In this article, I'd like to walk you through a few typical monetization approaches, how they can earn you money, and what you should watch out for as precautions. Let's get started.
#1. Pay-per-click (PPC) advertising
THE RISK: You only earn revenue when an ad is clicked, so you run the risk of not earning anything if the advertisements aren't relevant and tailored to your site's audience. You also run the risk of overwhelming your site-user with advertising when they are already bombarded with messaging from all channels. You can mitigate both these risks by ensuring that advertisers suit the content on your site and are providing products/services that are relevant to your user.
#2. Cost-per-impression (CPM) advertising
THE RISK: CPM revenue relies on high traffic to the site. Advertisers will want to be on pages where they can earn a lot of impressions, and you'll want to be able to serve more impressions in order to earn more revenue. Another risk is that not requiring click-throughs may lead to less-relevant advertising, which could frustrate site users and lead to a loss in traffic.
THE RISK: As subscription revenue relies on consumers being willing to pay for your content, which means that you need to invest in quality content, or risk losing out on any revenue. Another risk is if you already have advertising on your site, potential subscribers may not being willing to pay for content that they are already "paying for" by putting up with advertising.
#4. Data Monetization
In order to learn more about the Freemium Model, I spoke with Kemp Edmonds from HootSuite to learn more about how HootSuite found value in the Freemium model.
THE RISK: As many success stories as there are with the Freemium model (Skype, LinkedIn, HootSuite), there are many companies that have failed because their costs ran rampant since they couldn't support the first-stage high-quality free product. For Freemium to succeed, the site needs to be able to afford to support the product well before revenue comes through the door. Once the free product is established, they then need to develop value tiers that accommodate all users, while ensuring enough extra value is provided in premium tiers to earn revenue.
Choose what makes sense for your site
Have any other great monetization ideas? Feel free to leave them in the comments!