Business models are one of the most fundamental aspects of setting up a business. It is also one of the least understood area of creating and running a company. There are many different types of business models available but many business founders don’t pay complete attention to the model they use.
This often leads to a business having elements of two or more models within their structure. Sometimes this can work for the benefit of the brand and its customers. Other times it can create a poor environment for the business to thrive. A common mix of models is the subscription and advertising.
What Are The Definitions Of The Two Models?
A subscription model is where a business provides a service or product to a customer for a set regular fee. Common subscription models include software, publications or associations. However, subscription services have been implemented for a number of different industries including men’s health, gaming and food.
An advertising business model is where content or a service is provided for the customer. While they are using the brands content / service they are presented with several adverts from third parties. The advert is likely to be the main earner for the business. Sometimes the income is earned from the user clicking on the advert, other times the advert only needs to be shown.
This is a popular business model online with blogs being one of the obvious implementations. However other publications, online games, mobile app games and other industries have implemented this strategy.
Merging The Two Business Models
There are times when the two business models are merged together. A good example of this would be Massive Multiplayer Online (MMO) games. Normally in this case the free users have adverts posted across their web browser or have to watch a video to complete an action. Those who subscribe might also be subjected to the adverts, but in most cases the user can turn them off.
This can be a good earner for the business. The adverts pay very little per view, but when the game is played by tens or hundreds of thousands of players the income per day can be significant. Added with the revenue from subscribers, MMO games are turning in good profits.
Likewise, your subscription site can use this same method. For instance, you could include banners or video adverts that automatically show on your blog posts or main pages of the website. At the same time you can have subscribers sign up to receive exclusive content or use of some software.
There are advantages to mixing the two models:
- Gives two revenue generating avenues for your business to benefit from.
- Can allow your business to earn income even when the website visitor does not subscribe.
There are also some disadvantages:
- If used too often, can become annoying for your subscribers.
- They can look unattractive on your website.
- Advertisements can disrupt use of your product.
If you want to implement both an advertising and subscription model you should ensure you implement some best practices to keep customers happy. The first option is to have your subscribers free from advertisements. You can even use this as a selling point on your website if you have a free use option.
Your website should also not be ‘advertisement heavy’. Keep the number of adverts limited to just two on a page. This could be a banner at the top of your page and perhaps a small one on the right hand side.
Finally, you should ensure advertisements on your site align with your business. For instance, if you run an accounting software package, the adverts should relate to other financial services or complimentary services.
Advertising and subscription business models can be very effective when they are combined together offering your business good returns. You have to ensure you limit the number of adverts displayed and only include ones which are aligned with your business’ activities. You should also allow your subscribers the option to remove advertisements from their view. However, if implemented right, mixing the two models can increase your revenue without increasing your workload significantly.