Freebies are the cash cows of Web 2.0
Chris Anderson, the editor of WIRED Magazine and venerable architect of the Long Tail mindset which is turning many commercial principles upside down, also treats his readership to regular insights on The Long Tail blog.
Consider this series of insights from his January 30th post entitled “The big lie about free“:
- “Whether it’s pop stars or Wall Street analysts, the biggest misconception of free is that no cost = no value.”
- “The Web is built mostly on two nonmonetary economies, attention (traffic) and reputation (links).”
- “Free stuff does have value and the way we measure that is in the time people spend with them.”
Anderson goes on to list a variety of business models that revolve around these principles, such as CPT advertising (cost per transaction)…and a lot of other things which might not be self-evident to small business marketers.
| Scenario | Result |
| Restaurant offers free unlimited champagne at Sunday brunch. | Customers experience euphoric effect of beverages, enhancing quality time with companions and forging positive associations with the restaurant. There is also the short-term benefit of increased likelihood of staying longer and/or making additional purchases they would not otherwise make. |
| Lawyer offers a free consultation to prospective clients. | Conversion rate of advertising invariably rises. Knowing that they have access to legal expertise without paying money, more people become prospects, and more prospects become clients. The lawyer gets more face time with her clientele, and if she is a good saleswoman, she will simply get more business. |
| Neighborhood wine retailer offers a buy two, get one free promotion to subscribers of his blog. | Retailer further builds a qualified distribution list, and using website analytics gains valuable market research insights. Customers build concurrent perceptions of both quality and value, making them more likely to return. Word of mouth spreads about the interesting, engaging content on the blog. |
What emerges here is hopefully an understanding that a small business should not set up and run a website as a carbon copy of its offline business. True, it should be consistent in its branding and reflect the underlying business strategy. But the digital channel is by its nature a different medium, implying different customers and different methods of engagement.
Your digital communications are ripe for experimentation–the audience is well accustomed to innovation. But today’s over-saturation of information has also brought with it an engagement-driven bottom line. As a result, without a hook (such as free content), it becomes very difficult to hold the consumer’s attention.
Giving away something for free no longer means shaving off your bottom line. Instead, think of it as a vehicle of engagement: when done correctly, it enlarges the pie so that customers are happy to keep coming back, and you’re happy to have them.
This entry was posted on Wednesday, February 13th, 2008 @ 6:57 am on the category Blogging, Marketing Theory, Pay-per-click advertising, Small business.
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