Web Strategy: The Many Forms of Monetization using the Web

You: A Web Strategist
You’re an individual who is responsible for the long term direction of a website, and meets the requirements of business, community, and technology. Part of your role is to keep your website profitable, even if it doesn’t generate direct revenue streams.

As you plan out the direction of your website, there are multiple ways to bring your web strategy to fruition, I’m listing out these methods below.

The Many Forms of Monetization using the Web:

What’s Marketing? Everyone has a hard time describing this activity but I’ll break it down for you with my definition: The activity of bringing products and customers together.

The most common form of monetization for websites is Advertising, it works great for media sites, blogs, and other news and media sites. For the corporate web strategist, their goal is to get ads on these sites. ConversionRater has listed out the many forms of advertising including:

  • Contextual Advertising
  • Display Advertising
  • Targeted Advertising
  • Text Link Advertising
  • Sponsorship
    I’m calling this out as separate than advertising as often sponsors are infused into website or media as part of the experience. One example that often comes to mind is the infusion of the ScobleShow and Seagate brand. Robert mentions the brand uses the products, and displays the logo on a variety of media he creates. Please note I’m a former employer employee of PodTech, so here’s a few other examples: Chris Pirillo’s live stream show is sponsored by Dell and others, a perfect fit. Recently, Ask a Ninja of Federated Media created some customer shows to promote blades of steel, a cross over and viral marketing campaign.

    Paid Content and Advertorials
    Often in magazines and newspapers we’ll see advertorial sections that –at first glance– appear to be editorial of the publication. These paid content areas likely have useful or valuable knowledge being shared, but at the same time will guide the user towards a marketing direction. Media websites can offer these advertorial sections to their websites, allowing marketers to publish content. Transparency is required, don’t even think of trying to slip one over your users, as when they find out (they always do) a rebellion will occur.
    Thanks Andy Beard via comments

    Syndication of Content
    By repurposing content from other channels, or displaying your content on other websites can result in residual revenue in micropayments or fixed pricing. Displaying content feeds from other sources can result in content providers paying money to the provider.

    For many websites, providing recommended links to partners can be steady stream of links and revenue from commission. Amazon’s book recommendations program is an example of this. It’s important that the website be fully transparent about the relationship of the linking and recommendations. Companies that aggregate content and distribute to other companies can receieve a micro-payment for such activities, for example: Mozilla’s Firefox generates regular amounts of micro-payments from users that use their search bar in the top right on the browser.

    I put this under the Marketing bucket as the same types of activities are required to obtain donations from groups or individuals. This common method requests money be given to a cause, in return goodwill is shared from recognition (or badges to be placed on website) tax benefits, or knowing that one has supported something they believe in.

    Not all websites make direct revenue, although Marketers can bring prospects closer to the sales point. In some companies, those that bring qualified leads get paid, a dollar amount is defined for those leads. Websites can generate interests from marketing activities, contact sheets, qualification activities that eventually result in sales. Although indirect, don’t overlook this powerful form of revenue generation.

    For many web strategists and founders, this is considered the ‘exit strategy’. Although not listed directly, long term monetization and steady revenue growth is often a method to grow.

    The most talked about for today’s startup is the opportunity to get purchased by a large web entity. A few come to mind Flickr, Mybloglog, Upcoming > Yahoo, Measuremap, Google Analytics, Blogger > Google, MySpace > Newscorp, and others. Most notably the sale of YouTube to Google for $1.5 billion is a good indicator of an exit. This also includes domain squatting.

    Initial Public Offerings
    More common in the first web wave (I used to be at Exodus) IPOs are a company’s way to sell ownership of it’s company to the open public, these purchasers became shareholders, and eventually the value of the shares (and company) would increase. The founders and employees maintained a significant share of the company in which they eventually (hopefully) would sell and profit. This form of monetization has greatly tapered off in 2007, being very rare.

    Investment and Partnership
    Seen more frequently, and maybe not a direct form of long term revenue streams, many startups are receiving waves of funding from venture capital firms, or large partners. From Seed/Angel, A Round, B Round and partnership money we’re seeing these opportunities. Three year old Facebook recently received over $250 Million from advertising partner Microsoft. Although often not counted as ‘monetization’ methods, it truly keeps those who are running the site working, the lights on, and opportunities for growth.

    Key for ongoing revenue generation, websites that offer value added services to it’s users will grow.

    Brought to our attention during the first web phase, the “brick to click” mantra became talked about at many traditional retailer stores and has now solidified on many corporate websites, and etailers. Selling online goods, and providing recommendations to them provides and opportunity for the seller to either profit from selling their own goods, or a wholesaler or middleman to take a cut from the transactions.

    Premium, Memberships, and Licensing
    Common for websites that offer free service, feature-ladden exclusive memberships will provide users with additional benefits. A few examples include mail services offering additional storage, flickr offering more photo upload capacity, or access to other websites. This could also include software licensing options and white labels. (saw this from Brian’s list)

    Virtual goods
    Not to be overlooked, this form of monetization is growing steadily on Social Networks and Virtual websites. Objects (real and virtual) connotate value and meaning from the giver to the receiver, and can have a monetary value assigned. I’ve outlined the value of virtual goods, do not disregard.

    Corollary Benefits
    These are revenues that are generated as an outcome from the website itself. Based upon the feedback I’ve received from Twitter and in the comments, there’s some additional revenue opportunities.

    Selling Data
    Many websites collect information that can be resold to third parties. Data types could be: web traffic, search terms, registration information, email information. Please be open and transparent to your users when collecting information if this is your intention.

    Secondary Opportunities
    Opportunities to extend a brand into other mediums can generate revenue. In particular new jobs, speaking opportunities, writing opportunities, and syndication of content.

    Additional Resources
    Brian Oberkirch has a similar list to this one, I didn’t see it until now. If you want to get specific on blog monetization, problogger has a great list. Also read The Many Forms of Web Marketing.

    Was this post helpful? Read the other posts tagged Web Strategy. Have any additions? Don’t agree with my taxonomy? I wanna know. Leave a comment and talk back!