something like a job or real estate on your website)
  • Paid Inclusion (a form of CPC advertising where an advertiser pays to be included in a search result)
  • Streaming Audio Advertising (like radio advertising delivered in the audio stream after a certain amount of audio content has been delivered)
  • Streaming Video Advertising (like streaming audio but in video)
  • API Fees (charging third parties to access your API)

A lot of your revenue model choices depend on B2B vs. B2C. Some work for both, while others are particular to the type of regular transactions that will be taking place. At this point, I have narrowed down my choices based off of this list and I hope this helped you do the same.

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Posted under Events, Online Marketing, Social Networks, Ultra Light Startups, Viral Marketing

3 Comments so far

  1. Chris December 25, 2008 9:16 am

    I think you forgot SEO… Correct me if I wrong.

  2. RedRussak December 25, 2008 10:55 am

    Thanks for the comment Chris. SEO (Search Engine Optimization) is a form of improving search engine ranking in order to increase relevant traffic. It falls under marketing, an important factor in driving revenue b/c without page views, there’d be no money. Take your website, MakeItDigi.com, for example: Your revenue model is based on eCommerce. You need marketing to improve traffic and the likelihood of making a sale. SEO is just one of many forms of improving that process. For more info, feel free to contact me.

  3. Steve Fast December 31, 2008 4:46 pm

    Thanks for posting such a comprehensive list, all on one page.

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