Freemium: Something for nothing

As I saw firsthand at SXSW last week, many companies are still trying to figure how to make money in a market where online customers expect to get everything for free.  Here are a couple of interesting points from a keynote featuring Guy Kawasaki and Chris Anderson (author of the book “the Long Tail”). Question: How has the economic crisis changed things for online businesses? Two years ago companies were operating in a monetary and non-monetary economy The business model went something like this: raise money, sell company, if not try Google Adsense Today: need you a freemium business model right out of the gate The magic number they cited was 5% of users need to upgrade to a premium service for a business to be viable. I can’t recall if  a source was identified for the number. To be honest, this felt a little high to me.  In a previous life marketing downloadable shareware software that had a premium upgrade path, we had very profitable products if we could get 1% of the users to upgrade.  The challenges back then (as they are today) were getting enough users to install the free version and creating a strong enough value proposition for upgrading.  In the end, we keep coming back to the basic needs of a large customer base and strong revenue model,...

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Social Media Advertising: Does it work?

As I shared earlier this week, I’ve been experimenting with social media advertising on Facebook.  The results to date have been, how do i say this politely, appalling.  I knew from my prior research that the clickthroughs would be lower than paid search on Google but given the lower expected cost per click and and larger number of impressions, I figured we might “make it up in volume”. Here some interesting articles I’ve compiled while I try to assess the effectiveness of this campaign and my future with social media advertising. Ad Gurus Find The ‘Real Value’ Of Online Advertising Remains Elusive What’s the future for social network ads? Reach versus Engagement, part II (full post) Quick Case Study on Facebook Advertising The Facebook Ad Experiment — 5 Recommendations for a Successful Campaign Facebook Ads: Ineffective or Fraud? Social Network Advertising Must Change for Brands Results From My Facebook Ad Campaign As you can see, the jury is still out for social media ads and only more testing will help us discover the truth. Have you read any good...

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Making a bad decision on purpose: option value and social search

Am I going soft? I’ve been dabbling with paid search on one of the major social networks.  The interesting thing is that we decided to press forward despite the fact that our “back of the envelope” calculations using an optimistic lifetime value estimate projected that this campaign will end up underwater. I frequently rant about the value of running the numbers first but in this case we decided to “do it for strategic reasons”.  More specifically, this campaign had high option value.   In a situation like this, a simple ROI calculation may not be enough.  Conventional projects with predictable outcomes can use straightforward estimates.  When venturing into the unknown where the risks are greater and the future is uncertain, people often use real options as a way to capture the potential value of an opportunity. So in this case, paid social search is a good fit for thinking about option value.  Despite a lousy initial estimate, there is great potential in the medium.  If this works, it could open up a big, new promotional channel.  It could also be a bust.  We’ll never know unless we try it. So can you think of any high risk projects that have a small chance of a exponential...

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Nine things to consider when starting an affiliate marketing program

So how do you start an affiliate marketing program? As ubiquitous as affiliate programs are, I couldn’t find any great online content about getting started.  I was looking for something pretty simple like a checklist or PPT with the key questions and considerations.  Over the last 6 weeks, I’ve interviewed a series of “experts” to expand my understanding of the subject. So here is my “affiliate marketing checklist”: Types of partners – One size program may or may not “fit all”.  Some partners will need more hand holding and information before signing up. Size of partner universe – There always seems to be more ideas of potential partners than resources to contact them all.  I suggest building a big list (prospect universe) and contacting a couple in each category to eliminate the ones that don’t make sense. Revenue share – The marketplace for affiliate programs is very competitive these days.  Referral fees can range from 2 to 20%.  My opinion is that you want to be aggressive.  Remember it is better to have 80% of something than 95% of nothing. Competition – What are they doing and how are they doing it?  Is there any evidence of success?  How will you differentiate your offering? Affiliate network/tracking/reporting – Sites like Commission Junction and Linkshare offer a broad network of potential affiliates at a cost (as much as 30% of revenue) as well as payment and tracking infrastructure.  You need to think about whether or not the value of their distribution exceeds the cost.  If you decide to “roll your own”, then you can use a product like iDevAffiliate. The upside is its low cost but you will then have to recruit every affiliate on your own. Branding – What will you call your program and/or your partners? Ongoing support – Who will manage the affiliate relationships once they are signed up. Marketing materials/collateral – There is a variety of logos, web pages and PPTs you will need to promote and maintain the program. Set proper expectations – This is an indirect sale.  Even after you close a partner, it will take time to get them engaged and actively promoting your product or service. I hope this is helpful  Please let me know if you have any...

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Hubspot asks who do you love?

The good people at Hubspot never let me down. I was doing my early morning scan of Twitter when I came across a tweet with a shoutout to send “LinkLove” to anyone you want (ie friend, colleague or favorite blog).  After a short music video starring Hubspot’s resident triple threat Rebecca Corliss (singer, dancer and inbound marketer), I checked out the lovefest.  All you have to do to share the love is enter your Twitter name, your friend’s Twitter name and “their URL”.  Like all good viral campaigns, the made it “stupid easy” to share and it wasn’t long before my Twitter stream was full of their #linklove hashtags. So why all the buzz about #linklove?  For those of use trying to build a business organically (OK, using inbound marketing as Hubspot would say), inbound links are gold.  When they come from a site with stronger page rank, this is even better.  I feel pretty confident that Hubspot has more Google page rank than 90+% of the people on Twitter (Hubspot = 6 vs. Tangyslice = 3) so the once the “linklove” pump is primed, this was highly likely to go viral.  Everyone wants a free link from a site with more page rank. Or so they would think…  OK, I’m not an SEO expert (but I play one on television).  A closer look, however, reveals that linklove.hubspot.com has no pagerank (yet).  Thanks to all those inbound links i would expect this to improve pretty quickly.  Would it have been better to put it on www. hubspot.com/linklove instead?  Any SEO experts out there to offer an more qualified opinion? A more cynical marketer might also suggest that Hubspot is getting the better deal as the value of the aggregate inbound #linklove links to likely exceeds the sum of the link building value to all of us “lovers”.  It doesn’t take an MIT degree to figure that it just doesn’t matter.  Unlike many forms of marketing, there’s no cost to giving somebody a link so in the end this viral campaign is fun and everyone loves a free link. I once again take my hat off to these guys (Rebecca, Mike Volpe, Rick Burnes, et al).  Half the battle is coming up the idea for the killer viral marketing campaign and the other is making it happen.  They did both really well… ...

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10 Interesting Viral Marketing Links

Here are some links I found while doing some research to find a viral marketing consultant. http://blogsome.eu http://www.viralvoodoo.com http://www.viralblog.com/ http://www.viralmarketingtips.net/ http://www.technology-toolkit.com http://lehrblogger.com http://sethgodin.typepad.com http://blogs.forrester.com http://mariosundar.wordpress.com http://www.marketingexperimentsblog.com Time to get...

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