T4 Digital marketing
Essay revenue model
Name:
Course name:
Year:
Date:
Location:
Teacher:
Rodney van Rijen
IBMe
3
March 8th 2015
Amsterdam
H. Janssen
1
Rodney van Rijen, IBMe3
Essay revenue model
Introduction
A lot of companies worldwide focus on making profit and increasing their revenue. The increase
in revenue of a company, however, isn't just going to happen out of the blue. To increase the
revenue of your company you should use revenue models, which can be applied to your
company. As this is our digital marketing course, we will also focus on the digital revenue
models only. Within this essay I will explain and discuss about these models. This essay will
start with an explanation on digital revenue models. Secondly, my opinion will be given
regarding the information found and the models itself. Finally, I will be taking a look at the shortterm and long-term revenue models and will argue about the differences.
What are digital marketing revenue models?
Actually the term revenue models is quite easy to explain. A digital revenue model is a
framework for generating revenues online. It looks at the different ways and methods to make
money and which ones are the best to implement for a company. Of course there is a
difference between a normal revenue model and the digital revenue model, but this difference
isn't really dealt with in this essay. A digital revenue model should be implemented for every
online start-up, in their business plan, as it depicts the income for the rest of the start-up's time.
For this essay I have used three different sources for the different types of revenue models and
it is funny to see the difference between recent and old articles. Dave Chaffey wrote about
digital revenue models in 2011, which shows us the older and somewhat outdated revenue
models. However, both the articles written by Abhash Kumar and Don Nicholas were written in
2014, and these two show more recent and updated revenue models, which are more used in
the latter years.
According to these three articles combined, these are the main revenue models which can be
used:
1. Different ways of advertising. For instance, search ads, video ads, Email ads.
2. Freemium model. Normal version is free, but more possibilities when going premium.
3. E-commerce. The selling products and services online.
4. Affiliate marketing. Earning commission when someone is send and linked to another site.
5. Subscription model. Same as normal revenue models, subscription is paid for access.
6. Selling data. Selling the date of the people using the service/product.
7. Sponsorships. Paid by several companies to operate.
My opinion regarding found information and revenue models
I think this subject quite speaks for itself. During a lot of courses, we have already discussed
these sorts of revenue models, which made us known with the models already. And to be
honest, if you use the internet quite often, you will see either one of these models back in the
used websites. For instance Google (Selling data), Spotify (Freemium), etc. So the found
information was just an extra source to justify the thoughts, but the revenue models are quite
logical and can be found in everyday internet trafficking.
2
Rodney van Rijen, IBMe3
Essay revenue model
Short-term or long-term revenue models
Each and every different revenue model needs it's time to be online and to be used correctly. In
this part we will take a look at the revenue models which take a short time to generate revenue
and which need more time to generate revenue. For the division between short and long term
revenue models, we will use the ones discussed above. Of course these different methods differ
from the service, products you are delivering and the size of the company. But we will
generalize it in this case.
Short-term
The above-mentioned revenue models, which are short-term are the following. The freemium
model can be quite short term. Because the only thing you have to do is attract a lot of people
and make sure that these people want more and are willing to pay for it. This can be done quite
quick with a popular service or product. E-commerce is quite short-term also. as a company can
set up a e-shop and can buy their products right away. Affiliate marketing can also be shortterm, as people only have to link people to other sites to gain commission. This means they
don't need to build up a name first and such. Sponsorships can be short-term and long- term
though. It can be sponsored to create something, which means it is paid already in the
beginning. However, it can also occur that a online website needs sponsorship after a long time
to continue existing.
Long-term
The long-term revenue models are the ones that still remains. The thing with long-term revenue
models is that you have to brand your company first, before people trust it and are willing to
buy/invest. For instance in the advertisement. You will first need a lot of traffic on your website
before people are willing to invest in it. More traffic, is more views, is more revenue. Same for
the subscription model. First you have to make sure that the customer is willing to pay to
continue to the content, which needs some time to build the brand. For selling data, I believe
there is another reason for it to be long-term. I believe that the websites which are selling data,
often are really big websites, such as Facebook, Google, etc. These sites have a lot of
recognition and people are not afraid to put there valuable information in here. That is why you
will need to build a trustful relation with the customer first before receiving the data, which is
later sold.
Literature list
Chaffey, D. (2011). 8 Online revenue model options for Internet businesses.
Seen at 08/03/2015 and retrieved from: http://www.smartinsights.com/digital-marketing-strategy/onlinebusiness-revenue-models/online-revenue-model-options-internet-business/
Kumar, A. (2014). The ultimate master list of revenue models used by Web Mobile companies.
Seen at 08/03/2015 and retrieved from: http://yourstory.com/2014/03/ultimate-master-list-revenuemodels-web-mobile-companies/
Nicholas, N. (2014). 7 Internet Revenue Models Publishers Use to Generate Online Advertising Dollars.
Seen at 08/03/2015 and retrieved from: http://www.mequoda.com/articles/multiplatform-publishingstrategy/three-revenue-models-for-online-advertising/
3
Rodney van Rijen, IBMe3
Essay revenue model