Articles Comments

David Porter » Articles at Suite 101 » Monetising the Web: the New Business Generation’s Holy Grail

Monetising the Web: the New Business Generation’s Holy Grail

 

Two linked debates about the internet in 2011 are open and equal access, and how to monetise or charge for content successfully without restricting access.

September 2011, the UK’s Guardian is offering a one day course in London, Monitising Digital Content, aimed at small and medium businesses, marketeers and organisations. A website is a brand, as they say, ‘a customer service centre, retail outlet and community.’ Many businesses make money online, but maximising it is the magic ingredient of commercial success in this part of the century.

The Guardian set out key online revenue streams: advertising, paid-for content and e-commerce. Sessions revolve around those keys: How and why do customers buy? Which revenue stream is right for a given business? How to market successfully from own and others’ content? Affiliate marketing, social commerce and lessons from the High Street are also part of the course.

It’s just one event among dozens in the UK alone. Retailing, marketing, direct selling, personalised billboard advertising are all ideas being explored, in some quarters, quite frantically, as the web evolves and the need to make money becomes paramount.

Open Internet

In March 2011, internet founder Sir Tim Berners Lee told a round table event in London, chaired by communications minister Ed Vaizey, that internet service providers (ISPs) must ‘uphold neutrality’ as they strive to handle increasing web data. A two-tier internet (premier league big providers and the rest seen as minnows) would void the net principle of neutrality.

Berners Lee said: ‘The web has grown so fast precisely because we have had two independent markets, one for connectivity, and the other for content and applications’. He was keen that situation should continue. One observer likened it to the principle behind UK rail privatisation in the 1980s/1990s, keeping the fixed track operator separate from the rolling stock providers. Of course, that is still not without controversy.

Minister Vaizey summarised the event’s three agreed principles: ‘The first, users should be able to access all legal content. Second, there should be no discrimination against content providers on the basis of commercial rivalry. Third, traffic management policies should be clear and transparent’.

Fear of Abuse

Because web experience often began with non-commercial, information-gathering contexts, many failed to see business opportunities. Once business online really took off, so many people were subjected to so many varied scams, that some concluded no legitimate money could be made from it and the security risks were too high.

However, one only has to look at the success of Google, Facebook, Microsoft and Amazon, for instance, to realise that they are growing revenue at a massive rate. In July 2011, The Daily Telegraph’s Richard Blackden reported on Google’s second-quarter profits jumping 36% to $2.51bn (£1.54bn) as they expanded into mobile (cell phone) and display advertising.

In the same month, Amazon reported quarterly sales up 51%, but net income down 8% from a year ago. They forecasted sales to continue to rise, citing strong continuing consumer interest in their Kindle eBook reader. BBC Business News reported Jeff Bezos, Amazon’s Chief Executive as saying: ‘Low prices, expanding selection, fast delivery and innovation are driving the fastest growth we’ve seen in over a decade.’

Operating costs were up, but so was their investment in cloud computing technology. The impact of cloud computing is just becoming apparent, so the internet giant should be sitting pretty in the long run.

Thinking Differently

It’s probably a given in the 21st century, that man is still at the dawn of the communication, data sharing/searching, networking, global/borderless trading opportunities of the internet. There is still a digital divide between the haves and have-nots, and education is not equal around the world, but increasingly positive aspects of net commercialisation outweighs negativity.

People might assume that the giants experiment, but basically have got it right, if sales/profits/jobs are coming on stream. The Daily Telegraph of 22 August 2011 carried an interview by David Jones, chief executive of Havas, the second-largest advertising group in the UK and fifth in the world. He told Andrew Cave, that “Facebook has got it all wrong’.

He acknowledged Facebook with 750m users was ‘doing very well’, but he felt ‘the actual revenue Facebook generates is not in line with its profile’. He said they use the old monetising model, going after advertising dollars rather than the new model, ‘creating clever new ways of making money through genuine retail transactions’.

Jones suggested Facebook should say to Starbucks, for instance: ‘for everybody who logs onto Facebook whilst at Starbucks and buys a coffee, would you give us 0.1% of a dollar?’ Facebook should then tell consumers that if 20,000 buy a Starbucks coffee today, they’ll get a 15% discount.

They could accumulate that across McDonalds, Burger King, KFC and a host of retail outlets where people could log onto Facebook by mobiles or screens provided in the shops. Suddenly, he reckoned, there is enormous potential for major revenue streams.

New Definitions

That is nothing to do with advertising. It’s linking retail, brands and technology. He believed that the old interruptive advertising will not be sufficient, when users have an incentive to engage in ‘collaborative consumption’. A good discount works wonders. He thought there will be real competition amongst vendors as customers click around for bargains in a particular product or geographical location.

David Jones is upbeat about the digital/social/commercial future. This century will be about non-government organisations, transparency, business and individuals ‘having great intentions and great execution’, which the last one didn’t have.

First published on Suite 101, 30 August 2011, but still relevant in many ways.

Image: Facebook Could Be Making Even More Money! – Maxo

Written by

Filed under: Articles at Suite 101 · Tags: ,

Leave a Reply

*

*