Tag Archive for: Business Model

Twitter Ads: Thoughts on the test

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Now, there has been a lot, a lot, a lot of thoughts and talk lately on how Twitter will be making money. Finally, Twitter is experimenting with a new revenue model as Techcrunch tells us…

First, it seemed like a nice idea to promote their own service (i.e. widgets and search), which I thought is the case. This well-placed add-on feature makes it easier to work with Twitter, especially heading towards their search site, when you are not using any of the helpful Twitter apps. And there were also some good thoughts on Twitter becoming a search engine and as how this will be a driver monetizing their business. But Overture (now controlled by Yahoo), has patented placement of text ads on a search results page. So, this was probably a difficult pitch.

Now, back to what is happening, see the black box on the right hand side on ‘Widget’…

It is obviously really a ‘simple’ test for some solid revenue stream generating business, we all are familiar with via Google text ads. But can this be an appropriate test to recall on revenue models?

The two test objects, Twitter search and the above mentioned Twitter widget link, belong directly to the Twitter concept. It offers some immediate navigation benefit to the user. This is what users are after for a long time. Thus, ‘Twitterati’ will click on the links and appreciate the easy way accessing their search service. So, the results Twitter sees with the test don’t reflect in any way potential click rates on text ads as these are dependent on results.

Isn’t there a difference if you promote some internal service or feature, or if you run a promotion from some external party or company? In my experience, in terms of text ads, and those generating results, we can definitely say, there is a huge difference on the click rates. Hence, on the conversion rate clients will find the difference as well. Editorial focus is not comparable to advertising, reaching out for awareness, right? And as clicks is the interactive currency ‘No. 1’ for marketers and convergence their need, according to yesterdays CMO report, the test sounds like comparing apples and oranges.

Spot On!
Nevertheless, the test is worth some thought. And just imagine Amazon and Twitter are getting engaged, the business model becomes clear based on some semantic web thoughts: connecting Amazon’s product catalog by connecting tweets and related products. Someone talks about a film and gets an offer from Amazon in the text ad. Or maybe Yahoo could be the new ‘Who is buying Twitter at last’ as they could compete in the long-tail market. In general, Google could finally face a competitor here…

Cost per User – the next digital currency?

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The discussion about the best advertising currency is long-lasting. It may never be ending. Still the discussion needs to be continued. The web publishing space had all the options on the table: cpm, cpi, cpc, cpl, cps and so on. And each and everyone of those failed in a way that makes all sides of the publishing and web value chain happy. The only currency that did not seriously come up as a currency ratio in media is cost per user (cpu) although every company follows this metric to evaluate their website costs.

Advertisers love to purchase ‘cheap’ quality space of extraordinary target groups. Platform owners need premium-price compensation models in order to provide high-quality content to their users. The users don’t care. Although they are the stumbling block, the center of attention, in this issue between platform providers and advertising clients. Now that web 2.0 and social media comes into the ‘cpx-game’, everyone gets a chance to rethink digital currency models. What is missing in this discussion is the cost per user model.

A Retrospect on Controlled Circulation
If we go way back to the beginning of this century, there was an interesting discussion about controlled circulation going on in the publishing industry. This discussion indicated that the best value of a medium is the registered or qualified user. Someone who gives away a lot of personal data in order to receive a medium for free. And there were numerous print magazines in the market that do and did controlled circulation. And today? There are hundreds of community-based business models on the web – all of these are to a huge degree controlled circulation orientated. Only a few of these businesses know about it, or see the premium value of controlled circulation media in this advertising space.

Now, what exactly is controlled circulation?
In a lot of meetings with clients, the question came up a thousand times when we explained our old community model. Controlled circulation is a distribution model, usually free of charge, for newspapers and magazines that wanted to have a deeper control of their target group. Thus, controlled circulation magazines offered the ideal targeting of the best quality audience for their advertisers. The benefit was quite obvious if we read the articles here and there. Advertisers spend more money for an ad in the controlled circulation arena than for the classical news-stand magazine. In booking controlled circulation media advertisers know in details what target group get for their money. This premium model could have been applicable to business models on the web. But only a few saw this option and took advantage of the ‘closed’ access door idea.

Why is controlled circulation a winner?
The big benefit of controlled circulation is that non-profit organizations audit the reader database of magazines or web platforms in terms of database quality and quality reach: for print BPA and for web platforms ABC Electronic. Both independent ‘controllers’ double-check in the means of the advertisers what kind of target group quality content providers ‘pretend’ to offer to the advertisers. Advertisers love the audits as there is some reliable data that marketers could show to their bosses or the management team after the sales people had captured the marketing-office for their sales pitches. It needs to be said that the audits were based on projections – only 10-20% of the total database really was tested, but still the quality check was much appreciated by the advertisers.

Controlled circulation and the modern web communities
The question is: Why did the controlled circulation discussion ‘die’? Why was it not carried on as an idea for a premium-priced advertising currency in the web world? Why did the focus on the high-profile individual user registration get lost when there was such a huge benefit for the advertising industry? Did it get killed alongside the top-valued personalization idea which got stepped down by the advertising cpm valuation? Maybe…

Nevertheless, in days where social media, social networking and community-building is exploding, is it not the right time to focus on the value of the registered user in terms of digital currency and critically scrutinize the ‘odd’ cpm valuation? Does not the individual need to be in the center of attention of the modern web 2.0 world? The modern web individual that communicates with companies. The one that reads, comments, blogs, publishes, networks, rates or reviews?

A vision
Just imagine there was a kind of database that all magazines and platform owner have to use who want to earn advertisign dollars. That database is held by a non-profit organization or the government. A system where all users unite, active and inactive web users. Every user could define their most interesting platforms and status of activity which would lead to a cost per user index for each online magazine or web platform, based on consumption intensity of the average user, social networking value of the active user and staying-time frequency of each individual. In the end, the combined data of the website generates a platform coefficient which leads to a cost per user. This is the cost that advertisers want to book, right?

Spot On!
In the modern social media world registration processes become daily business for users. If it was one database as described above, the users would be held responsible. They would be more careful on how to define access and care about their data. From day to day, users get more open minded about showing their data on other media including registering their preferences, interests and hobbies. And platform owners benefit from that. In the future, it will become a state of the art for publishing houses and digital platform owners to have their own web community visible on the side-bar for new visitors. This is a huge success for web platform owners. What could be a better reference if you can show your audience, visual and accessible for everyone with avatar picture that the users upload themselves? Bloggers already use this option to attract more interest. The single user will become the reference for each platform.

So, what if the best targeting measurement of a platform becomes the cost per user (cpu)? If we think about how connected (via Google, Facebook or Yahoo) these platforms are becoming and see all the website and social media metrics we could monitor, the question rises: Is there an option to standardize registration on web platforms and communities plus integrating all the generated data of these platforms into one non-profit system or organization which calculates a cost per user index based on targeting criteria like b2b or b2c and different demographic data? Is Cost per User the next digital currency? The discussion is yours…

The Social Globe – social networks become paid-content

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The challenge for social media will remain to find ways to monetize platforms best way. Now, facing Twitter, Facebook, MySpace, LinkedIn, or any other social- or business network there is probably nothing shorter than their best practice list on monetizing social media business. Still there is banner-, text- or link advertising as the prominent revenue stream. Nobody really finds the right turn for a profitable and successful revenue model.

Now, let’s take a wild ‘think-tank’ approach… Is a business model like the ‘Pay-Per-X’ Murdoch TV business models (i.e. Sky TV) a solution? A company which ties together or combines social networks to a bundle and offers those on a paid subscription basis?

When we started silicon nearly a decade ago as a closed b2b IT community (see picture), social media and web 2.0 did not even have a name or definition. In those days we thought about offering silicon as a paid subscriber community for IT and business decision makers. Obviously the idea was to make our investors and share holders happy ‘asap’ by monetizing the business modell best way. But web days were too young for such an approach, paid content was seen as ‘boo’ and we were fighting against old media that gave ad space away for free in order to save their ‘powerful-print-publisher-position’ in the market. Paid content models were not embraced with open arms by (business) user. The appearance of an evangelist was even worse in the user’s eye. Today every adolescent knows about online communities and their use is paid for by parents. They are about to accepted spending money with their credit card for their children networking.

Surprisingly enough, most of the leading social and business networks as well as any other communities don’t want to touch the monetizing issue ‘premium-subscriber’ or ‘paid communities’. In the past as well as today it is the art of financing social- and business networks not only by revenue streams coming from the classical (banner-) advertising or cpx model because for social networks as well as for any other business counts: profit is a liability. A critical business model is, if users just love but are not willing to pay for it. Nevertheless, investors and the providers need to re-finance the business and ideally make it profitable. Altruism is nice but in our modern common era it does not exist anymore, and in business never did.

So, what if social media platforms were only offered as a subscription model? Let’s give the responsible company the title: The Social Globe. The business area of this company would be defined with the following definition…

The Social Globe is the leading pay-social-media company. The business segment of The Social Globe relies on the credo that pay-social-networks can only be successful as a broad offer of high-quality and exclusive community content. Social networks on subscription basis is the main business of The Social Globe. Furthermore, The Social Globe offers its subscribers an attractive value of business communities, corporate networks, micro-blogging services and so on with the option to subscribe to single- as well as pay-per-use services. The company carries the open networking, markets the lineup of all social networks and provides a world-class service around the planet.

Facebook Connect could be the door opener for this kind of open marketing via The Social Globe for the users (and also solve some security issues). Whoever wants to use social networks in the future has to pay a certain mite per month and intensity of use. These subscriber packages are targeted to business or private user or as topic packages – nice portions with attractive subscription offers and reasonable offers, or as single use offers. Would the users pay one to ten EURO if the social or business network is useful for them? Probably…

If providers and investors of social media platforms want to see reasonable profits they need to make their users pay for the quality platforms they get offered – on a long-tail view, advertising and co-operations are too heavily depending on global and regional fluctuations of marketing budgets and the world-wide economic situation. If the financial situation for social media remains as it is today, a positive view of the future will be a distant prospect. XING did it right when taking 5 EURO from their premium-users – but no other social network seems to be following. OK, XING wanted money from their users from the very start… a clever move!

Nevertheless, other social networks do have to follow if they don’t want to run out of money and face a ‘internet-crash-reloaded’. A big user and interest database -and most of the social networks are nothing more and nothing less in most cases- is nice to have but somebody has to pay for the efforts the providers are offering. Otherwise these business models are worthless, or let’s say, not really of value.

The saying “Free things always hurt!” has it’s rights. The power user will be paying, the ‘normal user’ needs to be made visible that there is a surplus value in social networks. Then this user will be paying as well – or this person will not be of real value for providing the platform. And if ‘word-of-mouth’ marketing works, then friends and peers will be getting this normal user to pay who once unsubscribed as of financial reasons. As this person will not be able to follow the offline conversation if he is not part of the online community. These people will become unpopular, or not…?

Spot On!
The surplus value of a subscriber model for social media platforms is huge and the ‘funding’ as well as the ‘revenue increase’ as well. What value do 140 million users have if the business model will not be flying in the sense of incoming revenues. If The Social Globe just turns 30% of the users of this social network to paid users the providers have 40 mio. EURO more to elaborate an even more powerful platform. Ad and newsletter formats would continue to serve as additional revenue streams but not as the only and leading ones. The Social Globe could tie all together and split revenues according to traffic.

Just utopia or is ‘The Social Globe’ a viable vision?

The Social Globe: Social Media als bezahlter Abo-Dienst?

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Auch wenn wir jetzt eine aussagekräftige Studie zu Erfolgsfaktoren in Social Networks haben, bleibt das Thema Monetarisierung von Social Media weiterhin ein schwieriges Businessthema. Egal ob Twitter, Facebook, MySpace, LinkedIn, StudiVZ oder welches Social- oder Business Netzwerk auch immer – so richtig hat noch niemand den Dreh für eine erfolgreiche Monetarisierung der Social Media Modelle gefunden. Nun wollen wir mal einen ‘wilden’ Denkanstoß wagen: Ist ein Modell à la Premiere, Kabel Deutschland oder Sky TV auch für die Social Media Welt in Form einer Netzwerk-Betreiber-Gesellschaft denkbar, die Social Media Abo-Dienste bündelt und anbietet?

Als wir mit silicon.de (damals eine geschlossene B2B-IT Community – siehe Bild) vor acht Jahren an den Start gingen, hatte Social Media und Web 2.0 noch nicht einmal einen Namen. Wir haben damals über ein kostenpflichtiges Angebot für IT-Professionals und Business-Entscheider nachgedacht, um die Monetarisierung im Sinne der Shareholder anzukurbeln. Damals wäre ein solcher Vorschlag undenkbar gewesen (Evangelist hin oder her) und die technischen Voraussetzungen hätten die Maßnahmen nicht erlaubt. Heute kennt und nutzt jeder Halbwüchsige Communities und die Bezahlung für Mehrwertdienste in Kinder-Communities ist teilweise schon im Vorschulalter durch die Eltern akzeptiert.

Dennoch machen die meisten führenden Social- und Business Networks sowie Communities noch keine Anstalten über eine Abo-Monetarisierung nachzudenken. Die Kunst und die Kür für Social- und als Business Netzwerk Plattform damals wie heute ist, sich als Businessmodelle erfolgreich nicht nur über ‘Werbe Revenue-Streams’ zu finanzieren. Denn auch für Social Media gilt: Profitabilität ist die Pflicht. Was die User nur gut aber nicht bezahlenswert finden, muss sich dennoch für Investoren und die Betreiber refinanzieren- und idealerweise ‘profitabilisieren. Nästenliebe gibt es in der modernen Zeitrechnung der Wirtschaft nicht mehr, und gab es früher auch nicht.

Was wäre also, wenn man die Social Media Plattformen als Abo-Dienst anbieten würde? Nennen wir die verantwortliche Firma mal: The Social Globe. Das Geschäftsfeld des Unternehmens würde sich dann vielleicht so lesen…

“The Social Globe ist das führende Pay-Social Media-Unternehmen. Das Geschäftsmodell von The Social Globe beruht auf der Überzeugung, daß Pay-Social Networks nur als breit gefächertes Angebot aus hochwertigen und exklusiven Communityinhalten erfolgreich ist. Social Networks zum Abonnieren ist dabei das Kerngeschäft von The Social Globe. Zusätzlich bietet das Unternehmen seinen Abonnenten attraktive Business-Communities, Social Communities, Corporate Networks, Micro-Blogging Dienste mit der Option zur Einzelbestellung im Pay-per-Use-Verfahren auf Abruf an. Das Unternehmen betreibt die offene Vernetzung, vermarktet die Palette aller Social Networks und sorgt für einen umfassenden Service rund um die Welt von Social Media.”

Facebook Connect liefert die Vorlage für die offene Vermarktung durch The Social Globe an die Kunden. Wer zukünftig die Plattformen nutzen will, zahlt einen Obolus pro Plattform und Nutzungsintensität. Diese Abo-Pakete sind für Businessuser und Privatpersonen ausgerichtet oder eben als Kombipaket – schön portioniert mit attraktive Abonnements zu sinnvollen Angeboten oder eben als Einzelangebot nutzbar. Für ein bis zu zehn EUR pro Plattform im Monat zahlen die User bestimmt, wenn das Social- oder Business Network für den User einen wahren Nutzen hat. Oder nicht…?

Wollen die Anbieter und Investoren von Social Media Plattformen irgendwann mal mit einem vernünftigen Gewinn dastehen, müssen sie den User an das Bezahlen gewöhnen – nur Werbung und Kooperationen ist langfristig immer wieder zu starken Schwankungen der globalen sowie regionalen Marketingbudget-Zuteilung in Unternehmen und der generellen Wirtschaftslage ausgesetzt. Eine positive Zukunftsaussicht bleibt so für Communitybetreiber in weiter Ferne. XING hat es richtig vorgemacht, aber irgendwie zieht keiner nach. OK, XING hat es von Anfang an gemacht, ein weiser Schachzug…!

Andere Social Media Anbieter müssen dennoch nachziehen, wenn das Geld irgendwann nicht ausgehen soll. Eine große User- und Interessen-Datenbank -und mehr ist eine Social Media Plattform heute in den meisten Fällen nicht- ist schön, aber es muss auch jemand dafür zahlen wollen, sonst ist sie wertlos bzw. nur bedingt wertvoll.

Der Satz ‘Was nichts kostet, ist nichts Wert’ hat schon sein Berechtigung. Der Poweruser wird zahlen, dem ‘normalen Nutzer’ muss der Mehrwert nahegebracht werden. Dann zahlt auch dieser… und sonst ist er auch nichts wert für die Plattform. Und wenn ‘Word-Of-Mouth’ Marketing funktioniert, werden die Freunde, Bekannten oder Peers denjenigen schon zum Zahlen bewegen, der mal aus den Networks ausgetreten ist aus finanziellem Grund. Denn irgendwann wird derjenige in der Offline-Community nicht mehr mitreden können.

Spot On!
Der Mehrwert eines ‘bezahlten Abo-Dienstes’ für die Social Media Plattformanbieter wäre immens und die Finanzierung der Plattform sowie die Umsatzsteigerung ebenso. Und was nützen 140 Mio User, die die Kuh nicht zum Fliegen bringen? Zahlt The Social Globe nur einen EURO pro User an eine Social Media Plattform aus, so wären das bei 30% Powerusern über 40 Mio. EURO Mehrumsatz. Banner- und Newsletterformate würden weiterhin als klassische Umsatzquelle dienen und ebenso vermarktet werden durch The Social Globe.

Alles Utopie oder ist die Vision ‘The Social Globe’ denkbar?

News Update – Best of the Day

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– Niemand will 404-Seiten sehen, schon gar nicht im Business. Wer aber kreativ ist, kann damit auch sein Business-Image aufpolieren. Und jede Wette, dass Sie die nachfolgenden 404’s sehen wollen…?

Unter einer herrlichen Liste lustiger 404 Seiten… nehmen wir zwei heraus und danken dem Kollegen, der die North Face 404 an uns weitergab – ergibt wiedermal 3 ‘Top 404’.

– European Interactive Advertising Association (EIAA) bringt Neuigkeiten zur europäischen Online-Nutzung in aktueller Studie: Online wird ein Teil des täglichen Lifestyles. Aus Perspektive des Business interessant…

“When researching or considering a product or service, 64% of European internet users consider personal recommendations important, with websites of well-known brands (49%) and both online customer (46%) and expert (45%) reviews following closely, showing that internet users are increasingly using both online as well as personal recommendations to make purchase decisions.”

– Das Monetarisierungsproblem hat Twitter kürzlich noch den Verkauf an Facebook gekostet. Nun reagiert der CEO des Micro-Blogging Dienstes, Evan Williams, und tritt die PR-Maschine los. Doch über die Monetarisierungs-Strategie lässt er nichts raus – nur, daß bald Umsätze fließen sollen. Zu lesen auf CNET, wo die Leser 11 Business Modelle voten können.