Tag: monetization (12)

Lessons Learned on the B2C2B Model

employee

In a recent post Tomasz Tunguz helped popularize the term B2C2B, which characterizes enterprise businesses that leverage winning the hearts and minds of the intermediate consumer, the employees of the company, as a primary customer acquisition channel. This bottoms-up approach to driving adoption & purchase within the enterprise has gained popularity for SaaS companies in the past years, including very successful startups like Dropbox, Slack, and New Relic leveraging the model.

LinkedIn is arguably the largest B2C2B SaaS business out there and I wanted to take the opportunity to share some of the lessons I learned on leveraging this model for success.

Freemium Design Pattern: Scale Pricing with Customer Success

Lately I've been spending time thinking about freemium business models and how best to structure them to maximize conversions. I believe we are still early in our understanding of these models and to date most of the available analysis has been limited to anecdotal evidence, one-off case studies, tips & tricks, and a few early overviews of what's been tried.

Despite this I think we are starting to see some interesting emerging design patterns and best practices coming together. I wanted to discuss one such design pattern, including examples of it's usage and potential limitations.

One of the segmentations that is often talked about among Chris Anderson, Eric Ries, etc. is dividing freemium plans into 3 main tiering types: time-limited, capacity-limited, and feature-limited. Canonical examples of each include 30-day trials for 37 Signals' Basecamp, storage space limitations for Dropbox, and mobile access for Remember the Milk, respectively.

One variant of capacity-limited freemium tiering that is particularly effective for products targeted at the SMB market is to scale pricing with customer success. What I mean by this is providing various premium tiers of your product that will become appropriate for your customer as they are more successful in their own business. Typically this means tying the tiers with capacity-limits that either directly reflect or proxy the customer's growth in their own user base or revenue.

5 Social Platform Predictions for 2010

Leading Social Platforms

As many of you know, I'm a big proponent of open platforms and have spent much of my career designing, building, or leveraging open platforms and APIs. While we have seen explosive growth in social platforms over the past several years, I believe they are still very early in their history.

I wanted to put out my 5 social platform predictions for 2010, as I think we are poised to see another exciting year of innovation.

Designing and Testing an Ad Product: 5 Lessons Learned From imeem's Audio Ads

Andrew Chen asked me to write a guest post on his blog about some of my experiences monetizing music at imeem. I wanted to share it here as well.

---

Introduction
In its search to find the most effective way to monetize user’s time spent listening to music, imeem has become one of the early innovators in the nascent online audio advertising space.

From the process of designing, testing, and iterating on imeem’s unique audio ad product, I wanted to highlight 5 key lessons learned that are applicable not only in developing imeem’s ad offering, but in general to designing any innovative ad product.

Lesson 1: Align the ad product with your site’s user experience
Lesson 2: The easy way is often not the best
Lesson 3: Pick the right metrics to optimize
Lesson 4: Make sure to look at qualitative feedback
Lesson 5: Iterate on the sell in addition to the ad product

1. Align the ad product with your site’s user experience
imeem had classically employed a variety of advertising strategies to monetize users, including display ad inventory that was filled by our direct sales team through high impact brand campaigns as well as dozens of ad networks we used to fill our glut of remnant inventory. Yet we knew with our audio consumption experience, we were creating a new kind of available ad inventory which could be much more effective at reaching our users than display ads since audio-based advertising better aligned with the activity users were most engaged with on the site. With terrestrial radio ads still generating $21B in revenue, there was clearly an opportunity to shift some of those dollars online and provide a better experience for both users and advertisers.

2. The easy way is often not the best
Online audio ads are not a new concept. They have been used by a variety of major online streaming outlets, including AOL Radio, CBS Radio, Live 365, and Yahoo LaunchCast. However, the initial incarnation of audio ads took the easy way out. They typically ran 30 second audio ad spots which they obtained from ad agencies that re-purposed their terrestrial radio creative for online audio ads. This made it very easy for agencies to get their feet wet with online audio advertising with no additional creative costs. While this may work for traditional online streaming services, the new generation of music streamers like imeem, Last.FM, and Pandora would not be willing to run such long audio ads out of fear of losing their user base.

So what was needed was an audio ad unit custom tailored for personalized streaming services. And that’s what we ended up creating at imeem. We came up with an 8 second audio ad spot that would advertise a national brand and show a standard IAB medium rectangle (300×250) banner on top of the player during the audio ad playback. The user could click-through the medium rectangle to the advertiser’s landing page like classic banner ads. We started with a very low frequency of a maximum of 2 ads per user per hour. However, this was far from easy, as it required imeem to develop in-house production capabilities for the 8 second audio creative, as agencies never had existing creative and were rarely willing to develop another set of creative themselves. While this was an undertaking, it is often necessary to bear the cost of innovation to deliver the right ad product to your audience.

3. Pick the right metrics to optimize
In order to understand the effectiveness of any ad unit, it’s important to systematically test it. The first step in designing a successful experiment was determining what were the metrics that we were testing. We knew that we were trying to satisfy two customer segments with this ad product: advertisers and users. For advertisers, there were a variety of ad-related performance metrics that we could measure. However, we decided to start by measuring the advertiser metrics that ad agencies had classically been most interested in. We wanted to determine whether we could make advertisers happy through the performance of these classic metrics, since trying to educate ad agencies on the importance of new metrics is an uphill battle that would significantly decrease your ability to sell the unit. Thus the initial advertiser metrics we tracked were click-through rate of the tethered medium rectangle banner as well as aided and un-aided brand recall as measured through quantitative surveys administered by our research partner Dynamic Logic.

For users, what we wanted to understand was whether introducing audio ads onto our site would decrease the amount they used the site. While we tracked page views, visits, session length, etc, we focused on number of songs played per user during the life of the experiment as the most important proxy for site usage.

4. Make sure to look at qualitative feedback
In addition to measuring quantitative metrics, it’s equally important to collect qualitative feedback from real users. The iModerate online focus groups we conducted ended up being very enlightening and allowed us to derive interesting insights of consumer motivations and behaviors that looking at the quantitative data alone wouldn’t provide.

For example, though initially we were significantly worried that the introduction of audio ads would cause users to flock to our ad-free competitors, we learned through interviews that many of our young users had developed a strong affinity with imeem, understood the need for imeem to monetize, and were eager to suggest ad verticals they would be most interested in hearing to improve the product.

5. Iterate on the sell in addition to the ad product
An area that’s as important to iterate on as the ad product itself is how you sell or position this offering in the marketplace. Selling innovative ad products is actually the greatest challenge in the process. Anytime you introduce a new ad unit, significant education is required for brand marketers and agencies to help them to understand the importance, effectiveness, and promise of this new medium.

Our sales planning team iterated many times on the pitch to advertisers for the audio ad product as well as how we reported on ad unit performance at the end of each campaign. This was regularly refined based on feedback we elicited from our advertising partners.

Conclusion
While many have claimed the death of online advertising in light of the recession, its important to remind ourselves that ad dollars are still being spent online. Now is an opportunity to innovate on the ad products that we offer advertisers to show greater value, brand awareness, and performance. We must keep in mind that ad agencies are eager to find better ways to spend ad dollars, as they are equally interested in showing results to their brand clients to hold on to their ad budgets. We should partner with our advertisers and users to find the most efficient way to leverage online advertising to monetize our sites.

Interesting Metrics From Flash Gaming Summit

The Mochis Winners
Winners from the Mochis Award Show @ Flash Gaming Summit

On Sunday I had the opportunity to attend Flash Gaming Summit, the first annual conference dedicated to flash game development organized by my fiancee Ada Chen from Mochi Media.

What's often most exciting for me about events like these is hearing different metrics tidbits from the speakers who are knee deep in the space. This conference was no exception, with a variety of different stats shared throughout the day. I've summarized some of the highlights below.

Optimizing Offer Providers with Sometrics Virtual Currency Manager

As more and more offer providers enter the incentivized CPA and direct payments space, there is a clear need for a way to easily test different offer providers and optimize between them.

At imeem, I was responsible for evaluating, signing up, testing, and optimizing the various offer and direct payment providers that were leveraged as part of the imeem points virtual economy. I learned valuable techniques and lessons that I thought I would share with all of you as every day I see more interesting startups jumping on the virtual currency bandwagon.

Lessons Learned from imeem

Before moving on to a new phase in my career, I always like to reflect on the previous experience and put together key takeaways that I can leverage in the next opportunity.

It's that time again as this past Wednesday was my last day at imeem. As some of you know, imeem acquired Anywhere.FM at the end of 2007. Since then I've helped to migrate Anywhere.FM, develop the imeem Media Platform, and contribute to a variety of monetization projects. But now I'm eager to move on to the next adventure :)

Since I have a blog this time around, I thought I would share my lessons learned from imeem with all of you.

Monetize Online Music with Audio Ads

Despite the over 200 music startups that launched in 2008, I am disappointed with the lack of startup innovation in the space. While many of them definitely nailed building something people want, most failed to make something people will buy. When developing a startup, figuring out a viable business model is as important as producing a compelling product. And unfortunately there was little in the way of innovation in business models in the music space.

This is an even more pronounced issue in music, where content licenses are owned by an oligopoly of four highly litigious record labels. The labels have been eager to shut down or sue a variety of music startups, including Muxtape, Songbeat, Seeqpod, Project Playlist, and others. Yet what the labels are struggling most with is recouping lost revenue from the 45% drop in CD sales since their peak in 2000. What they are most desperate for is not a large settlement, but a new sustainable revenue stream. What they need are startup partners seeking to help them generate new commercial value with their content and through relationships between artists and fans.

9 Startups to Help You Build Your Virtual Economy

So are you thinking about adding a virtual economy to your app or website? The great news is there are a variety of startups out there waiting to help you!

Incorporating Virtual Currencies in Non-Gaming Sites

2008 saw an explosion in virtual currencies and their associated virtual goods all across the internet. With Facebook social game Mob Wars suspected of making a million dollars a month and Zynga rumored to have made $50 million in revenue in 2008 off of its social and iPhone games, companies are seeing real revenue from this burgeoning monetization model. Even other indie social game developers like Mobsters and Lil Green Patch who also monetize virtual currencies have seen huge success with 13M users on MySpace and 5.9M monthly active users on Facebook, respectively. To top it off, over $580 million was invested in virtual goods related startups in 2008.

Monetize the Twitter API

Silicon Alley Insider recently announced The Create a Twitter Revenue Model contest. I decided to throw together an entry and today SAI has picked it as one of the finalists. So I thought I would write a blog post summarizing my submission.

Make Something People Will Buy

Y Combinator is famous for its well known motto "Make Something People Want." This very simple statement serves as a guiding principle for a startup, helping to focus it on this core goal early on: to ensure that its product provides compelling value to its target audience. It also de-emphasizes many secondary issues that, while important, are not likely to be an early cause of failure for a startup. I'm a big fan of the motto and use it myself as a quick filter for all the startup ideas I evaluate.

Yet the economic recession that we are in the middle of poses new challenges. While it hit in the financial and real estate sectors first, it is undeniable that it will have a lasting effect on all sectors of our global economy.