How is the internet Monetised?
The internet was free and it was a place of unlimited information on just about any subject you could hope for. I guess it still is and that is great, however, I always likened the old web to the wild west. Many early web users dedicated their time in chat rooms and playing RPGs. Many others saw an opportunity to place importance on having an online business presence, directing website traffic to it. With this brought the guardians of the internet to life and they subsequently began to make you gradually pay for the privilege of raising your online profile.
So yes, you now have to follow some rules and part with some cash, but it allows for the constant renewal of services and an overall smoother experience online. I have highlighted below, the four main ways the internet retains its ecosystem and how it can be useful for your business by funneling that sought after traffic.
PPC VS CPM
The two most popular ways to monetise online is through implementing the pay-per-click (PPC) or cost per impression (CPI/CPM) advertising methods. Both now tried and tested mediums of acquiring money, driving traffic forward and in turn increasing that sweet profit margin. With each year that goes by, we see an upshoot in companies incorporating these strategies into their marketing campaigns.
PPC (pay per click) which is also known as cost per click (CPC). The advertiser pays for each click made on an advertisement. Payment depends on the number of clicks that the campaign acquires. Pretty simple really, although the cost of each click depends on many factors such as the relevance of your ad, how much you are willing to pay for each click, the landing page experience etc. Read up on Google’s explanation of AdRank here. The CTR (click through rate) measures the success of the campaign through the number of clicks divided by the number of impressions.
We are, quite obviously, biased when it comes to SEO/SEM marketing but it really does work. Your PPC ad is based on the targeted audience methodology, which increases the chances of closing the deal with your target demographic. Not only that but you are in complete control of the costs and only pay for any clicks on your ad.
CPM (cost per mille), not to be confused with the traditional CPT (cost per thousand) methodology, is the price of mille impressions. Payment depends on the number of impressions gained.
CPM makes the most sense for a campaign focusing on heightening their brand awareness or delivering a specific message. Website publishers and media owners get paid for displaying ads on their site/content. However, because CPM rates tend to be very low, a website needs robust traffic to make decent money from CPM ads.
This badger is fairly easy to explain, it’s essentially a shop… online. We all know how that works, you want a product, you go to the shop and buy that product. The benefits of having a shop online can be summarised simply because it is convenient for both the consumer and the business owner.
- You can overcome geographical limitations.
- It lowers your overheads by not needing a shop front (although a shop front isn’t necessarily a bad thing to have).
- You can also curate targeted communication with your customer base through a number of ways. Using the information that a customer provides in the registration form, and by placing cookies on the customer’s computer, an e-commerce merchant can access a lot of information about its customers.
- Online retail is driven by traffic from search engines and social media. It is not unusual for customers to follow a link in a search engine results and land on an e-commerce website that they have never heard of. This additional source of traffic can be the tipping point for some e-commerce businesses.
Algorithms I hear you say? Yep. A constant source of annoyance for anybody who makes their income amongst the Google/Youtube/Facebook/Twitter universes. The algorithm changes, however, only happens to increase the user experience. Often showing you the most relevant and suitable content it thinks you want to see based on your interests. The popularity of these social media channels grew. They grew for both consumers and companies. So did, naturally, the monetisation of certain aspects of sites.
Let’s take Facebook, it’s billion users worth of information and it’s targeted advertising methodology. Facebook stores your data and allows companies to advertise to you based on your interests. With their own ecosystem of likes and shares, companies pay to have their posts on top of your news feed. You can have an ad on the side of the site. Video ads played in amongst user-created content on the Facebook player is now available too. Other avenues of revenue Facebook has tried out included the Gift Shop. This allowed users to send virtual gifts to one another. It made over $100 million in revenue in 2009 but closed down the next year.
Ok, YouTube, you’re up, what do you do? Well, video advertising of course. The difference with Youtube is that it rewards its users. Roughly, a video creator can earn about $2,000 for every million views. Again, making relevant content to be at the top of users dashboards and having a chance of bigger income.
Well, you get the picture here, most of the money Social Media gains is from advertising revenue. They use the target advertising ideology from their huge supply of real-world data collection they have acquired over the years. This leads us nicely on to, arguably, the biggest controversy of our era.
Data is the new oil apparently… Here are the three types of Data Monetisation below. Yawn. GDPR etc.
Contributory databases – A customer provides their own data in exchange for receiving a more robust set of aggregated data that provides insight into the broader marketplace or provides a vehicle for expressing a view. Give a little, get a lot back in return.
Data processing platforms – These businesses create barriers through a combination of complex data architectures, proprietary algorithms, and rich analytics to help customers consume data in whatever form they please.
Data creation platforms These businesses solve vexing problems for large numbers of users, and by their nature capture a plethora of data from their customers. As these data sets grow, they become increasingly valuable. Enabling companies to better tailor their products, features and to target customers with highly contextual and relevant offers. Customers don’t sign up to directly benefit from the data asset. The product is so valuable that they simply want the features offered out-of-the-box.
I’m only kidding, I don’t find data boring at all. A lot of the data collection above is part and parcel of how the online advertising world works its magic. This has come under scrutiny recently. If you want more info on GDPR head over to our other blog here to read up on it.