I often hear about great ideas to make a web site popular, ideas about driving traffic to the site, and indeed it is one of the beauties of Web 2.0 that there is a wide variety of popular sites each contributing to the great diversity of cyberspace.
I don’t very often hear much about the monetisation of a site. And unless you are blogging or running a web site for a bit of fun and as side hobby to your (well paid) day job, you need to generate revenue. For the self employed, time really is money.
But don’t be conned by the deceptively simple equation that more traffic equals more revenue. So many people I speak to concentrate on driving traffic and assume that a few Google ads carelessly run down the side bar will look after the revenue end of the business. The fact is that you need to put equal weight in your web strategy to traffic generation and monetisation.
I believe that we are in the early stages of monetisation, especially as far as it used by Web 2.0 sites. As we all collectively explore new business models and push the boundaries, we’ll find new ways that work.
At the moment there are generally three ways of generating regular revenue, all well known.
The most common, thanks above all to the slick process designed by Google, is advertising. But a site does need quite large volumes for advertising to make an impact but even then, there is a growing body of feedback that is showing what works and what doesn’t. (See following article)
Subscription, either at a fixed, regular rate, or a variable rate is probably the second most popular way of raising revenue. But as Rupert Murdoch demonstrated with his off/on again subscription debate when he took over Dow Jones and its Wall Street Journal web site, its often a fine judgment about which of advertising or subscription is the optimal route. Inevitably many sites try a bit of both. A key factor about subscription is that a subscriber needs to feel there is value available, because there’s a lot free stuff about. But some genres, like online dating, have made this model their own.
The third general approach to monetisation is earning commissions on transactions. The best example of this has been the phenomenal success of eBay. There are quite a few analysts who think this may be the biggest growth area, and who I am to argue.
I believe a key area to watch for new monetisation models is the social networking sector, the mySpaces and Facebooks etc, as they search around for new revenue generators.
Another sector to monitor will be the aggregator and mash-up sites. Some of these are technically excellent and popular – think del.icio.us, for example – yet have not settled on revenue generation models.
I suspect many of these social and mash up sites may be less popular if cluttered with advertising.
Of course there are other revenue generators already around, but you need deep pockets or understanding relatives, and have an appetite for risk. You can build and develop a site, promote it and work your online networking fingers to the bone, in the hope of generating a site that someone will want to buy, eventually. The success stories – think hotmail, mySpace, Facebook – are what keep the dream alive in millions of online hearts. I have been this route in my early days – when I was on a steep learning and the market was not as developed as it is today - with a tourism/backpacking-based site, but it was touch and go for much of that time, and to tell the truth, the eventual sale price probably meant I’d been working to $1 an hour. As the old song goes, wish I knew then, what I know now.
Finally, there is one revenue generator that makes you appreciate the finer side of cyberspace. There’ll always be spamers and site hackers, but there are people who donate for free services or software they like, when prompted (see following article). They don’t donate much on an individual basis, but quite a few sites generate some revenue through heaps of small donations.
For more information contact us.
Monetisation
