monetization models in the age of free
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Monetization Models in The Age of “Free”
Lesley Grossblatt, Lucinda Foss,Caitlin Smallwood & Eddy Wu
Pop quiz!
What is the key to a successful, sustainable offering?
A) Solving an important customer pain.
B) Bringing in revenue.
Answer:It’s a trick question! You need both!
Answer:
It’s a trick question! You need both!
But how can you make money with free?
How do these “free” offerings make money?
Identify who you create value for and how they’ll pay for it
Advertising,Licensing
SponsorshipFreemium
How long has Intuit been competing with “free”?
Answer:Always, but competing with free today
requires us to approach offerings differently
The starting point isn’t “free”
Monetizing “free” is about finding value someone will pay for
Monetization is about value
1. What are your assets?
2. Who would value your assets?
3. How would they pay for your assets?
Step 1: What are your assets?
• Product features
• Technology
• Data
• Content
• People
• Processes/know-how
• Brand
• Reputation/goodwill
• Physical space
• Equipment
• Relationships
• …
Think as broadly as you can
More assets than meet the eye
• IndividualsSingle parents, Green Day fans
• HouseholdsFamilies saving for college, rental households in rural areas
• BusinessesOnline retailers, FI’s offering payment solutions, office supply stores
Step 2: Who would value your assets?
Broad as well as niche markets may find your assets valuable –
think broadly about the ecosystem
• GovernmentUS Department of Labor
• Competitors
• Advertisers
Who values these assets?
Step 3: How would they pay?
• Purchase
• Free trial leadingto purchase
• Subscription
• License or lease
• FreemiumBase product is free, but you pay for additional features
• Cross-Sell
• Advertising• CPM – cost per thousand
(mil) ad impressions shown
• CPC – cost per ad click
• CPA – cost per new customer acquired through ad
• CPL – cost per lead
• Revenue share• Sponsorship
One party pays for other parties to benefit from the asset
How would they pay?
Shoe Manufacturers•Freemium:• Free access to online
reviews• Subscribe to review
service
FBI , CSI, Other Agencies•License access to Sole Search
Other Businesses•Subscribe to Zappos Insights•Purchase Zappos Culture Book
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How can movie theaters compete in the Age of “Free”?
Big screen+ lots of seats
Good soundsystem
Audience
Films &exclusive movies
Concessions & cups
What are your assets? Who values assets? How would they pay?
Per-meeting, per-hour
Admission
Subscription - annual or season pass
Number of ad impressions oncontainers
Companies havingbig meetings
Music fans whocan’t make alive show
Film club or experience (e.g., Rocky Horror)
Advertisers (Coke, Orville Redenbacher)
How can you monetize free FAFSA?
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What are your assets?Data on lots of students about to go to college
Lots of FAFSA’s + parents’ verified tax information
Goodwill for providing free service
Who values assets?Student loan lenders, computer sellers, office supply stores
College financial aid officers
Students’ parents
How would they pay?Purchase mailing list of students
Pay licensing fee for data
Purchase other Intuit products such as Quicken, TurboTax
Challenge:Idea is a winner (NP score: 58),
but we can’t charge for it
Exploring 3rd Party Pays in QOL
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Use quick experiments to test and validate your monetization hypotheses
•>1MM users
•Data on millions of transactions
Quicken Online Hypothesis: Advertisers will value and pay for these assets. How?
1. Advertisers will pay to display ads in on QOL.
2. Intuit can serve both advertisers and users by personalizing discounts based on spending data.
$3MM opportunity
$20MM opportunity
Technology and business innovationcan change the equation rapidly
Models change over time
Keep revisiting your assumptions –play offense with your monetization strategy
In your team, discuss a product/service:
1. Brainstorm all the possible assets this product/service has – think broadly!
2. For each possible asset, who would value it? How? Why?
3. How would these parties pay for this value?
Let’s find the value . . .
What are your assets? Who values assets? How would they pay ?
Cheat Sheet – Finding Value
• Product features
• Content
• Data
• Technology
• People
• Processes/know-how
• Brand
• Reputation/goodwill
• Physical space
• Equipment
• Relationships
• Etc.
• Individuals
• Households
• Businesses
• Government
• Competitors
• Advertisers
• Etc.
Who values these assets?What are your assets?• Purchase
Direct payment for value
• Free trial
• Subscription
• Freemium
• Pay for success
• License or Lease
• Revenue Share
• Cross-sell
• Sponsorship
• Etc.
How would they pay?