Revenue Models for Online Communities – #3

3. Translating community into revenue and profit
(woohoo the good stuff!)

• The six elements of the ‘hexagon’ describe what community looks like, but the real question is how community translates into revenue and profit.
  
• The majority of community-building activities do not generate revenue themselves.
  
• They create an environment that can potentially stimulate income generation.

I wish I’d been at the presentation, standard marketing points are listed like advertising, ecommerce and commission, SWOT analysis, but no notes on how they relate to Virtual Communities. But there were some great diagrams.

See the part about “Reduce by the % of online adults that are active users. Well one big change since 2001 is the shift to children and teens as online purchasers and consumers. Think about the fact that the fastest growing economy in the world is the one revolving around purchasing of online game products and you’ll get an idea of what I mean. Read Edward Castrova’s reports (Associate Professor and Director of Graduate Studies, Indiana University) to find out more.

I know its probably hard to read and for some reason, Blogger sometimes allows you to click on an image to see it expanded, and sometimes not. I”ll work something out but try clicking here.

Its an interesting diagram of the issues brought up in the Revenue Model presentation. I’d add a few more arrows – users as partners in the content partnership, integration of offline and online tribes, etc but all-in-all quite a clear model.

4. Partnerships

While the point here is that communities have to partner and can’t do everything on their own and is therefore a fundamental part of revenue modelling and generation, the types of partnerships are not clear. There’s an implication (maybe?) that the retal site is seperate from the community. That ain’t necessarily so. Also, I love the Google AdSense model – the user as the generator or publisher of advertising material. I suspect people are a lot less grumpy at ads from Adsense if they are publishing them themselves on their own sites and blogs.

In summary, build a community with value (compelling content), make sure members feel like they belong (identification with brand) and contribute (user generated content), then use the information gathered with their permission (participatory marketing) to convince them to buy (interactive ads) and advertise for you (Adsense model). Now if only the members would do the accounts and answer the phone too !