Monetize. Monetization. What it is and how to do it. (2023) |
When Luis von Ahn famously developed CAPTCHA, you know those little words you must write to prove that you're human being-he devised one of the greatest ways to monetize. The program would select some random words taken from the archives of the New York Times, and the user would type in what they saw. Little did they know they had contributed to the digitization of newspaper and books that were once in the archives as well as paying the companies for that service.
It was an innovative method of adding a new revenue stream to the secure digital data.
In this post, we'll introduce you to the concepts of monetization and monetization. We'll explain what each one means before guiding you through the different forms of monetization and how to create a strategy to monetize your brand.
What is business monetization?
The process that generates revenue from items or activities that do not currently generate income. In the world of internet, monetization generally the method we use to look at how individuals and companies that create software and content can be financially compensated for their effort. In any kind of product, service or application, there are a number of options to earn money according to how users utilize the product or service.
Sometimes, monetization is a part of digital creation-for example, a content gate may require people to buy a product direct. This happens if you are using the New York Times or Netflix needs subscriptions.
However sometimes, monetization may require adding extrinsic material. In traditional newspapers advertising format, advertisements consumed additional space, and the paper had to add pages. Companies paid for advertisements where they were sure viewers were already looking at, thereby generating sufficient revenue to carry on their reporting of information. Television works in the same way. The same is true for internet advertising, or YouTube ads.
Online monetization
If we're talking about monetization now, we're usually discussing different methods people monetize things online: for instance, a YouTube Channel, a TikTok following, or a blog or web site. The result is common expressions like "Are you making money?" or "I need to increase my monetization." And-of course-we've all seen the tale of the influencer or blogger who earns $50,000 per month.
There are a variety of methods to make money online. For example, a blogger may monetize his website through display ads or affiliate products as well as a course that they sell. Social media companies monetize their user's data rather than offering users a no-cost experience but charging companies to put advertisements in front of users.
Since there are different ways to earn money, monetization needs creative thinking about the ways to monetize things. That's what Luis Ahn did with CAPTCHA. There are ways to monetize that are all over the place. Like, for instance that the market for stocks lets investors monetize ownership within businesses, while the derivatives market provides an additional way to monetize the stock market with the use of options and calls. (If you've ever seen The Big Short, it compares these to "side bets" .")
When you are thinking about your model of monetization and method, think of ways to be innovative when tackling the issue and finding a monetization method that is suitable for your needs.
Monetize: Monetize literally means "to turn something into money." When you have an item you've made: digital content, digital goods, an app, or even software, the goal of monetizing is to turn that thing into cash. But, of course, you're taking this action in a literal sense. The majority of the time it's about figuring out ways you can earn money through the use of your thing. You're turning uses, views, subscriptions, members, etc. into money.
What's a monetization strategy?
A monetization plan is a way or method that you can earn money through a service, product or creation intellectual property even your own personal branding. There may be many components in your model of monetization. All of them must work together to create the revenue you need.
In the case of example, if you created an app it is possible to incorporate in-app purchase, charge for downloads, add advertisements or any of the above. In the event that you developed software, you can pick from various monetization strategies. It is possible to "white label" it and license it to users to use with their own branding. It is possible to sell access through your company's brand, or provide access for free with a a "freemium" increase in price.
A monetization strategy is the way that individual and multiple sources of revenue come together to make up a brand's total revenue.
The types of Monetization
They are among the most well-known methods of the monetization. However, they're not the only means to earn money. There are even new monetization methods being invented constantly. Note that these are also not mutually exclusive. Many brands employ several of them (and there's some crossover ).
Member Mmonetization
The growth of members through member-led development is among the most effective ways of monetization. The next wave of businesses that will grow rapidly are expected to be the ones that are able to convert users, customers as well as subscribers to members. They'll be able to do this in a large scale.
Membership-led monetization is simply as easy as establishing an annual membership fee for your community. However, doing so can generate valuable regular revenue. Additionally, your members produce contents and share it with others to help grow your community by itself.
Here are a few examples of the ways we've seen members-led monetization work:
- An entrepreneurship org. The app was branded and launched for 5,000 members and made over $35,000 in two and a half months.
- The health-focused launch of 100 premium members, which also added $40,000 to the ARR.
- A speaker and author announced a promotion for four weeks in their membership community and saw an additional $30,000 in revenue.
- A podcaster and author has sold 5,000 seats for the $997 course within 10 days to existing members.
- One community launched a 13-week add-on course and brought in an additional $100k of revenue in 2 months.
If you're running an item that is based on membership and you're a member, you'll typically earn revenue from both the members' memberships as well as the other items your customers purchase-a business model McKinsey describes as a Flywheel for communities .
Digital Subscriptions
The way you can earn money with subscriptions is similar to a membership model. However, your members aren't adding benefit. Instead, they consume content or software which you've created or licensed. It's an extremely popular strategy for software companies as companies like Microsoft as well as Dropbox have made subscriptions their bread and butter.
It also works with the content, too. Netflix and Disney+ have built empires with subscription services. The subscriptions have even helped save the New York Times; in 2020 there were 8 million subscribers to print and digital.
Freemium
Freemium monetization is one of the models that is extremely popular among software companies, since it lets users try an item for free prior to signing up. In this case, the monetization structure takes care of the free trial, thus reducing the need for features such as "money back guarantees" because the purchase doesn't have to be made in advance. But also, it lets members, users, etc effortlessly upgrade over the paywall after a specific period of time OR to get additional features.
Content monetization
There are lots of different ways to monetize content, including digital subscriptions and memberships. But for content creators, the options keep going. Here are some of the most popular ones:
- Affiliate marketing is when you discuss the products you sell on your website or social media feed and someone clicks a brand-approved tracking link, you may receive commissions. Numerous websites and blogs earn money by utilizing affiliates.
- Ads: Monetizing with ads is a well-tested and reliable monetization method for brands that rely on content, ranging from websites to TV channels to applications (more on this in the next minute). Advertisements can be paid for per advertisement, or per view (usually described as RPM=revenue Per Mille ).
- Sponsorships: A sponsored content is typically usually refers to a sponsored blog post. More and more sponsorships are content created by an influencer.
Social media monetization
We usually consider social media monetization as a ways people make money through their social media channels. And most social media creators make money using different methods already on this list: affiliate marketing, ads, and sponsored content.
There's the issue about how social media platforms make money- and they're creative. Here are two examples of the ways that social media giants earn profits:
- Meta: With its top brands like Facebook and Instagram, Meta makes money through selling attention. And with two billion active users each day, there's lots to offer. Meta collects user data and offers companies the opportunity to put the most relevant adverts to their customers, with highly targeted data on demographics. It led to $32 Billion during the last period of the year 2022. Meta's data collection is so powerful that it has been the target of controversy (think Cambridge Analytica's attempts to influence the outcome of elections).
- LinkedIn: LinkedIn is much smaller than Meta and has the number of users who are daily 141 million. However, it has a unique monetization model that is in line with the strengths of a platform. As a career and networking site, it can sell premium plans to job-seekers (giving the job seekers an advantage when applying for jobs) as well as offer special plans to recruiters as well as employers for a higher price. The platform lets all types of user get what they require from the platform, and they still offer ads. LinkedIn has generated over $13 billion in sales in 2022.
If you look at all the social media sites and you'll notice they all have one thing in common. They don't charge users for access to the site to begin with. Their aim is to gain massive engagement and attention, or to convert users to premium plans or-more usual-simply to offer their customers their attention to advertisers.
App monetization
App monetization can be a whole world of its own, and we've devoted a guide to this. However, let's simply say that there are a variety of methods to make money from apps, such as memberships, subscriptions, and ads. What makes apps unique is the category of purchase in-app.
There are 13 ways that mobile applications can be monetized make sure you read our guide to Mobile app monetization for the full details of each.
- Freemium
- Ads + Premium
- Advertisement Only
- Ads + In-App Purchases
- Subscriptions
- Memberships
- Courses
- Events
- Product (physical or digital)
- A one-time payment
- Services
- Selling user data
- Crowdfunding
Monetization based on product
Sometimes, the best method of monetization is to create a product. It can be digital or a product such as a major online course. For example, we mentioned above that a podcaster as well as an author on Mighty has sold 5,000 tickets to an online course of $997 in just 10 days. It's an amazing digital product monetization model.
However, selling physical goods is a tested and true way to earn money, and there are some truly amazing brands who have grasped the art of turning digital hype into real-world success for their products.
Look at Peloton, who created a physical bike that could plug you into exercise routines and other fitness enthusiasts at any time. Also, Peleton was born during the pandemic, when people were looking for a way to exercise. There have also been celebrities who launch physical goods and utilize their brands to boost them-like Ryan Reynolds' Aviation Gin brand which he has recently sold for $600 million.
The integration of products that are online-focused is only getting started, and we'll see a lot more of this in the coming years.
Licensing
This is a model of monetization that's under-appreciated and for those who own any kind of intellectual property, licensing could be an incredible way to monetize. Essentially, licensing means you are the owner of a particular procedure or model, and then you sell the rights to others to use the model. When you see someone selling the "Trademarked X method to X" you're probably thinking about a licensing plan.
In particular many thought leaders will build their brand around topics like TED Talks and op eds however, they will also license the application of their theories to corporations.
Consulting and other services
It's similar to licensing, however those who develop expertise in their online content may typically sell the idea of their content. As an example, many of creators are on LinkedIn and YouTube that share their expertise could be hired by other people and companies to use it directly. If you had your own YouTube channel focused on helping entrepreneurs build their business there is a good chance that you would be able to get your services as a coach. Consulting and service are often a great business model for monetization.
Data
A third monetization option is to monetize data. In this example the platform gathers information regarding its users and sells that data to third party advertisers. This is a common practice of social media companies (above) however, social media companies aren't the only ones that collect and selling data from users.
All across the spectrum of industries, from health care to finance, companies collect and sell user data. However, while selling data is a model of monetization employed by lots of tech companies but it's not one small-scale creators and brands use-for the reason that it's not used for. It's complex, complicated, needs to be done on a large scale as well as having a lot of legal implications.
What monetization model is the most effective?
Every model of monetization has its advantages and disadvantages. Models that are free let customers try products or services before charging and facilitate selling. The upfront charging process requires more sales effort, but could bring the cash in earlier on. A subscription monetization model brings in revenue month after month, however it requires continuous client service. Plus you need customers to remain for a long time so to realize the real value of the recurring revenue.
There are dozens of ways to make money off of any, product, or service, especially in the digital space and therefore, picking a model for monetization that allows you to manage access to users, growth in user numbers, as well as your own objectives is really essential.
Monetization model examples
- Vikrim creates an internet-based community and decides to charge a one-time fee at for the first year that gives an annual subscription and includes everything that falls under.
- Ali creates a paid sub-scription newsletter, with tips and special offers. She sends it each month.
- Charles can be described as an influencer who sells social tokens to allow people to have more access.
- James develops an app that is free to download with the purchase of in-app items.
- Jen is an author and thought leader who earns money from her writing through speaking and book sales.
How to develop an monetization plan
If you are planning to monetize, here are some tips for establishing your strategy:
- Learn your strengths. A large portion of efforts to monetize fail due to they don't know the advantages of their brand. As an example, suppose that you only have a handful of loyal members. Ads might be the worst option to make money, because they need a lot of. A targeted product might be perfect. On the other hand, if you had the website that didn't have a clear area of focus and lots of users advertisements could make more sense. A product isn't likely to achieve success without having a distinct area of focus. Choose your strengths and choose the model that fits best.
- Contact your existing members: If you're looking at making a product or a service to make money from, ask your existing members to discover what they would most want from you. If you're a part of an online community it is as easy as asking a question.
- Be sure that it is appropriate the target market: Many monetization efforts do not work because they misunderstand the audience. For example, there's a story of a blogger who gave guidance to millennials who were unemployed and decided to create a high-ticket product. It failed miserably. The crowd was enthusiastic, however, they didn't have a dime (remember they weren't employed! )
- Align your tech: Monetization-especially done online-usually takes some sort of tech solution. If you're planning to make a profit from an online community, it could be as simple as turning on a membership plan or a bundle. But each monetization method needs some preparation. Want to self-publish an ebook? You'll have to be familiar with how to format, design and layout of your cover, as well as the KDP platform (or find someone who understands it). Want to put ads on your website? You'll need to get into an ad-based network like Mediavine or Ezoic and get it set up.
- Understand the business side: Even if done online, earning cash is something that the IRS holds a strong opinion on. Be sure to know how you can claim your income. Visit your local small business center may be in order. They will frequently provide you with the information you'll need.
- Learn, experiment, and learn Learn, test, and adapt: The first method of monetization you attempt might not be the right one. Do not be scared to test different things (and allow things to go) until you discover what works best for you and your audience.
Conclusion
While you search for the most effective monetization method take note of what works for your brand and your members. Don't force the process. The process of monetizing needs to be handled cautiously, so that you don't risk your customers' loyalty, or damaging the experience for users of your service.
If you are looking for a fantastic method to create a community-driven growth business, come build on Mighty! The community can be monetized through and content such as courses, classes, and live events. And you can test it for free for 14 days!