Monetization Models in the Age of Free
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This document discusses monetization models for offerings that are initially free. It argues that to be successful, offerings need to both solve customer pains and bring in revenue. Common monetization strategies for free offerings are discussed, including advertising, freemium models, sponsorship, and identifying who creates value from assets and how they will pay. The document provides a framework for identifying assets, who would value them, and how they would pay through various monetization strategies like purchases, subscriptions, licensing, and others. It emphasizes taking a broad view of potential assets and parties that could find value in order to explore monetization opportunities.
Monetization Models in the Age of Free
- 1. Monetization Models in The Age of “Free” Lesley Grossblatt, Lucinda Foss, Caitlin Smallwood & Eddy Wu
- 2. Pop quiz! What is the key to a successful, sustainable offering? A) Solving an important customer pain. B) Bringing in revenue. Answer: Answer: It’s a trick question! You need both! It’s a trick question! You need both!
- 3. But how can you make money with free? How do these “free” offerings make money? Advertising, Freemium Sponsorship Licensing Identify who you create value for and how they’ll pay for it
- 4. How long has Intuit been competing with “free”? Answer: Always, but competing with free today requires us to approach offerings differently
- 5. The starting point isn’t “free” Monetizing “free” is about finding value someone will pay for
- 6. Monetization is about value 1. What are your assets? 2. Who would value your assets? 3. How would they pay for your assets?
- 7. Step 1: What are your assets? • Product features • Brand • Technology • Reputation/goodwill • Data • Physical space • Content • Equipment • People • Relationships • Processes/know-how • … Think as broadly as you can
- 8. More assets than meet the eye
- 9. Step 2: Who would value your assets? • Individuals • Government Single parents, Green Day fans US Department of Labor • Households • Competitors Families saving for college, rental households in rural areas • Advertisers • Businesses Online retailers, FI’s offering payment solutions, office supply stores Broad as well as niche markets may find your assets valuable – think broadly about the ecosystem
- 10. Who values these assets?
- 11. Step 3: How would they pay? • Purchase • Cross-Sell • Advertising • Free trial leading • CPM – cost per to purchase thousand (mil) ad impressions shown • CPC – cost per ad click • Subscription • CPA – cost per new customer acquired • License or lease through ad • CPL – cost per lead • Freemium • Revenue share Base product is free, but you pay for additional • Sponsorship features One party pays for other parties to benefit from the asset
- 12. How would they pay? Shoe Manufacturers FBI , CSI, Other Agencies Other Businesses •Freemium: •License access to Sole Search •Subscribe to Zappos Insights • Free access to online •Purchase Zappos Culture Book reviews • Subscribe to review service
- 13. How can movie theaters compete in the Age of “Free”? What are your assets? Who values assets? How would they pay? Companies having Per-meeting, per- Big screen big meetings hour + lots of seats Music fans who Good sound can’t make a Admission system live show Films & exclusive movies Subscription - Film club or experience (e.g., annual or season Rocky Horror) pass Audience Number of ad Advertisers (Coke, Orville impressions on Concessions & containers cups Redenbacher) 13
- 14. How can you monetize free FAFSA? Challenge: Idea is a winner (NP score: 58), but we can’t charge for it What are your assets? Who values assets? How would they pay? Data on lots of Student loan lenders, Purchase mailing list of students about to go to computer sellers, office students college supply stores Lots of FAFSA’s + College financial aid Pay licensing fee for data parents’ verified tax officers information Goodwill for providing Students’ parents Purchase other Intuit free service products such as Quicken, TurboTax 14
- 15. Exploring 3rd Party Pays in QOL Quicken Online Hypothesis: Advertisers will value and pay for these assets. How? 1. Advertisers will pay to display ads in on QOL. $3MM opportunity 2. Intuit can serve both advertisers and users by personalizing discounts based on spending data. • >1MM users • Data on millions of transactions $20MM opportunity Use quick experiments to test and validate your monetization hypotheses 15
- 16. Models change over time Technology and business innovation can change the equation rapidly Keep revisiting your assumptions – play offense with your monetization strategy
- 17. Let’s find the value . . . 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? What are your assets? Who values assets? How would they pay ?
- 18. Cheat Sheet – Finding Value What are your assets? Who values these assets? How would they pay? • Product features • Individuals • Purchase Direct payment for value • Content • Households • Free trial • Data • Businesses • Subscription • Technology • Government • Freemium • People • Competitors • Pay for success • Processes/know-how • Advertisers • License or Lease • Brand • Etc. • Revenue Share • Reputation/goodwill • Cross-sell • Physical space • Sponsorship • Equipment • Etc. • Relationships • Etc.