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Internet Business Models and Setting Up a Website Business Models Advertising Only (Single Rev. Stream) TV Radio Google Outdoor Content access is free Content creation, distribution, and advertising-delivery business Advertising/ Subscription Hybrid (Dual Rev. Stream) Cable Newspapers Magazines Content access cost is low Content creation, distribution, access, and advertising-delivery business Subscription Only (Single Rev. Stream) Transaction (Single Rev. Stream) HBO DVDs Newsletters Music Movies Content access cost is higher Content creation, distribution, and access business Content ownership cost is highest Content creation, distribution, and retail business Internet Business Models • • • • Ad supported – Google, Yahoo, Gawker Hybrid – Cable TV, NY Times, Pandora Subscription – HBO, Economist Commerce – eBay, Amazon Types of Business Models • B2B – Business to business: GE, Cisco • B2C – Business to consumers: Apple • C2C – Consumer to consumer: Craig’s List Types of Websites/Apps • • • • • • • • • • Content publishers – NY Times, ESPN Content aggregators – Google News Social networks (communities) – Facebook Facilitators – Craig’s List Peer-to-Peer – Wikipedia Gaming – Candy Crunch Financial Services – E-Trade Travel – Expedia Health – WebMD Education – Coursera, Code Academy Online Advertising Models • CPM – Cost-per-thousand (M) impressions – Unlike TV, no start or end date – CPM model used primarily for branding • Sold guaranteed and programmatically • CPC – Cost-per-click – Auction – AdWords • Modified Dutch auction – Sold programmatically also • CPA – Cost-per-acquisition or per-action • Rev Share (typically a hybrid model) • Sponsorship Online Pricing Model • Go to http://charleswarner.us/cseindex.html and open “Daily Comedy Sponsorship Costs” spreadsheet for an example of an ad pricing (sponsorship) model. IAB Standard Ad Units * * http://www.iab.net/adunitportfolio Check out the latest, because changes occur from time to time. A Business Model Must Scale • In order to get financing from anyone other than friends and family, your startup must be able to scale. – Scale means a company must add revenue faster than it adds costs. • Writing a novel scales– you don’t have to write a new copy for everyone who buys the book. • Software scales – write it once and sell it to lots of people. No Scale • Services don’t scale. – Services that charge by the hour, such as production companies, advertising agencies, consulting, law firms, gardeners, etc. don’t scale. • No scale, no $ from investors. Setting Up a Website • Get a domain name – Buy it (register it) and close mutations (.net, .tv, .us, etc.) on GoDaddy.com or namesecure.com or negotiate with squatter (afternic.com) • Serving the domain name and site – Web hosting company – where you registered it or third party such as GoDaddy.com or HostGator.com. • Microsoft or Linux server software (some hosting services give you a choice – Linux is less expensive. • MySql and Fetch or other interfaces as needed (need some way to FTP files to and edit site) • E-mail addresses • Transfer domain name to server Design a Site • Online platform – Proprietary platform – Server company design software, i.e. SquareSpace • Original design 1. 2. 3. Do it yourself - HTML, CSS Word Press, e.g. Drupal (PHP, open source) Setting Up a Website • Design – Read Don’t Make Me Think by Steve Krug – Banner sizes – Navigation – Contact Us – Terms of Service – Privacy Policy – Registration, if needed – Subscribe (RSS), if needed – Video (expensive to serve) – Community (social networking) – Facebook, Google+ Sign In – FB, Twitter, Reddit, etc. links – HTML – CSS – Java – Adobe Acrobat – Video player – Browser compatibility Setting Up a Website • Platform/Architecture – Proprietary (Movable Type, InGage e.g.) vs. open source (Drupal, e.g.) – Get an expert webmaster – Get ad serving if ad supported – Get video serving (Brightcove, e.g.) – Commerce – secure payment, Verisign, PayPal, or outsource it. Setting Up a Website • Marketing (the key to success) – Social Media -- Create buzz (Twitter, Facebook, Instagram, Pinterest, SnapChat, LinkedIn) – Publicity (PR firm) – Advertising (reciprocal deals, Google Search, programmatic) – Viral marketing (not as effective as advertising)