Our business just doesn’t make enough money
Once a new idea has been scoped, beta takes shape and initial adopters gather onboard, some firms are lucky enough to receive their first, then second round of funding and so on.
In today’s tech-heavy, entrepreneurial world we are seeing some amazing products, services and apps develop. Though, to the surprise of the traditional businessman, they make no money whatsoever! Those funding these firms are taking huge risks on companies for long-term growth and eventually monetisation, but like Facebook they delay their monetisation techniques until their base is significant enough on which to capitalise.
Focusing particular attention on apps; some are lucky enough to generate an income from the offset, others later in life. It all depends on the nature of their proposition, the userbase, the costs and demands from shareholders. Let’s first explore what monetisation options are out there. This is by no means an extensive list but gives an idea, particularly for growing applications that are at that stage where monetisation is becoming important, of what options are available:
1. Fees. Apps such as Deliveroo, Uber or Booking.com will charge fees whether to the consumer or restaurant/hotel. Investment platforms such as Moneyfarm or Scalable will take small monthly fees from the consumer for managing their funds. Airbnb takes a fee from the host every time a booking is made.
2. Subscriptions. Some products operate via a subscription service. The most obvious is Netflix – its huge userbase gives it a consistent income from monthly payments. Interestingly, services such as Spotify offer a free service too, with ads, to entice skeptics in before upselling to more premium subscriptions. Cornerstone is another example, charging you regularly for razors to be delivered direct to your door.
3. Advertising. As we touched upon, Facebook is the main monster example, Google and LinkedIn too. Using their service is free from a consumer perspective but they earn through paid search and a host of other advertising services. Livescore, a live sports results app, uses ad banners at the bottom of the screen. Other sites are subtler still, Buzzfeed for example charges businesses to create content.
4. Purchases. Focusing again more on applications, some charge for purchase while others for in-game extras. Pokemon Go is a notable example of a free app that offers in-app purchases.
5. Affiliation. Many firms choose to include affiliate links, earning from CPC or CPA deals with third parties. Content heavy sites tend to introduce this strategy as a more native technique than pure advertising. Apps tend to avoid affiliation so as to not encourage movement away from their own environment, but the likes of Moneysupermarket and Topcashback live off it.
There are so many examples out there of businesses that have developed over time with no clear-cut strategy of how they will monetise, only to figure it out later. The reasons aren’t because their products aren’t popular, on the contrary they are simply growing their userbase in unforeseen timeframes.
But when it comes to the crunch, when the investors are no longer patient for profits, it’s time to look for revenue streams, and there are those who are adopting a cleverer technique, one we have yet to mention… those I call integrated partnerships…
So, what are integrated partnerships?
To understand integrated partnerships one must first appreciate the difference between affiliation and partnerships.
Affiliation is the act of linking to a third party and receiving commissions in return for clicks or conversions. It is a form of partnership marketing. There are advertisers and publishers, an advertiser being those that are seeking to advertise, while publishers ‘publish’ or host the ad. An advert can be obvious such as in a table on Confused.com, or a native link within an article on Moneysavingexpert.
Partnerships are the act of working with any secondary brand to promote each other’s services. Some are pure partnerships where each promotes one another, others are paid for agreements, like affiliation or sponsorships. Those that I believe to be a game changer in today’s digital heavy, app dominated landscape, are integrated partnerships.
An integrated partnership takes all the elements of the traditional partnership model but takes it a step further where a primary brand will incorporate the secondary’s product into their own. In my partnership marketing guide, I reference this as a Joint Product but it can take many forms. Offline it can be a literal merger of products or including elements of one into another. Online though and within apps it’s via the use of white-labeling, I-framing and integrating APIs.
This will become clearer in the examples below but it’s about including a third-party within your own with the primary objective of benefiting the user. And this is a vital point here, despite our focus in this article on monetisation, integrated partnerships are not adverts, not in-app purchases or subscriptions, they are meant to be native and principally to add value.
Check out some examples
Here are several examples to illustrate the point that integrations are, for some really well-known brands, the answer to monetisation without jeopardising the customer experience. They may also help you think about your own revenue streams – brands don’t necessarily need to rely on just one.
In July 2017 TripAdvisor announced that it was partnering with Deliveroo. The partnership was a big enough story to feature on the BBC and meant a unique offering to users where they could order via Deliveroo from their favourite restaurants featured in TripAdvisor.
It really is seamless and a very complimentary partnership which connects more than 20,000 restaurants to the service.
For a content-only site TripAdvisor has steered away from the overuse of adverts, instead deciding to expand its consumer offering and revenue streams to integrated partnerships. The integration of Deliveroo via its API is just one example – TripAdvisor has also partnered with Opentable to offer direct table booking services in-app, another really useful proposition.
One of the longest running sites still in existence and going strong for that matter is IMDb. Starting in 1990 and otherwise known as Internet Movie Database, it was purchased by Amazon in 1998 for the core reason of upselling Amazon products, mainly DVDs and video.
It continues to partner with its parent by upselling Amazon Prime and suggesting to purchase products via Amazon store. It has also synced cinema showing times with the ability to purchase tickets in-app.
Challenger bank Starling created a very interesting integration with savings app Moneybox.
Its current offering provides a traditional bank account but for the digital generation. Like other challenger banks Starling is looking to disrupt the industry with easy-to-use services with the focus on mobile first. Without a savings vehicle of its own Starling has integrated with Moneybox so that its users can round-up their savings seamlessly and invest.
This is a great example of how you can offer a third-party service through your own app, in turn benefiting from commissions from each user. It was made possible through the use of open APIs which allow both products and data to combine so the journey is seamless.
Anyone who has ever been looking for the quickest route home will be familiar with Citymapper. The commuter’s favourite app uses opensource data from local transport services to provide options on journey routes and in doing so compares various forms of transport.
Citymapper has no obvious revenue streams, it’s a free app, no subscription required and no ads – amazing for the consumer. But Citymapper has to generate revenue, so without compromising its great service it integrated Uber as a transport option, in turn earning from each booking.
Easyjet is the king of integrated partnerships and has two famous ones that you might not have even noticed as they are extremely well done.
Although producing revenue from its primary source of flight bookings, Easyjet realised that users would want to view hotel and hire car options too. Rather than redirecting to a third-party site it could simply host the partners site within its own. This I-frame is both contextual and beneficial to the consumer.
Easyjet partners with Booking.com and Europcar all within the boundaries of its own site:
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