There's More Than One Way to Make a Buck on The the Internet
By Brian Schraff (firstname.lastname@example.org)
Advertising banners may be the best-known way of bringing in revenue for Web sites, but there are other ways to build revenue streams while providing added value to Web site visitors. And most of the ways won't cost you a fortune.
Depending on the type of Web site you manage, there are several strategies you can employ to build customer return visits and add value to your current offering.
The Internet economy has rewritten much of the old rules of marketing and competitive relationships. New methods of distribution have prompted new breeds of sites that benefit from unique revenue stream strategies.
At their core, e-business marketing techniques serve to improve sales, create new revenue streams and bring in new business, while helping to drive return on investment for your Web site. Best of all, there are a variety of ways to add revenue generating content or functionality to your site, with little or no hard costs up front.
The goal of incorporating various revenue models, besides providing a means to grow and sustain your business, is to add valuable content and functionality as part of a robust site that retains viewers, produces long click streams and, most importantly, gives them an unmistakable reason to return. If it's a marketplace-based Web site, you have a great opportunity to increase the number and average dollar value of your transactions. It's a way to integrate functionality into your site, while spending less and providing viewers with value.
Let's take a look at some e-business revenue models and talk about how they may help your company achieve your e-business goals:
The merchant/webmaster charges a commission or fee for each transaction. Transaction fees are more likely imposed on those who use exchanges, multi-vendor catalogs and auction sites. See http://www.tiredex.com or http://www.centralxchange.com/ for examples.
Another way to generate transaction-based revenue is by acting as an Application Service Provider (ASP). ASPs are companies that lease computerized applications out to businesses from their own servers, creating new markets by selling to smaller companies that previously couldn't previously afford a licensed client/server application. Those clients are then able to open up new opportunities in their existing markets because they will have paid less for implementation.
Desktop.com is an example of an ASP provider. Desktop.com offers an Internet desktop (or Web page) that can be accessed on any computer connected to Web. The company hosts personal office software (Microsoft Office), as well as human resource, accounting and marketing programs. Individuals and companies pay a flat monthly fee to access the programs via the Internet. The value proposition to these visitors is not having to deal with upgrade fees and other hassles. What they will get is free technical support and the ability to add new applications with the click of a check box. Advertising Fees Advertising accounts for a large portion of business-to-business (B2B) e-business revenue. Advertising comes in the form of banner and showroom fees. But according to Goldman Sachs research, advertising driven revenue will eventually give way to more comprehensive models. For example, some e-markets have already begun to give away free storefront ads in order to pursue more robust revenue contributions from auction commissions and savings.
Ad serving technology, banner farm scheduling and administration, as well as the challenges of hiring, training and paying an effective sales force can be quite taxing on the revenue stream. The result is a diminished ROI.
Web site visitors or buyers/sellers are charged a fee for access to select information on the Web site.
Private labeling is one of the best and low-risk ways to generate revenue and add real value to your site. For example, a company like GoTo.com will allow you to wrap their data with your brand's look and feel. It will also allow visitors to go anywhere on your Web site. The plus side for this marketing endeavor is the search engine has an integral look on the site.
In exchange, the search engine provider pays the webmaster a transaction fee and the parties may also share ad revenue. The point of this is to draw traffic to your site by providing a feature unique to a marketplace. Another way to add data is to go to a competitor that has functionality or listings of interest to your users. You can also offer to have your users propagate their database with additional listings. The Web site database is likely to get additional information it would not otherwise have. The bottom line is that it may help keep your visitors glued to your site longer, rather than heading off to competitors' sites.
A fine example of private labeling can be seen on Nickelodeon's Web site. A Britannica.com search engine is built right into the children's Web site.
Another example is Tradeshow News Network, which has partnered with OnVia, ImproveMyBusiness, Business Marketing Magazine and a host of others, to provide a search engine for information on tradeshows.
An affiliate is a Web site producer that agrees to place merchant links on its Web site for selling a merchant's goods and/or services. For example, an affiliate will add a banner or text with specially coded links. These coded links, called tags, track visitors as they link to the merchant's site and navigate through it.
The webmaster benefits by expanding content on his site. For example, a webmaster could place a link to Amazon.com or Beyond.com and for every person who clicks though to the site, the webmaster is paid a commission. Merchants often offer flat-fee commissions for affiliate viewer actions such as completing a membership application or other types of forms. This is called a bounty and it also leverages your site's credibility as well as sales skills by offering a percentage of sale commissions on merchandise.
Some Web sites, particularly business-to-business (B2B) e-commerce marketplaces, may compile information based on information gathered on the Web site (while not giving away proprietary company information). Information could include market trends and regional demand. RateXchange.com is a metamediary that offers such research reports.
A webmaster can earn commissions by placing third-party services such as warranties, service contracts and technological support on his e-business site.
iCat.com offers e-business services for a monthly fee. But iCat.com also wants to partner with those who can proffer their services as a Commerce Service Provider–with an initial investment.
Implementation and Training Services
After a buyer makes a purchase, he may need help with installation or training. As a merchant, you could offer these services on your site. The buyer is charged a fee for each training course and you make a commission.
An example is Learn2.com. Learn2 offers online tutorials on topics such as desktop publishing and programming. The company recently signed a deal with AOL to provide multimedia educational content to its computing channel.
This list is by no means comprehensive. It serves as an a la carte menu of some ways to generate additional revenue from a Web site. You may find that some of the above revenue sources just aren't appropriate for your visitors. There are others not listed here that may be just the right fit for your site.
In talking with many business-to-business clients with Web site initiatives, we find that they have not yet created a comprehensive revenue and site functionality plan. Often, this means opportunity has gone unrecognized. Remember, having additional functionality that allows a visitor to find a third-party's assessment of fair market value increases confidence and produces more sales. A vertical community offering knowledge to the pulp and paper industry, for example, can enhance its overall value by offering a search engine that is indexed to find pulp and paper related answers first and list ``Pulp Fiction" related sites at the bottom of the relevancy list. This adds to the overall net worth of your company and creates a huge ROI for the overall value of the site.
Whatever you choose for your e-business Web site, make sure it is relevant for your customers and viewers. The last thing you want to do is include a revenue stream that offers no value to your site by increasing clutter and confusion. This may keep you from focusing on your mission and take away time that could be spent on quality improvements to your site.
Brian Schraff is president of Schraff Group, a fully integrated business agency with a successful 22-year history. The firm leverages its expertise in advertising, public relations, Internet application development and Internet business consulting to offer its clients truly integrated business and marketing support. Schraff Group is Orange County's leading firm for hot ramp Internet start-ups. Additional information can be accessed at http://www.schraff.com.
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