Category Archives: Economic Aspects

Making Small.World Pay

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Making Small.World pay

The successful development of Small.World will rely on careful design of the revenue stream. The app is hinges on the content and access to data from as wide a user-base as possible. The efficacy of the application is significantly improved by the quantity of suggestions and level of detail offered about a particular area.

It is crucial that this application is as easy to use and open as possible with minimal barriers to user uptake. The more users, the greater the product and the potential for increased market penetration. As the success of this application relies upon having a wide range of users in as many locations as possible, the subscription approach is considered inappropriate and potentially harmful to the growth of our user-base.

Research suggests that users concerns about targeted advertising rank far behind fears about cyber-bullying, identity theft and government surveillance, indeed only 4% of respondents in a survey cited behavioural advertising as a concern. Effective and appropriate targeting of adverts has been shown to significantly decrease consumerā€™s irritability with online advertising.

Popular Social Media platforms tend to attract a broad demographic and as such can be attractive to advertisers. The value of Social Media platforms which require a login and sign-up process is in the potential for adverts to be targeted at specific audiences and demographics.

Small.World will be in a position to offer the potential to offer a rich mine of customer preferences and interests to advertisers, as well as location and demographic details about our users.

Small.Worldā€™s main selling point to advertisers may be broken down as follows:

-Demographic information (age, gender etc.)

-Location

-Interests

-Interests of Social Group

-Access to contacts and social groupings

-Activity and behavioural data

-Internet usage data (e.g. device preference)

The USP of Small.World to advertisers is that we offer an easy and effective way of targeting real social groups. We may be able to offer an opportunity of targeting people who are known to each other offline with the same online ad experience. This may create interesting opportunities for marketing strategies to harness the potential of the social group and the reinforcing of advertising with a peer group.

Our users will be constantly providing a rich source of data, refining their own interests and social groups creating a powerful tool for very specific advertising opportunities. Users should be empowered to give feedback on ads in an attempt to remove inappropriate advertising. This function will also allow us to feedback to advertisers on the effectiveness of their targeting strategy.

References:
Bachman, K. (2015). Poll: Targeted Advertising Is Not the Bogeyman. AdWeek. [online] Available at: http://www.adweek.com/news/technology/poll-targeted-advertising-not-bogeyman-updated-148649 [Accessed 15 Apr. 2015].

Pan, S. and Yang, H. (2014). Targeted Advertising on Competing Platforms. 1st ed. [ebook] Ohio: Ohio State University, pp.1-36. Available at: http://econ.ohio-state.edu/hyang/Tageted-Ads-Jan14.pdf [Accessed 15 Apr. 2015].

Who Likes What: Social Media By Demographic. (2011). [Blog] KISSmetrics. Available at: https://blog.kissmetrics.com/social-media-by-demographic/ [Accessed 15 Apr. 2015].

Cashing in on success: Advertising or Subscription?

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Cashing in on success: Advertising or Subscription?

pay-per-click-impression-online-advertising1-570x350The web has provided many companies with new and lucrative ways of accessing markets and consumers. The history of the web is also littered with examples of failed or over-inflated companies unable to realise the potential of commerce in the internet age.

Perhaps the most obvious evolution in online business models is the move in recent years from subscription models (such as Friends Reunited) towards advertising based revenue models (such as Facebook). The developments in online business models are far from complete, with constant readjustments and innovation in what is still a very nascent market. Youtube has been identified as a service which may in the near future move towards a mixed-model approach, introducing a subscription stream to its business model in part as a response to user objections to advertising.

There are five commonly accepted approaches to monetising web-applications, Paid Apps, In-app Purchase, Virtual Currency, Advertising and subscription models . Each model has its benefits, and of course its weaknesses, the appropriateness of each strategy depends very much on the type of application in question.

Paid Apps are apps that require the user to purchase a version of the application on their device. This may be appropriate for an application or service that is very confident of its product, to the extent that they can place a value on the app and promote it sufficiently to generate an income. In App Purchase is most commonly associated with ā€˜freeā€™ applications known as ā€˜freemium appsā€™ where the is no initial cost, but there are incentives to buy extra features or access to further content within the app. Virtual Currency approaches allow users to buy currency within the app or game that can be used to enhance the user experience. Advertising within applications allows companies to access their consumers within the app. The potential for targeted and specific advertising is appealing to brands and the app is usually free to use. Advertising can be negatively received by users, particularly if it is intrusive or bandwidth hungry. Subscription models incur significant overheads for the developer and can be unpopular with users, however this approach may be appropriate for apps with content that is in high demand (such as popular news or magazine content).

The choice of revenue stream for an application is incredibly important to get right. The type of audience, amount of traffic and and the overheads associated with an application or service all have an impact on which model is appropriate.

References:Ā 

Perez, S. (2015). YouTube Confirms Plans For An Ad-Free, Subscription-Based Service. [Blog] techcrunch. Available at: http://techcrunch.com/2015/04/08/youtube-confirms-plans-for-an-ad-free-subscription-based-service/ [Accessed 12 Apr. 2015].

Kanada, P. (2013). Which Can Be Best Mobile App Revenue Models?. [Blog] The App Entrepreneur. Available at: http://theappentrepreneur.com/mobile-app-revenue-models [Accessed 12 Apr. 2015].