How to make money in web2.0

In answer to Aljosa Japundzic’s post about how to monetize a web2.0 service, here my small reply. Of course you can go for the old school ad-model, or even try to sell your data for marketing use. But there is also a third option: the pro account. I translated a post I made a while ago about how Google could make money with YouTube by creating ProTube.

I was originally inspired by the book “Information Rules” from 1999 that explains how you could give away free software and still make a buck by creating a pro version. I shall write down six strategies that can easily be blended or broken in smaller pieces, and end with an example for the ProTube case.

More Options
This one can be found, for example, by Flickr or LinkedIn. Those who pay have an easier way of browsing and working with the site than those who don’t.

Quantity / Quality
Also a Flickr option (but also found on Live Mail and Gmail), those who pay have more storage, or can use a higher quality version of your product.

Speed
Sometimes the case, pro users can download and upload files at a higher speed. Or if it's still the case, can access the version of your site that is hosted on a faster server.

Delay
Users who pay can first use your lab and beta features, and can get a higher degree in involvement.

Annoy
Although it sounds a bit rude, this is what a lot of sites use - annoy the non paying visitors with advertisements, and let the pro-users work ad free.

Support
And the last example, one from the old world, gives support to you users; gives them the possibility to be in contact with a real human. Make them feel you still care.

The ProTube case
Although it seems now that Google is going for the add revenue model for YouTube, it isn’t that hard to imagine how they could make money by selling pro-accounts.

• Pro users can edit their videos, and can upload several videos a day.
• Pro users can watch all videos in high quality and can download them in several formats.
• Features from the lab are first given to the pro users.
• Pro users don’t have to watch advertisements.
• Questions of pro users will be answered by humans in a reasonable time.

I have a strong feeling that the people behind Flickr knew all those ideas, and combined them to build a great photo site. Which is still the only web service where I bought a pro-account. So next time you try to finance your project with Google ads, think about the alternative.

This is the first post of Sjors Timmer, who recently graduated as a Master in European Media and is working for an exciting web start-up and blogs for several websites.

Using TV to unlock the power of the web

Back in the mid-nineties the online marketing industry’s research agenda was all about how online could build brands, proving that the exposure to banners worked in a way comparable to press or outdoor. Did banners build brands? Yes. At the time, the research was revolutionary, uncovering a mathematical certainty and a truth of this new media channel for the very first time. Fast-forward to today and it’s about the brand building power of all media; mashed up together in a new diet of consumer behaviour, what should the advertiser’s mix be? Where exactly does online fit?

When i-Level teamed up with Yahoo and Hitwise at the end of last year to look at the new mix of media, their insights were rich and deep. They were digging into the relationship between TV and the web, and how marketing activity on TV triggered an uplift in searched online.

First up some of the basics were proved: online was “a highly effective medium for driving brand awareness and message association,” explained i-Level’s Amanda Davie at the IAB Europe Leadership Council in London today.

Next it went further, confirming that the combination of online and offline delivers the best yield and drives better awareness. It then examined the way that on-air mentions of the Sky brand drove immediate searches and web activity. Back in the late nineties Yahoo stumbled on this and created their ‘Buzz Index’ to gauge how popular a brand was so it’s no surprise they were one of the three partners behind this piece.

This collection of research studies, which included the Sky television network, looked at the behaviour of experienced online advertisers. Sky already put in 11% of their overall advertising budget into online, and the AA motoring breakdown service put 14% of their spend into online. By helping experienced online advertisers improve their media mix, this also reveals the reality that ‘best practice’ is still evolving.

“In the search marketing industry we’re still in our infancy”, explains Davie, “and much of the research we all use comes from the US. But here in Europe there’s a difference in the media mix and what we were trying to do was learn about how search could work with classic media advertising.”

Most revealing of all according to Davie was that “TV advertising can change the way the media mix works, often reducing the cost of other media”. As an agency, i-Level are clear that this work fundamentally changed their advertisers’ use of each media channel.

Two of the often cited powers of online advertising are measurability and accountability. But here with ‘search’, the data can actually be used to measure the impact of other media spends within the media mix. The studies tell us lots about the way people use media today, sliding seamlessly from one channel to another. The challenge many media planners still face is that they are not tracking the activity a campaign creates when that activity is in a different channel.

For experienced online advertisers this will be a familiar story, but for many marketers, understanding the relationship between the media channels urgently needs more attention. Audiences have shifted, new marketing channels have leapt into the mainstream, the strategic media is ripe for radical reassessment, yet many campaigns begin by dusting off the previous plan and applying only minor changes. With audience behaviours changing on the vast scale that they are, this approach prevents the planner from being able to address the real picture.

Takeouts:
• Point 1: Online builds brands
• Point 2: Online and TV together build brands more effectively
• Point 3: Understand the precise role of each channel and you can completely change the mechanics of your campaign

Need more? Contact your national IAB for more research studies or Yahoo, Hitwise and i-Level for more about this.

How big are we really?

Alain already wrote about this, but this week has been a very busy one for me and especially my team as we struggle to gather all the data necessary to answer a simple question. How big is this industry?

The question is of course a simple one and the answer should be too. But the path to this answer is a very difficult one. And not just because gathering the data in itself is a slow process. But there are a lot of things that need to be answered before that in order to get the right data. Let me just start with the first one. NET or GROSS.

Well in fact the question is not so Shakespeare-ian. The right question is: Net, Gross, Gross with volume discounts (or Gross Gross as we like to call it), Rate Card , and so on?. The fact is that different countries use different methodologies to establish the value of a market. And this is of course a big obstacle in trying to set a common denominator for the adspend across Europe. So there is not other way to set the market for the whole Europe but to try to estimate the differences between gross and net.

And this differences can be, believe me, very different by country to country. Luckily enough IAB Europe has a distinct advantage in this matter. People within the country organizations around Europe are the very people that know their online markets inside out. So estimating the differences between one and the other is much easier and precise. The other good part if it is that by doing that people in those markets and across Europe begin to gain an even more extensive knowledge of the other markets.

For comparison is always good. It tells you where you stand and where should you be in a few years time. And it brings people around the table once again. A thing that IAB Europe has always done and always will. :-)