Revenue models

Companies use various online revenue models in order to attract customers to a wider range of products and services through which they generate profitability from interaction with customers. According to the Internet Advertising Bureau (IAB, 2013), digital advertising expenditure in the UK grew 12.6% to £2.59 billion in the first half of 2012.

To generate revenue online, companies use advertising models such as display ads on Yahoo, search and text ads on Google, promoted content on Twitter, Recruitment ads on LinkedIn and many more.

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However, there are implicating factors in this model such as a correlation between an individual’s online behaviour and advertising exposure, and actually having a positive effect on buyer behaviour (Ekimov, 2013). Google’s interactive advertising model can be used to achieve more desirable results.

Subscription revenue models allow customers to subscribe for a sum of money for a certain period of time (daily, monthly or annual). Typically this model was used by newspapers and magazines, however, others also embraced it. According to International Business Times (IBTimes, 2013) Sony Play Station 4 due for November release will charge users for its online features through offering a premium subscription, enabling users to access thousands of games for a monthly fee.

The revenue model benefits businesses providing them with constant revenue from subscribers. Subscriptions are paid in advance, meaning reduced risk and uncertainty for the businesses.

“Affiliate”, another form of revenue model is commission based, providing purchase opportunities wherever people surf (Slideshare, 2012). This can be done, offering financial incentives in the form of a percentage of revenue to its affiliated partner sites.

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This model offers merchants a wider area to sell their products and services, whereas for affiliate marketers it proves to be an easy way of creating additional income for their websites. However, by implementing this model, merchants may suffer from costly set up and high commission costs, and affiliates can be cheated by merchants when dishonest ones close down programs without informing the affiliates, and leaving them without paying commission (Bandyopadhyay et al., 2009).

Amazon, for example offers an affiliate program for those interested, by encouraging people to promote the Amazon website in return for payment.

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Bibliography:

AVC, 2012. Web and Mobile Revenue Models. Photograph. AVC. Available from: http://www.avc.com/a_vc/2012/12/mba-mondays-revenue-models-advertising.html [Accessed 28 March 2013].

Bandyopadhyay, S., Wolfe, J., Kini, R., 2009. A critical review of online affiliate models. Journal of the Academy of Business & Economics, 9 (4), 141-148. Available from: http://ehis.ebscohost.com/eds/search/advanced?sid=5e230881-e00e-4d69-9a01-9ea7c7268467%40sessionmgr11&vid=11&hid=104 [Accessed 28 March 2013].

Ekimov, G., 2013. How to build successful internet advertising network. Available from: http://www.webxiom.com/how-to-build-successful-internet-advertising-network/ [Accessed 28 March 2013].

International Business Times, 2013. Sony PlayStation 4 to force premium subcsriptions similar to Xbox Live. Available from: http://www.ibtimes.co.uk/articles/437194/20130220/ps4-playstation-sony-price-launch-details-specs.htm [Accessed 28 March 2013].

Internet Advertising Bureau, 2013.  2012 H1 Digital Adspend Results. London: Internet Advertising Bureau Available from: http://www.iabuk.net/research/library/2012-h1-digital-adspend-results [Accessed 28 March 2013].

Slideshare, 2012. Business and Revenue models in e-commerce. Available from: http://www.slideshare.net/pranaypanday/business-and-revenue-models-in-ecommerce [Accessed 28 March 2013].

WordPress, 2010. Affiliate Marketing. Photograph. WordPress. Available from: http://welaoh.wordpress.com/2010/02/18/ [Accessed 28 March 2013].

YouTube, 2013. Playstation 4 News: Subscription Models and all games are digital. Available from: http://www.youtube.com/watch?v=I7tGnXalwVM [Accessed 28 March 2013].

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2 Comments »

  1. garth said

    Please remember that you need to complete the 21st entry before Friday 29th March at 16.00, and the entry for 28th March by 16.00hrs on Friday 19th April.

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