If you take a look at the most successful companies in the world over the last decade, they seem to have quite a few things in common. The most predominant characteristic is their business model. Companies like Facebook and Google make products that take a natural part in our everyday life, but when did you pay your last invoice for using the Google search engine? The products from some of the most successful companies in the world are free! And at the same time, these companies are extremely profitable!
We are the product
The hundred of thousands of development hours needed to develop the worlds leading search engine and social platforms has been paid for by the advertising dollars from companies buying Facebook ads or Google Adwords to market their business. What they get in return is the best marketing money can buy. Google match their advertising with relevant product searches making the placement very relevant. At the same time, you only pay when somebody clicks on your ad (pay-per-click). Facebook steps it up one notch, as they probably know more about you than you know about yourself. They let you specify your target audience down to gender, age, where they live and what they like. In other words; we are the product!
How can you compete against free?
In the gaming industry the Free-to-play (F2P) model is growing increasingly popular. This makes you able to download the game and use it for free. If you really like the game and want to get serious about your game-play, you can purchase upgrades and equipment that will further improve the gaming experience. These payment models are now starting to find their way over to more traditional business segments. One of the worlds leading online invoice solutions, freshbooks.com has recently been challenged by a new company called invoiceclub.com (www.invoiceclub.com). InvoiceClub will give you an identical online billing solution, but thanks to their adware business model, you can use the system completely free of charge. How can you continue selling your product with the same profit when your competitor is giving away their product for free? The answer is simple; you can’t!
Who will be the new market winners?
Rupert Murdock said;
The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.
The challenge with just about every market leader is that as a result of their success, they have grown big. And according to Rupert Murdoch: big is not fast. Through free technology like Google analytics, small companies have access to the same business analytics tools that only 5 years ago was available only to the biggest businesses in the world. The ability to know what the market wants in combination with the ability to act fast enough will make these companies the winners in the future. The best things in life are free, and at the moment the best thing in business life is the ability to make fast & qualified decissions.
Freddy Aurso, MD Lighthouse8