Online Revenue Models

Online revenue model – revenue from sponsorship of site sections or content type

 

The online community aims to create revenue uses the resources and space they occupy. A company can pay to advertise a site channel or section through sponsorship. This allows the online platforms to host a variety of sponsored organisations, which target these specific platforms based on their audience and the reach they hold (Chaffey, 2011). Rather than an obvious advertisement, a content type or section of a website can just be sponsored. For example, banks often sponsor online shops so that their services are advertised and prioritised as the preferred method of payment (see below image). This type of arrangement is often for a fixed period, or may be part of a reciprocal arrangement, sometimes referred to as a ‘contra-deal’ where neither party pays (Chaffey, 2011).

 

A great and very famous example of this is the Million Dollar Homepage, created by Alex Tew. Established in 2005, this homepage essentially sold parts of itself to advertisers in return of a fee. Created by Tew, who was concerned about paying his university debts, the site earned him $1,000,000 in just four months. This is a great success story of online owners creating revenue in return for website space, advertising and sponsorship.

 

Often web hosts will seek only those organisations that are relevant to their website or platform. If they allow irrelevant advertisers to promote on their site they’re deconstructing the trust and loyalty they have built up with their audience and/or followers.

 

Affiliate revenue models – making beneficial partnerships

 

Affiliate revenue is created through online companies and businesses through online advertising and creating a web of networks, allowing organisations to target a wider audience. Varying from sponsorship, affiliate networks often are used to promote another brand openly, through competitions or click-throughs and presenting this network as ‘friends’ of the brand.

 

A commission based operation, affiliate revenue arrangements are often known as Cost Per Acquisition (CPA) (Chaffey, 2011). Generally tasked to secure a sale, the arrangements can also be based on getting a customer to fill out a form, click-through, or simply boost website ratings by viewing their website.

The affiliate model requires an advertiser, the business with the product — and a publisher, the person bringing in sales. In this business model, both partners are making money, but in different ways. This can be used to help garner extra sales for a business while helping website owners make a profit from their website. Thus it is common for blogs to promote this way, as their followers are loyal and therefore trust and are likely to action what the publisher states about the brand.

 

 

Above: VEVO heavily sponsors musicians and artists on their social media profiles – playing a big role on YouTube.

Mamaia promotes their sponsors through both advertising banners and specific content type sections – see the competitions page where they promote Novotel.

 

Above: Some of the competition based affiliation used and directed at uni students – left shows Beginning Boutique’s competition which features a sample of products from organisations, thus promoting their product to their target demographic. Right: UniDays homepage, essentially just a discount to organisations (particularly online stores) whose target market is university students. This partnership is greatly beneficial as university students want discounts and UniDays links them to organisations who can provide that.

References

 

Chaffey, D. 2011, 8 Online revenue model options for internet businesses, Smart Insights, http://www.smartinsights.com/digital-marketing-strategy/online-business-revenue-models/online-revenue-model-options-internet-business/

 

Tew, A. 2005, Million Dollar Homepage, http://www.milliondollarhomepage.com