(11 minute read)

In this post I outline some common types of Business Models that emerge from the digital business space.

Aggregators: gathers, aggregates, or connects different types of users and brings together different types of needs. E.g. Virtual merchants, e-tailers, catalogue vendors etc.

Brokerage: business models that shape markets by bringing buyers and sellers together to facilitate transactions. It can be B2B, B2C, C2C, or a combination. Brokers usually charge a fee or commission. They can include:

  • Buy / sell fulfilment, distributors, metamediaries, market exchange
  • Trading communities, auction brokers, reverse auctions, virtual store
  • Classifieds
  • Personalised search agents

Value Chain: moves away from discrete streams of data about the product to pools of information.

Infomediary: sometimes also known as content aggregators, these models are about gathering data about consumers, their consumption habits, and market information in order to analyse it, and help buyers and sellers understand a market. Can use Recommendation systems or Registration models.

Advertising Model: an extension of the traditional media model where the business (usually, not always) offers free content (news, information) and services (email, messages) mixed with advertising messages. Content can be original, distributed, or a combination. Models can be general or personal.

Manufacturer (Direct Model): helps a company or manufacturer reach its customers directly, thereby compressing the distribution channel – depends on sales for revenue generation through e-commerce.

Affiliate Model: provides purchase opportunities to all users and customers by offering financial incentives to affiliated partner sites – depends on driving traffic and revenue sharing arrangements.

Community Model: based on loyalty of users and voluntary contributors who invest emotion, energy, and time in generating content. Creates a knowledge network. Revenue generation can be through advertising, subscription, or affiliate advertising.

Subscription Model: where users are charged a periodic fee to subscribe to and access services.

Utility Model: a type of a pay as you go approach or use-based model.

 

E-MODELS

  1. Online Revenue Models:
  • Direct selling
  • Transaction Fees
  • Brokering online sales
  • Subscription access to content and charging for downloads / views – e.g. pay per view
  • Different forms of display advertising – CPC, PPC, CPM
  • Sponsorship – of sections of sites through fixed fee or time limited deals
  • Subscriber data – for email databases, charging for ads in emails or newsletters
  • Special access and membership: charging for online research, special reports
  • Affiliate – commission based revenue for driving sales or traffic
  • Freemium models – where free access is given for limited content as taster and full rates are charged for full access
  1. Online Intermediaries Models: understanding the position of the company and its website in the online marketplace – the click ecosystem.

A ‘click ecosystem’ is a concept that describes the flow of online visitors between search engines, media sites, other intermediaries, competitors, and your own business. This helps a business understand customer behaviour in order to identify potential search terms through which the company can be promoted and potential customers reached.

  1. Online Attribution Models: using tracking and analytics to understand how customers are influenced by different online media channels and the different ways in which they buy.

Different customers buy differently. Some buy on first visit while some others use searches on multiple channels and adopt multiple routes before buying. There is usually a big time lag between customer’s first interaction on the website and actual buying.

Businesses need to understand the different channels that are influencing sales – e.g. sources of web traffic, which promotional campaigns are effective, analysing different channels such as search, social media, partner sites, paid ads, tracking, and analysing ‘conversion’ paths.

  1. Online Communications Models: changing from linear to multiple, simultaneous, and interactive models – the role of Opinion Leaders is important.

Internet and social media have dramatically changed the way people communicate online. More web-based models are stimulating multiple, multi-way simultaneous conversations between businesses and individual and group customers.

It is important for a business to identify opinion leaders and ‘influencers’ who can drive sales and create brand awareness.

Social business models are increasingly gaining traction

SOCIAL COMMERCE

Social commerce started off as a form of e-commerce done on social media. It originally covered only activities related to user-generated content and sharing – e.g. reviews, ratings, recommendations, social interaction and collaboration, shared lists, online communities and networks etc.

Social commerce now includes a whole range of social media facilitated commercial activities including social shopping, product and brand curation, influencers and attributions, social ecosystems and generating social currency.

It increasingly also includes commercial transactions that take place using virtual and real money on social gaming platforms including mobile games and MMORPGs.

SOCIAL CURRENCY

This is the value generated from social presence which can be monetised online and offline. It is a form of leveraging digital and social assets.

It is captured in the Social Currency Wheel with key hubs of Affiliation, Utility, Identity, Conversation, Information, and Advocacy.

GAMIFICATION

This refers to the application of gaming principles in non-gaming contexts.

It improves productivity, marketability, user engagement, customer education, employee training and development, fundraising, customer journey and flow, and organisational learning. It generates new forms of value creation opportunities and revenue streams and is used in a variety of industries.

PURPOSE OF E-BUSINESS MODEL

For any kind of online presence with commercial motive, it is important to reflect, identify, and understand the purpose of online presence, the objectives, goals, how goals will be measured, the type of current and potential target audience or target customer base, the type of current and potential product offer, the value being offered, the brand proposition, and the goals, and compare them with existing opportunities and resources available.

VALUE AND BUSINESS MODEL

Always remember that a ‘business’ can be anything and always remember to think of a business not just in terms of products and services that they sell but in terms of the value and meaning they provide the ‘customers’.

Once you figure this out, you can think about products and services that you can tailor, that will act as a vehicle for your business to deliver that value to your current and intended customers, and will allow you scope for expanding the nature of your business.

A business model can then be your way of understanding different means by which you can raise revenue including online through your business and monetizing value creating sources of business.

In the next post I shall discuss the role of Value in Digital Transformation.