Making Money by Giving Things Away?

Sounds crazy, but the Internet has introduced some new ideas, and you need to understand the concept even if it is not for you.

The post at the other end of the title link outlines the principles of such a business model. Since this was posted (some years ago now) the concept has evolved and acquired a name. The term now being applied to the concept is "Freemium". In very simple terms, the concept is that you give something away (we are talking about services here, but the film industry used to give cameras away so that they could sell more film to the users, and they gave film away so they could earn the processing fees!), and then offer more elaborate or extended services at a cost to the consumer.

The author advises that you never make this into a "bait and switch" operation, where you provide something free and then later ask people to pay for it. The idea is, once free, always free, but as the free service becomes more valuable to you through use, you will be willing to pay for more features, or more capacity. In my personal experience, I have seem this work on me in regard to Picasaweb. I put all my vacation pictures up there so my family and friends can follow me on my travels. I find it so compelling that I have finally succumbed and bought more storage so I can keep adding pictures without having to manage the storage so tightly. With storage costs so low, I can get a lot for my money, and it doesn't bother me at all.

The NY Times recently did an article about another example of this business model being put into practice. In this story, the product is called Evernote, and it is an on-line database that one can use for storing all kinds of information of personal or business interest. I have not tried it (yet) so cannot provide any more reaction than what I read in the article, but it looks very interesting, and I will be there soon! You can read more about it on the Evernote website.

The entrepreneur who started the business describes the application as, “... a universal memory drawer”. He expects only a small number of users to ever pay for the enhanced service, but his metric that he is relying on is, "... the revenue from Evernote’s 500,000 active users is growing faster than the growth in the customer base." This means he is making money from the growth in the percentage of users who are paying.

This sounds to me like a real "cloud" application, where all your information and the application itself is part of the cloud, which you can get to from anywhere that you can get an Internet connection. This has a lot more appeal to me than having to remember to move material to the briefcase on my laptop before a trip, or making sure that I have material I might need or want while away up on the web somewhere that I can get to. I can see this being addictive, which is another feature of a good business model!

Not everyone will be in a field where this business model will work for them in the same way as described in these articles, but there are principles here that we can all benefit from if we can figure out a way to apply them to our own business model.

Social Network Marketing Expands Sphere

"Social networks can be used for branding, improving customer loyalty, lead generation, direct marketing and e-commerce."

Previous postings have indicated that social media are being used effectively for creating brand awareness. This latest research confirms that use, but also points out that some marketers are having success in generating sales activities using the media. This seems to be largely through offering promotions that draw attention and response, but the major point is that the usage expands as people learn more about hos to exploit the services for their own needs.

Another article I recently referred to said that the primary reason that marketers were not using social media was a lack of understanding of how it worked or could be used. This latest article shows how things change as users learn more.

On another front, I have seen some indications that some people are beginning to move away from Facebook, in part, at least, because of its effort to exploit the service more aggressively for marketing purposes. This is part of the Facebook effort to monetize the application, but it seems to be creating some negative reaction among users. Whether this movement will continue or become significant remains to be seen, but illustrates the need to remain current with your understanding of what is going on in the online environment. It is changing every day, and those users who stay on top of the changes will do better in their efforts to make creative use of the tools!

Brand Marketers Embrace Social Media

"The survey of US brand marketers found the majority already using social media."

Interestingly, the top reason for not using social media seems to be a lack of understanding of how best to do it. That would seem to be a gap that could be easily closed, and leads me to believe that we will see a much greater adoption of social media by businesses in the near future.

It seems to have too much power and potential to be allowed to languish because of a lack of understanding.

At the same time, the method given as the best means of measuring effectiveness is tracking website traffic.

My own investigation so far leads me to believe that social media can have a huge impact on certain kinds of businesses, while it is problematic for other types. One report I read about who is effectively using social media pointed toward what I would consider very connected communities like high tech businesses and people in communication-oriented businesses. In the cases described, people within the industry kept up with one another to stay on top of their field. This is more a "community" function than a "business to consumer" model, but still an important and beneficial use of the tools.

In fields where businesses are looking for a B2C function, it seemed to depend upon the demographics of the target audience and the characteristics of the business product or service. For example, younger consumers clearly have adopted these tools much more fully than older consumers, and businesses trying to reach that audience will have more opportunities. Also, products or services that can generate some excitement or "buzz" within their audience have much more to work with in using these tools.

For a better view of the charts or more discussion, visit eMarketer by clicking on the title of this posting.

Calling In Pros to Refine Your Google Image

"Google's ubiquity as a research tool has given rise to a new industry: online identity management. The proliferation of blogs and Web sites can allow angry clients, jealous lovers or ruthless competitors to define a person's identity. Whether true or not, their words can have far-reaching effects."

Several people, at different times recently, have had problems with people posting things on the web that they were uncomfortable with. In one case, a friend's associate put up a lot of links to his name offering "escort services" so that it would look like he was in the business of setting up connections for people. This was a deliberate attempt to embarrass and cause problems. In another case, a search for my contact's name brought up some other blog postings that could be awkward for her business to be associated with. This was more of a "coincidental" situation rather than something deliberate, but it was still a problem.

In both cases, I had to tell them that there was no "direct" action that they could take to remove the problem materials, and that the only thing they could realistically do is to "push" the problem references out of sight by establishing a more robust presence on the web for material that they did want to be associated with.

It is unfortunate that this is the case, but there is simply no way to get things that are bad for you removed from the web. This article describes a solution offered by different companies whowill help you deal with this if it happens to you. What they are doing is implementing the practices that we teach in the Internet Marketing Clinic each month to help you build a strong position on the Internet.

Companies in new age of networking

"Social media can be very helpful for a company to get ideas and receive instant feedback, and it's a way to get the word out about products and events. It's a publicity technique but more importantly, it's an engagement technique to make people feel connected."

A June survey conducted by The Internal Association of Business Communicators (IABC) and Buck Consultants reported almost 80 percent of organizations frequently use social media, outranking even e-mail. The most used form is blogs, which have become a very common feature of business web sites.

Businesses have an opportunity to reach their clients and prospects in a new way. If your business or organization is not using some form of social media to communicate your message, you are "leaving something on the table". In this competitive world, that is not a good idea.

Julie Freeman, president of International Association of Business Communicators, who was interviewed for this article, emphasizes the importance of thinking through what you want to communicate and what you want to accomplish before you undertake an effort to use this medium. That sounds like good advice for just about anything you do!

The basic message here is that the world is constantly changing, and to keep up with it, you have to be changing as well. Stay on top of these types of developments and make use of them as you determine they work best for you. You will be glad that you did!