Building a business model helps you define your company's goals, identify the resources and methods you'll use to achieve those goals, and anticipate the expenses you'll incur once things are up and running.
There are numerous business models, but in this article we are going to focus on five examples of digital businesses. Join us!
Freemium model
Subscription and on-demand model
Marketplace model or online market
E-commerce model
But before we start, let's talk about the characteristics that digital businesses share.
Digital business models have different characteristics from “traditional” or physical ones, starting with the fact that the added value of the company would not be possible without the use of digital technologies . For example, Amazon, Uber and Airbnb are companies that would not have any business without the Internet.
Customer acquisition and retention for these businesses is based on digital channels ( website , email, social media, digital advertising on search engines and apps, etc.). These companies use digital technologies to reach their potential audiences, and sales are characterized by following trends such as sales automation.
In addition, customers are willing to pay for a digital product or service (even if it is sometimes linked to the physical world). This makes the difference with traditional models.
Now, let's go to the examples...
Free model (supported by advertising and product sales)
The free model is quite common on the web. Many companies have created great products, releasing them on the WWW for free in the hope that once people get used to them, they can monetize them .
Companies like Google, Facebook, YouTube and many apps started out this way: they launched a free service that started to gain more and more users. Thanks to their popularity, they first attracted angel investors, then venture capitalists, and then they turned to the advertising model to monetize their platforms, and thus avoid running out of cash and investors.
Let's look at the example of Google as a “free” business:
What is Google’s value proposition?
Allow searching for any type of information on the Internet.
Free email to communicate and receive information.
Possibility of creating advertising announcements focused on certain search terms and for certain types of users.
Ease of building advertising campaigns for specific periods of time.
Have an internet browser (Chrome) that makes it easy to search for information in your search engine (Google).
And much more.
How do you make money? Through:
Google Ads.
Google Adsense.
Gmail Ads.
Google Shopping.
YouTube Ads.
YouTube Premium.
Google Cloud.
Google Play.
Google Maps.
And more…
Who are your main partners or clients?
Agencies, companies and people who make advertisements.
Sites that generate content (display advertising).
Original equipment manufacturers that partner with Google to launch barbados business email list Google-branded products.
What are Google's main activities?
Crawl and index data. Crawls all existing pages on the World Wide Web and indexes them based on their content.
Search, associate and present information. It is estimated that there are more than 1.88 billion pages on the web and Google is responsible for organizing the results of each search by keywords according to the relevance of the pages found.
Improving the internet search experience. Google tries to understand what each user is searching for. It presents the most popular and most recent searches, and is always trying to disqualify sites that promote misinformation, spam, and clickbait .
Building digital ecosystems. The company promotes integration and communication between its tools, such as Google Search, Android, Chrome, YouTube, Gmail, etc.
Marketing. Google also needs to promote its own products and services.
Today we know that it is very difficult to start at the level of this technological giant, but you can learn a lot from this company that mixes the free business model (supported by the sale of advertising) with the “hidden business” model where the user does not pay for the service, but rather the companies that want to attract the users that Google already has do.
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Freemium model
Examples of the freemium model include Dropbox, Spotify and MailChimp. Essentially, it consists of having a free version available to everyone, but inviting them to pay for a subscription to get more capacity, to stop seeing or listening to advertising or to receive special compensation .
Let's look at the example of Dropbox as a freemium business :
What is Dropbox’s value proposition?
Offer a platform to store documents that are available on any device connected to the Internet, either accessed through a web browser or through its app.
Being a collaboration platform. It not only allows you to synchronize documents, but also makes it easier to edit them if they are in a Microsoft Office format.
How do you make money?
Through its freemium model . You can get the basic version for free, but if you need more space and features you can sign up for one of its personal or business plans.
Sales earned through the Dropbox Reseller Program.
Who are your main partners or clients?
Individuals who need to store personal or professional digital documents.
SMEs with between 10 and 50 employees.
Large companies like National Geographic or News Corps that have many employees and different cloud storage needs.
Dropbox resellers looking to enter the cloud marketplace.
