Revenue Models for selling on Web:

1. Revenue Models for selling on Web: -By Ms. Trushali Jambudi Lecturer, HLICA.

2. B2B B2G B2C C2C C2B Partners You Consumer Consumer For existing and new customers. Click-and-buy based. Sell products or services directly to consumers. www.Amazon.com www.pets.com Reaching business partners. Manufacturers to Retailers, Manufacturer to Supplier etc … Sell products or services to other businesses. www.Metalsite.com www.Cisco.com Businesses selling to local, state and federal agencies iGov.com For consumers trading. Consumers sell directly to other consumers. www.uBid.com www.eBay.com Consumers name their price which businesses accept or decline. www.priceline.com www.ReverseAuction.com Business Models of e-Commerce Government

3. Various Revenue models • Web catalog revenue model • Digital content revenue model • Advertising-supported revenue model • Advertising-subscription mixed revenue model • Fee-based revenue models

4. Web catalog model • In Traditional Catalog based revenue model, the seller establishes a brand image and then uses the strength of that image to sell through printed information mailed to prospective buyers. • The Webcatalogmodel is the adaption of the mail order catalog revenue model. • In the Webcatalogmodel the prospective buyer picks items from an on-line catalog for purchase • These purchases may be made on-line, by telephone or by mail (since some people might be afraid to disclose credit card information on-line) • The type of items sold by this method include: • Computers and consumer electronics (Dell.com) • Books, music and videos (Amazon.com) • Clothing (Myvirtualmodel.com)

5. Web catalog model • Computers and Consumer Electronics: • Apple, Dell, Gateway, and Sun Microsystems • Have had great success selling on the Web • Dell • Created value by designing entire business around offering high degree of configuration flexibility to its customers

6. Web catalog model • Books, Music, and Videos • Retailers using the Web catalog model to sell books, music, and videos • Among the most visible examples of electronic commerce • Jeff Bezos • Formed Amazon.com • Jason and Matthew Olim • Formed online music store they called CDnow • Used the Web catalog revenue model

7. Web catalog model • Clothing Retailers • Lands’ End • Pioneered idea of online Web shopping assistance with its Lands’ End Live feature in 1999 • Personal shopper • Intelligent agent program that learns customer’s preferences and makes suggestions • Virtual model • Graphic image built from customer measurements

8. Web catalog model • Flowers and Gifts • 1-800-Flowers • Created online extension to its telephone order business • Chocolatier Godiva • Offers business gift plans on its site

9. Digital Content Revenue Models • Firms that own intellectual property • Have embraced the Web as a new and highly efficient distribution mechanism • Digital products received through purchasing or subscriptions and they are received instantly •  Lexis.com • Provides full-text search of court cases, laws, patent databases, and tax regulations • ProQuest • Sells digital copies of published documents. ProQuest acquired reproduction rights to digital versions of journals and books

10. Advertising-Supported Revenue Models • Broadcasters provide free programming to an audience along with advertising messages • Only a few high-traffic sites (e.g. Yahoo.com) can generate significant revenue this way – because of the large number of visitors • Some information only sites are still successfully using this model, e.g. About.com, www.howstuffworks.com

11. Web advertising has been hampered by: • Identifying ways to measure and charge for site visitors • Some measurements do exist, e.g. number of visitors, number of unique visitors, and the number of click through, however it is difficult to develop a standard • The key is to make a sticky Web site (the ability to attract new and repeat visitors to a Web site) because visitors will be exposed to more ads •   Few Web sites have sufficient visitors to attract large advertisers • Most successful advertising is targeted at specific groups based on demographics, e.g. address, age, gender, income level, type of job, hobbies and religion (due to privacy issues more and more people are unwilling to give this information)

12. Advertising-subscription Mixed Model  • Used for many years by newspapers and magazines (subscribers pay a fee and accept some level of advertising) • Subscribers are subjected to less advertising than an Advertising supported Web site • The New York Times and The Wall Street Journal use this model • Both of these newspapers use a separate revenuemodel for the print and on-line editions

13. Advertising-subscription Mixed Model • The New York Times is supported mainly by advertising, but charges a small subscription fee for visitors who want to access crossword puzzles • A searchable archive (dated back to 1996) is also provided • A small fee is charged for articles dated back more than one week • Business Week • Offers some free content at its Business Week onlinesite • Requires visitors to buy subscription to Business Week print magazine

14. Advertising-subscription Mixed Model • Sports fans visit the ESPN site for all types of sports-related information. • It sells advertising and offers a vast amount of free information, but die hard fans can subscribe to its insider service to obtain access to even more sports information.

15. Fee-for-Transaction Revenue Models • In this model businesses offer services for which a fee is charged. The fee is based on the number or size of transactions they process. • Transactions can be personalized and executed much cheaper than traditional transaction service providers • An examples is a travel agent: • Traditionally, they were paid a commission for every ticket sold. With more low cost flights being offered commissions in many cases have disappeared. As a result, many travel agents now charge a flat fee for processing a ticket on an airline that has reduced or eliminated the fees it pays to travel agents • Disintermediation • Removal of an intermediary from value chain • Re-intermediation • Introduction of a new intermediary

16. Fee-for-Transaction Revenue Models • Other examples include: Automobile sales, Stock brokers, Insurance brokers, Online banking and financial service, etc. • Value Chain: A value chain is a way of organizing the activities that each strategic business unit undertakes to design, produce, market, deliver and support the products or services it sells – Primary activities. • It also includes support activities like HRM, Finance and administration, Technology development, etc.

17. Fee-for-Service Revenue Models • An increasing number of organizations are charging fees for services provided • These fees are not based on the size or number of transactions processed, but rather on the value of the service provided • Services • Range from games and entertainment to financial advice • Online games • Growing number of sites include premium games in their offerings • Site visitors must pay to play these premium games • Sony’s EverQuest adventure game has greater than 400,000 players. Each player purchased a US$40 software pack and pays US$10 monthly

18. Fee-for-Service Revenue Models • Concerts and films • As more households obtain broadband access to the Internet • Companies are providing streaming video of concerts and films to paying subscribers.

19. Revenue Models in Transition • Many companies have changed their revenue models in order to remain competitive; some examples of changes in revenue models are: • Subscription to Advertising-Supported Model • Advertising-Supported to Advertising-Subscription Mixed Model • Advertising-Supported to Fee-for-Services Model • Advertising-Supported to Subscription Model

20. Revenue Models in Transition • Subscription to Advertising-Supported Model • Microsoft founded its Slate magazineWeb site • Microsoft State magazine started as an upscale news and current events publication • Charged annual subscription fee after a limited free introductory period • Was unable to draw sufficient number of paid subscribers • Now operated as an advertising-supported site

21. Advertising-Supported to Advertising-Subscription Mixed Model • Salon.com • Operated for several years as an advertising-supported site • Now offers optional subscription version of its site • Subscription offering • Motivated by company’s inability to raise additional money from investors

22. Advertising-Supported to Fee-for-Services Model • Xdrive Technologies • Opened its original advertising-supported Web site in 1999 • Offered free disk storage space online to users • After two years, was unable to pay costs of providing the service with the advertising revenue generated • Later switched to a subscription-supported model

23. Advertising-Supported to Subscription Model • Northern Light started in 1997 as a search engine which searched the Web as well as its own database • The user was charged for items in their database, but Web items were free • The site was therefore a mix between advertising-supported and a limited fee-based service • In 2002 Northern Light decided to change its revenuemodel to subscription supported since the revenue it was getting was insufficient

24. Revenue Strategy Issues • Channel conflict • Occurs whenever sales activities on a company’s Website interfere with existing sales outlets such as distributors, retailers, dealers, and sales representatives, by selling their products direct to consumers through general marketing methods and/or over the internet through ecommerce. • Also called cannibalization • Some manufacturers want their brands to capture the power of the internet but do not want to create conflict with their other distribution channels, as these partners are necessary and viable for any manufacturer to maintain and gain success. • Channel cooperation • Giving customers access to the company’s products through a coordinated presence in all distribution channels • Direct motivated consumers from Web site to an authorized dealer • General Motors,s BuyPower (www.gmbuypower.com) program allows consumers to specify the vehicle they wish to purchase, browse local dealer inventories, and establish an upper limit price, all on-line. • Conflict can be turned into cooperation with technology that enables retailers and consumers to purchase products from its branded Web site, which is then shipped by a geographically-designated distributor. Retailers and distributors share in the net profits from every purchase in same manner as if the purchase was made in a retail store.

25. Strategic Alliances and Channel Distribution Management • Strategic alliance • When two or more companies join forces to undertake an activity over a long period of time • A Strategic Alliance is a formal relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations. • The advantages of strategic alliance includes: • Allowing each partner to concentrate on activities that best match their capabilities. • Learning from partners & developing competences that may be more widely exploited elsewhere • Adequency a suitability of the resources & competencies of an organization for it to survive. • Channel distribution managers • Companies that take over responsibility for a particular product line within a retail store

26. Google.com

27. History • As with its technology, Google has chosen to ignore conventional wisdom in designing its business. The company started with seed money from angel investors. The company was founded by Larry Page and Sergey Brin, often dubbed the "Google Guys”.While the dotcom boom exploded around it and competitors spent millions on marketing campaigns to "build brand," Google focused instead on quietly building a better search engine. • The word quickly spread from one satisfied user to another. With superior search technology and a high volume of traffic at its Google.com site, Google's managers identified two initial opportunities for generating revenue: search services and advertising.

28. Google continues to think about ways in which technology can improve upon existing ways of doing business. New areas are explored, ideas prototyped and budding services nurtured to make them more useful to advertisers and publishers. However, no matter how distant Google's business model grows from its origins, the root remains providing useful and relevant information to those who are the most important part of the ecosystem – the millions of individuals around the world who rely on Google search to provide the answers they are seeking.

29. Google AdWords for Advertisers • Google designed AdWords for advertisers who want to reach a qualified audience as efficiently as possible. Advertisers select their own target keywords and only pay when customers click on their ads. It's easy to create ad text and manage online advertising accounts with no large upfront payment required. All that's needed is five minutes and a credit card. The ads appear across Google's growing roster of partners, including thousands of sites from America Online to the Washington Post, and are targeted to relevant search and content pages. • There's no limit to the number of keywords that an advertiser can select and each keyword can be matched with a different creative execution. Recent advertisers include Amazon, Cisco Systems and Staples. • Google provides all of its advertisers with a full complement of reporting services to enable fine tuning of campaigns and real-time intelligence about which components are performing best. • Advertisers can further increase efficiencies by targeting their campaigns to specific geographies or languages.

30. Google AdSense • Google believes relevant advertising can be as useful as search results or other forms of content. And that advertising can enhance the experience for visitors to a publisher's website, while helping publishers recover some of their investment in creating content of value. Google AdSense combines Google Search technology with the base of keyword advertisers to deliver ads that precisely target search results or the content on a site's pages, no matter how specialized the subject matter. Advertisers, publishers, and information seekers all profit as a result. • AdSense serves relevant ads on content pages search result and content pages as well as dormant domain pages. • Google Site Search Services enable publishers to provide Google web search on their own pages – results that can be used to generate revenue with the AdSense for Search program

31. Google Commerce Search • Google Commerce Search is a hosted search service for online store. • Google Commerce Search increases online sales and usability by allowing customers to quickly and easily find exactly what they’re looking for. • Robust features including synonyms, advanced spelling, targeted promotions, and multiple customization options make for a streamlined yet powerful online retail experience. • Simple deployment and scaling, user-friendly analytic and tracking components, and enterprise-class support. • You can optimize your online product search experience and give customers the information they need to make purchases online.

32. Google Commerce Search • Recognizing a key fact – that visitors spend only about eight seconds before deciding whether or not to remain on a site – Tim and Jim Horton, founders of Discount Office Items, wanted to enable visitors to find the right products, fast. • Google Commerce Search was integrated into the site’s existing interface, allowing shoppers to refine results by any attribute they choose. • What they wanted to do: • Improve the shopping experience and drive sales • What they did: • Implemented Google Commerce Search on DiscountOfficeItems.com • What they accomplished: • Increased revenues and site visits 6.4% • Boosted transactions by almost 1,400 per month • Measurably grew average order values

33. Google Wireless Services • Google Wireless Services deliver Google search results via PDAs, wireless phones and other mobile devices powered by many of the world's leading wireless service providers.

34. Other Services • Maps • Gmail • Google Wave • YouTube • Buzz New! • Alerts - Google Alerts are email updates of the latest relevant Google results (web, news, etc.) based on your choice of query or topic. • Blog Search Find blogs on your favorite topics • Google Chrome A browser built for speed, stability and security • Directory Search the web, organized by topic or category • Images Search for images on the web • News Search thousands of news stories • Scholar Search scholarly papers • Groups Create mailing lists and discussion groups • Translate View web pages in other languages • Go mobile • Mobile Get Google products on your mobile phone

35. Thank you