Continuing my train of thought on finding new alternatives to advertising as a revenue model for web-based businesses, it occurred to me recently that yet another greater business need than exposure (which is what advertising gives to a business) is conversion – converting eyeballs to users or buyers. Businesses collectively pay billions to Google to get new visitors to their websites but what happens once they get there? Beyond relying on their own copy-writing skills, what tools are available to businesses to help convert those visitors to users?

I did a little bit of research consisting solely of a blog search on tools for converting visitors and the only two tools I found were a very interesting service called EyeView and another called Involver. From what I can make out, EyeView and Involver seem to let you build interactive and direct calls to action into your tutorials and adverts respectively. Personally, I like EyeView’s tutorial approach better – you teach visitors how to use your service or product and right from within the tutorial, you enable them to begin using it. It appears that EyeView supports an option to pay per conversion. Wonderful!

I started to think that given the right execution, market conditions and guidance; and provided they don’t get gobbled up along the way, either of these two companies or some other similar one, could well become the next Google. However, I soon remembered that Google did not become so successful by simply providing a service to businesses and charging a fee for it. Instead, and as I outlined in the post I linked to above, it first met a basic consumer need to generate traffic and then leveraged that traffic to meet a business need. The awesomeness is in the combination.

Wow, this is a Eureka moment – for me at least; since we don’t have a choice anyway, let’s leave Google to continue to dominate advertising and let’s focus instead on Conversion as the next big opportunity. Why didn’t I think of this before or more to the point why aren’t more start-ups operating in this space?

Perhaps in my next post, I will look at how Facebook or Twitter might take on the conversion problem. I already feel an idea coming on.

If you are a web developer then you have no doubt rolled your eyes more than once at a suggestion by some wannabe entrepreneur like me that you should work on his brilliant idea for equity. We all know what your answer was – naff off or some less polite variation of the phrase. That was certainly the sort of response I got.

So now I get it, you developers are the salt of the earth and your time is worth more than any half-baked idea could possibly offer. Be that as it may, there is obviously quite some demand for this sort of thing and what follows is a suggestion for how both parties might meet half way.
So my idea is for a unique marketplace that brings people with knowledge together with people in search of it. I know there are many of these but this will have the following key differentiators or unique selling points.

1.  Learning will be project based in that a pupil will be able to propose a project that they wish to accomplish and tutors will bid to guide them through it. My thinking here is that if I want to learn Ruby on Rails for examples, I may have a project in mind that I want to use it for. I am likely to learn better by working on a project but even more so if that project is my great and brilliant start-up idea. For pupils without project ideas or tutors that prefer to work with their own projects, tutors will also be able to define standard projects that they prefer to use in their lessons.

2. Pupils and tutors will have the option of paying and accepting payments respectively in equity instead of cash or part equity part cash. The difference between this and the often frowned upon request to work for equity is one of time. It is one thing to be asked to work full time on and take responsibility for developing an application; it is quite another thing to be asked to guide someone through doing it. The difference as I say is one of time I think. The latter should take less time. The tutor will review the project, devise a plan for the pupil and prepare lessons or gather text or relevant examples for each lesson in the plan. Basically, the tutor will tell the pupil what to do and offer text, examples and general guidance on how to do it. Bids will include how long the tutor thinks the project will take, how much they will charge and how involved they will get etc.

3. The marketplace could also offer pupils the option of charging fees back to their employers who will in turn have the ability to approve or reject project proposals as they may want to insist on the projects being of some benefit to the company. This feature would not have to be available at launch if at all but it could help the marketplace gain traction. I envision companies becoming more willing to allow their employees to do side projects and gain knowledge in doing so, as part of their development plans etc. Rather than actively market to enterprises though, their employees could do the job for you.

So what do you think? Is it feasible, would you use it, will you build it (for equity?)? By the way, if you don’t buy the pay by equity feature, what do you think of this as a cash-only marketplace? Oh and one last thing, the marketplace will of course make money by taking a share in cash payments or a no-loss stake in resulting start-ups for equity payments.

In this post I look at Google’s revenue model to see how alternative billion dollar revenue models can be derived on the same principles, using Facebook and Twitter as examples. I say alternative because advertising, which basically is Google’s prime product serves only one of many business needs – gaining exposure. There are several other needs that businesses have and at least one that is arguably even more fundamental and significant than gaining exposure. This post explores this need and others.

What’s Great About Google’s Model?
Few would doubt the brilliance of what Google has achieved but you appreciate it even more when you break it down as follows:

1. Google drives traffic by meeting a fundamental consumer need (information) for free through its Search product.
2. It then drives revenue by leveraging that traffic to meet a fundamental business need (advertising or gaining exposure) for a fee and in doing so provides added value to the consumer in a way that is consistent with and complimentary to the original consumer service. It does this through its Adwords programme.
3. Finally, it then makes even more revenue by meeting a fundamental need (making money) of a third group of people – publishers, through its Adsense programme.

Do you notice a pattern here? It is all about meeting the needs of multiple groups of entities using complimentary products. In particular, my take-away from this is that a proven strategy for building a billion dollar web-based company is to get consumer traffic by offering a consumer product for free and then charge businesses a fee for using that traffic to meet a fundamental business need – one that they will be willing to pay for time and time again. In addition, if the company can generate an ecosystem that enables a 3rd party group to make money like Adsense does then even better.

Some Other Consumer and Business Needs
So Google gives away information to consumers and sells exposure to businesses. Are these the only consumer and business needs that are worth meeting? Absolutely not. Below are a few others, not all of which can be as profitable as the needs Google targets and meets very well, but at least one of the business need is worth even more to businesses – can you spot which one?

Basic Business Needs

• Hiring People
• Selling Products and Making Money
• Reducing Costs
• Retaining Customers / Generating repeat Business
• Managing Risk (financial, reputation, legal, regulatory etc)
• Training and Developing Employees

Basic Consumer Needs

• Communication
• Making Money
• Shopping
• Entertainment
• Self Improvement
• Information

So can you guess from the list above what’s even more important to a business than gaining exposure? Selling their wares of course. In fact, selling products/services and making money is the whole point of gaining exposure. So if we accept that Google has cornered the online advertising market and that unseating it is almost impossible, why not focus more on meeting some other business needs that may be profitable? LinkedIn for example is doing just that, focusing on the self-improvement / earn money consumer need and the hiring people business need. OK, LinkedIn is no Google but it sure isn’t doing too badly.

So What About Facebook?
LinkedIn is no Google because it doesn’t have the traffic that Google Search does and this itself is because the consumer need it meets is not as fundamental and frequent as the need for information is.

Facebook on the other hand obviously does meet one or more fundamental needs or wants, if its traffic is anything to go by. It provides entertainment, communication, a way to keep in touch with friends etc. Not needs in my book but 120 million active users and counting say different.

So Facebook has the consumer angle covered. What it needs now is to find a good business need to meet. Like many other companies and to some extent the whole industry, the mistake Facebook is making is in focusing on advertising. Zuckerberg should face facts and realise that Facebook will never do as well in advertising as Google does. As a website it simply isn’t as conducive for it. Facebook should instead seek ways in which it can enable businesses to sell directly on its platform and charge them commissions for it. In a previous post, I described an idea that I named Profile Party, which might be one way of achieving this. Read the post for details but in summary, the idea is to enable users to host ‘profile parties’ on their profile pages and amongst many other activities that can go on in such parties, let the host sell partner companies’ products to their friends at discounted rates, earning the seller a commission as well as Facebook. After all, a user is more likely to know what his/her friends would like and by offering the goods at a discount, you might even fool users into thinking they are doing their friends a favour, thus getting around the I-won’t-sell-out-my-friends problem.

What Can Other Companies Learn from All This?
If you are not Facebook and therefore do not already have huge traffic, perhaps you are not focusing on the right consumer need. See if you can extend the list of consumer needs above and pick one that has a complimentary business need that you can charge for.

If like Facebook you have traffic but do not yet know how to monetise it, forget advertising for a minute and look at one of the other business needs. The list above is not exhaustive of course. Come up with a bigger list of needs and pair them with your consumer need in turn until you find a winning formula. You won’t always come up with one mind you, in which case you may want to accept that you are screwed and move on to something else. I tried applying this to Twitter for example, whose consumer need is communication I guess. I kept getting stuck on advertising as Twitter’s business model. Good luck competing with Google in that space Twitter. That said, I did come up with an interesting idea for Twitter in the advertising space a while ago.

Finally, I should point out that I am by no means suggesting that all businesses should aim to be a billion dollar company. As our friends over at 37 Signals reminded me in a video I saw recently, there is absolutely nothing wrong in making a few million dollars a year. Many, including I would settle for that.

With all the recent talk of the Facebook platform being dead or dying, I wondered the other day about how it could be revived. I suppose the product I am about to describe could be implemented by a 3rd party developer on the Facebook platform but in my opinion would best be done by Facebook itself, if only for impact.

I would name the application “Profile Party” or “Let Me Entertain You”. We will go with the former in this post. The idea would be to enable users of the application to throw Profile Parties that they invite friends to. Friends who accept the invitation will on the date/time of the ‘party’ all converge on the party thrower’s profile to engage in various fun activities simultaneously for say half an hour.

The fun activities will be chosen by the party thrower, who would also pick music to play at the party that he/she thinks their friends would like.  Activities would include party games of course (ID that tune for example), buying virtual drinks, making introductions, chatting etc – all the things that you would typically do at a real-life party or small get together, except dancing perhaps. Crucially, users could be encouraged to vote afterward on how well/badly the party went and a leader board maintained of the best profile parties.

Now on to the money. You may have noticed above that I mentioned buying virtual drinks. The application could encourage ‘gossip’ later about who got the most (virtually) drunk and thereby boost sales of virtual drinks. More lucratively though, the app could enable profile party throwers to select real-world and virtual items that their friends might be interested in buying and have the party thrower offer them to friends at discounted rates during or immediately following the party. This way, the party thrower can earn an affiliate commission as can the app developer. Facebook would then become a place for real-life businesses to sell their wares directly, which in my opinion is even better than being a place to advertise their wares – better for the sellers and better for Facebook. By the way, the music played at the party could also be made available for purchase to attendees and subject to the same affiliate revenue model.

The great thing about this idea is that it enables Facebook to become an ecosystem that enables participants to make money, an increasingly important trait of a billion dollar company. The holy grail of social network monetisation seems to be to find a way to make money from friend-to-friend recommendations without cheapening their relationships or causing offence. Arguably, a close second-best goal has been to try to target advertising to a user based on the user’s profile data and relationships. As we all know, neither of these has proved as viable or fruitful as originally hoped. With this idea of profile parties though, Facebook could have a way to get users to directly and profitably drive product sales to their friends without feeling bad about it and have these product recommendations be more relevant than any automated targeting could ever hope to be.

Finally, I should point out that in implementing this idea, the developer would do well not to be greedy. Offering products for sale at a profile party should be strictly optional for the party thrower. I envisage a party planning tool that allows the user to choose a party theme/mood, effects (e.g. laughter) and then pick and choose from a variety of activities (one of which would be product sales) for their party – from a widget akin to a toolbox in a development environment for example. Not that I know much about development environments mind you. If I did I would probably be building this app instead of giving the idea away ?.

In a later post I plan to discuss revenue models more generally, with thoughts on where and how the next Google-sized company might emerge. In the meantime do let me know what you think of my Profile Party idea and/or suggest improvements to it.

This one is definitely in the declutter my mind in order to stay focused category. It was someone’s leaving do at work today and it gave me an idea for a service that would serve the following purposes:
For Someone Leaving a Company
1. You are leaving or have recently left a company so you sign up for the service and through it send a keep-in-touch invitation to your (ex) colleagues.

2. The invitation includes details of how they can stay in touch with you, e.g:
2.1. Your Contact Details (Email, Phone, IM etc)
2.2. A link to your LinkedIn Profile
2.3. A link to your Facebook Profile
2.4. Links to other social networks
2.5. A link to your lifestream feed, which may be hosted by the service and take feeds from other services like Twitter, FriendFeed, Google Reader, Disqus etc; or may simply be an external lifestream feed service.
3. Each recipient of your invitation is then prompted by the service to respond by:
3.1. Sending a sorry-you-are-leaving farewell message
3.2. Signing-up for a profile to help you keep in touch with them also.

For Someone Whose Colleague is Leaving
1. A colleague of yours is leaving soon so you use the service to invite other colleagues to each:
1.1. Write a farewell message. The collection of farewell messages will be available to the leaver for as long as they remain with the service, assuming they sign up, and may be shared with their friends etc. This is as opposed to a farewell card which usually gets thrown away as soon as the leaver has shown it to their spouse at home – if it makes it home that is.
1.2. Donate towards a gift for the leaver. Donors will have the option of donating anonymously.
1.3. Sign-up for a profile to help the leaver keep in touch with them.
2. You can then use the donated funds to purchase a gift for the leaver from one of the service’s affiliates or withdraw the funds to use elsewhere for a gift purchase. And this, along with advertising, is where the service makes money – by taking a commission from affiliate sales or charging a fee on withdrawals.
3. You send the compiled package of profiles and farewell messages to the leaver and you can optionally print off the farewell messages to present in person to the leaver, perhaps along with their gift.
What I like about this Idea
The benefits of this idea to the user are hopefully obvious but the following are a few reasons why the idea should be a success:
- It solves a specific problem. OK not a massive or daily-encountered problem, but no less significant or more occasional a problem than those solved by say birthday reminders or e-invite services, some of which are very successful. Besides, solving a problem at all puts it ahead of many of the so called web 2.0 apps being released practically on a daily basis these days.
- It is extremely viral – funnily enough, just like birthday reminders and e-invite services.
- It is sticky – generally, people like to know what/how ex-colleagues are doing, even if the interest is malicious.
- It collects potentially useful data for the user, which would hopefully make them stay on as users – e.g. their profiles, farewell messages from friends which could be used as reference material for new employers.
- It has the potential to collect potentially lucrative data for the service, third parties and its user base, e.g. which companies are losing employees to which, what is the typical career path for employees of this company – I believe LinkedIn offers these as well.
- It could well grow into a reasonably sized social/professional network in its own right.
- It has a fair chance of a good exit – e.g. being acquired by a larger company, like LinkedIn or Microsoft.
- It has a revenue model beyond advertiising – thought I’d save the best for last.

Screen Mock-ups
Below are a couple more mock-up screens for the application

There is a little known service available on mobile phones called a callback tone or ringback tone. It allows the customisation of what other people hear when they call you, instead of the normal ring ring tone. So people who use it tend to have their phones play selected music tracks to their callers until they answer their phones.

Now apart from the risk of people irritating the heck out of their friends, it strikes me as a potentially lucrative idea to let people opt-in to play ads as their ringback tones and as a reward get to make free calls or something. The service could offer even higher rewards to people who handpick ads that they think might be of interest to their friends.

Of course the chances of success for such a service will only be as good as the rewards people get. Users would have to feel that those rewards are worth annoying their friends for.

Another issue is likely to be in how to measure the effectiveness of such ads and on what basis to charge advertisers. Should they be charged based on how many people hear their ads and/or how long for? What feedback does the advertiser get on how effective their ads are? This is of course no different to display or TV advertising but puts it at a disadvantage relative to cost-per-click and cost-per-action ads.

So what do you think? Would you end your friendship with someone over a silly little ad?

As I haven’t posted for a while, I thought I would write briefly about three ideas in this post.

1. Suspend a Keyword in Google Reader: I would like to see a Google Reader plug-in that allows me to suspend keywords for a configurable number of days. So if I was sick of reading about the iPhone 3G around the time of its launch (which I was), I could have suspended the word iPhone for say five days during that period, such that any posts containing the word were hidden from me. I would then start to see them again after five days had elapsed.
2. Exchange Business Cards by Mobile Phone: I think the world is ready for a decent application, say on the iPhone, that enables users to send or swap digital business cards between their mobile phones. We’ve had VCards for a while but they don’t cut it. I would like a service that lets me either text or email a link to someone that then gives them access to a digitised version of my business card, which the service obtained by either scanning an existing card that I sent them or by allowing me to create one on their website. Corvida over on RRW covered a number of services that I hoped would do what I wanted but after reading her write up and trying out two of them, I found that they still fall short of the mark. Update: CloudContacts has recently launched what I think is the closest service to what I have described here. I wonder if they got the idea from here :-).
3. WhoIs on Facebook: This is a suggestion for Facebook. More and more I find that I am having to ask friends who someone that has requested to add me as a friend is. Basically, I get a friend request and I don’t recognise the name and/or photo but see that I have a mutual friend. I then send a message to the mutual friend asking who the new ‘friend’ is. I’m starting to get similar questions from friends also about other people. So my suggestion is for Facebook to make this easier, with a WhoIs link that enables people like me to ask the Who Is This Person question in one click.

Anyone else think any of the above would be useful?

The first idea is for an app that might be named Crossed Paths. It would use the iPhone’s location capabilities to track each of its users’ movements. It would then report to each user which other users crossed paths with them each day - basically which users were in the same vicinity in any given day and perhaps even around the same time. User Profiles could be anonymous to prevent abuse but would need to be very rich in terms of describing users. If a user found that another user with an interesting profile was in the same vicinity as him/her at some point, he/she could then initiate a conversation with the other user. This creates a reverse social network of sorts helping people to make new friends etc. I expect it could be quite successful as an alternative approach to a dating application.

I would call the second idea Met2day - an application that would enable users to record details of people they met for the first time that day and create a visual timeline of their social activity for future reference. This social activity could be posted to the user’s Facebook newsfeed for example. The app could include a leaderboard of its most social users but to prevent false claims of social activity and to encourage viral spreading of the app, a ‘meeting’ would need to be confirmed by the other party (the person that the user claims to have met) - so the user would be given the option to request confirmation from each person they say they have met. For marketing purposes by the way, the app could be positioned as an anti-virtual-friendship crusade - i.e. show how genuinely social you are by showcasing your true (real-life) social encounters.

As I read here and here about the various examples of iPhone apps in the App Store today, it first occurred to me in a true case of web 2.0 warped thinking that people might not be willing to pay for the apps. But when I noticed that the majority of the apps cost between $0.99 and 9.99, I recognised the app store for what it was - yet another genius idea from Apple.

To understand the genius of the idea, consider Facebook and its application platform - specifically the fact that Facebook is having trouble monetising Facebook as a whole and the difficulty Facebook application developers are having in making money from their apps.

Now what if Facebook had enabled apps to be sold for $0.99 per install? For one thing I think users would install fewer frivolous apps and only useful apps would get bought. This would in turn mean less spam notifications to friends and perhaps there wouldn’t be so much talk of Facebook app fatigue. Developers would of course have a clear means of monetisation as would Facebook itself by charging a commission on each purchase. Facebook would also have the useful apps it hoped but has failed to achieve by launching the platform in the first place.

Back to Apple and the iPhone. I don’t expect to win any awards for predicting that the App Store will be a great success and Apple will make a ton of money from it. I also predict however that Apple will do a better job than Facebook of having useful and serious utility apps built on its platform.

This idea was contributed by reader Cliff Bull.

It is amazing what the mind can conjure up when you don’t make money your primary focus. Cliff has come up with an idea to boost the adoption of recycling, particularly amongst young people in the U.K and in fact anywhere else in the world. His idea is to put empty drink can collectors alongside drinks vending machines and introduce a card scheme whereby you insert your card into the collector machine and when you deposit your used cans, you get points added to your card. You can then use your earned points to purchase goods (music, phone credit etc) from participating companies.

Like Cliff I could quickly see the potential for this idea to become huge among teens and even younger kids. The cards could be called ‘Green Cards’ and one can imagine kids going round to collect cans just to earn their green points - not because they particularly care about the environment of course but because being green pays. Also it turns out that in the U.K alone and as far back as 2001, approximately 5 billion aluminium drinks cans were consumed. I imagine that number must have increased greatly and I’m almost certain that only a small proportion of these cans get recycled. Expand the range to cover the U.S. and I am sure the number of cans consumed would more than triple.

Cliff did not initially see this as a money making idea but it is not hard to see how it could be. The company facilitating this whole concept could make it such that points have to be redeemed via its website. This could drive considerable traffic to the site and therefore advertising revenues. It could also take a commission on purchases even though those purchases are made using the virtual currency of points. Also, there may be some potential for facilitating the trading of points, which again could be done on a commission basis.

I read in a recent edition of Fast Company magazine about marketplaces (such as the Ecosystem Marketplace) for trading in carbon offsets. Basically, companies in many countries around the world have to achieve certain levels of carbon offsets per year. Some meet more than they are required to and sell the surplus on to others who can’t meet theirs. This is apparently big business and many young environmental studies graduates are apparently making vast amounts of money just by facilitating these deals. Now I don’t know if this is too far-fetched or not or even if such offsetting regulations are imposed in the U.K. or the U.S. but what if these companies could achieve their offsetting goals by funding the purchases made with green points - in other words a marketplace that allows companies to ‘buy’ offsets that come from people depositing aluminium cans for recycling.

I think this idea has a lot of merit and could do very well if properly executed. I can certainly see it getting funded, if not by A VC then by one of the numerous grants available to green initiatives. Neither Cliff nor I is in a position to execute on this idea so for the sake of our planet, I ask one of you many capable entrepreneurs out there to step up to this one. All I ask is that you give credit to Cliff as appropriate or even better, cut him in on some of the revenue you will no doubt make. Oh and I wouldn’t mind a piece of the action myself of course :-).