He gives the example of some industries using the Internet to change the basis of com-
petition away from quality, features and service and towards price, making it harder for
anyone in their industries to turn a profit.Revenue models
Revenue modelsspecifically describe different techniques for generation of income. The
main revenue models are shown in the second column of Figure 2.12. For existing com-
panies, revenue models have been based upon the income from sales of products or
services. This may be either for selling direct from the manufacturer or supplier of the
service or through an intermediary that will take a cut of the selling price. Both of these
revenue models are, of course, still crucial in online trading. There may, however, be
options for other methods of generating revenue: perhaps a manufacturer may be able to
sell advertising space or sell digital services that were not previously possible. Activity 2.3
explores some of the revenue models that are possible.Situation analysis related to customers is very important to setting realistic objectives esti-
mates for online customers and developing appropriate propositions for customers online.
Customer-related analysis can be divided into two. First, understanding the potential and
actual volume of visitors to a site (demand analysis) and the extent to which they convert
to outcomes on the site such as leads and sales (conversion modelling). Secondly, we need
to understand the needs, characteristics and buyer behaviour of online customers (also
covered in Chapter 7), often collectively referred to ascustomer insight.Demand analysis and conversion modelling
It is essential for Internet marketing and e-marketing managers to understand the cur-
rent levels and trends in usage of the Internet for different services and the factors that
affect how many people actively use these services. This evaluation process is demand
analysis. If customer usage of online media is evaluated for customers in a target market,Customers
Revenue models
Describe methods of
generating income for
an organisation.
Activity 2.3 Revenue models at Yahoo!
Purpose
To illustrate the range of revenue generating opportunities for a company operating
as an Internet pure-play.
Yahoo! (www.yahoo.com) is a well-known intermediary with local content available for many
countries.Activity
Visit the local Yahoo! site for your region, e.g. http://www.yahoo.co.uk, and explore the different site
services which generate revenue. Reference the investor relations reports to gain an indication
of the relative importance of these revenue sources.
visit the
w.w.w.Customers
Customer insight
Knowledge about
customers’ needs,
characteristics,
preferences and
behaviours based on
analysis of qualitative
and quantitative data.
Specific insights can be
used to inform
marketing tactics
directed at groups of
customers with shared
characteristics.