Monetization Models in The Age of “Free”

Lesley Grossblatt, Lucinda Foss,Caitlin Smallwood & Eddy Wu

Pop quiz!

What is the key to a successful, sustainable offering?

A) Solving an important customer pain.

B) Bringing in revenue.

Answer:It’s a trick question! You need both!

Answer:

It’s a trick question! You need both!

But how can you make money with free?

How do these “free” offerings make money?

Identify who you create value for and how they’ll pay for it

Advertising,Licensing

SponsorshipFreemium

How long has Intuit been competing with “free”?

Answer:Always, but competing with free today

requires us to approach offerings differently

The starting point isn’t “free”

Monetizing “free” is about finding value someone will pay for

Monetization is about value

1. What are your assets?

2. Who would value your assets?

3. How would they pay for your assets?

Step 1: What are your assets?

• Product features

• Technology

• Data

• Content

• People

• Processes/know-how

• Brand

• Reputation/goodwill

• Physical space

• Equipment

• Relationships

• …

Think as broadly as you can

More assets than meet the eye

• IndividualsSingle parents, Green Day fans

• HouseholdsFamilies saving for college, rental households in rural areas

• BusinessesOnline retailers, FI’s offering payment solutions, office supply stores

Step 2: Who would value your assets?

Broad as well as niche markets may find your assets valuable –

think broadly about the ecosystem

• GovernmentUS Department of Labor

• Competitors

• Advertisers

Who values these assets?

Step 3: How would they pay?

• Purchase

• Free trial leadingto purchase

• Subscription

• License or lease

• FreemiumBase product is free, but you pay for additional features

• Cross-Sell

• Advertising• CPM – cost per thousand

(mil) ad impressions shown

• CPC – cost per ad click

• CPA – cost per new customer acquired through ad

• CPL – cost per lead

• Revenue share• Sponsorship

One party pays for other parties to benefit from the asset

How would they pay?

Shoe Manufacturers•Freemium:• Free access to online

reviews• Subscribe to review

service

FBI , CSI, Other Agencies•License access to Sole Search

Other Businesses•Subscribe to Zappos Insights•Purchase Zappos Culture Book

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How can movie theaters compete in the Age of “Free”?

Big screen+ lots of seats

Good soundsystem

Audience

Films &exclusive movies

Concessions & cups

What are your assets? Who values assets? How would they pay?

Per-meeting, per-hour

Admission

Subscription - annual or season pass

Number of ad impressions oncontainers

Companies havingbig meetings

Music fans whocan’t make alive show

Film club or experience (e.g., Rocky Horror)

Advertisers (Coke, Orville Redenbacher)

How can you monetize free FAFSA?

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What are your assets?Data on lots of students about to go to college

Lots of FAFSA’s + parents’ verified tax information

Goodwill for providing free service

Who values assets?Student loan lenders, computer sellers, office supply stores

College financial aid officers

Students’ parents

How would they pay?Purchase mailing list of students

Pay licensing fee for data

Purchase other Intuit products such as Quicken, TurboTax

Challenge:Idea is a winner (NP score: 58),

but we can’t charge for it

Exploring 3rd Party Pays in QOL

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Use quick experiments to test and validate your monetization hypotheses

•>1MM users

•Data on millions of transactions

Quicken Online Hypothesis: Advertisers will value and pay for these assets. How?

1. Advertisers will pay to display ads in on QOL.

2. Intuit can serve both advertisers and users by personalizing discounts based on spending data.

$3MM opportunity

$20MM opportunity

Technology and business innovationcan change the equation rapidly

Models change over time

Keep revisiting your assumptions –play offense with your monetization strategy

In your team, discuss a product/service:

1. Brainstorm all the possible assets this product/service has – think broadly!

2. For each possible asset, who would value it? How? Why?

3. How would these parties pay for this value?

Let’s find the value . . .

What are your assets? Who values assets? How would they pay ?

Cheat Sheet – Finding Value

• Product features

• Content

• Data

• Technology

• People

• Processes/know-how

• Brand

• Reputation/goodwill

• Physical space

• Equipment

• Relationships

• Etc.

• Individuals

• Households

• Businesses

• Government

• Competitors

• Advertisers

• Etc.

Who values these assets?What are your assets?• Purchase

Direct payment for value

• Free trial

• Subscription

• Freemium

• Pay for success

• License or Lease

• Revenue Share

• Cross-sell

• Sponsorship

• Etc.

How would they pay?