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Successful Websites Combine 4 Online Business Models

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A successful website more and more needs an online business model that merges four different value propositions.

A value proposition creates value for both the business and the customers of that business. In an online environment, any business finds value in one of four broad ways:

  1. Brand
  2. Audience
  3. Advertising
  4. Ecommerce

In the early days of online, websites often focused on a single value. For example, many retailers and other national companies began with a focus on brand. They used online to build awareness, improve reputation, enhance image and try to drive more traffic into brick-and-mortar locations to buy their products.

In time, their websites have seen massive growth in audience. They are selling products and services via their websites. Some are even making more money from their websites with advertising.

Amazon is a good example of this trend. Amazon’s early focus was ecommerce; even earlier, it’s focus was just on books. Yet Amazon is having incredible growth in advertising. It has built a world-class brand. And it has an enormous audience.

Traditional media built websites and put their print or broadcast content on those sites. They began to make money from ads on the site from networks and direct sales. Newspapers in particular eventually began to sell print subscriptions on their sites and even created tools for people to buy ads directly on the sites.

So what began as an online business model with a single value proposition has evolved in a model with multiple values to businesses and customers alike.

Online Business Model #1: Brand

Websites represent two types of brand: an online brand and — if the business is brick-and-mortar — an offline brand.

A pure online brand such as Amazon, Facebook and Google all create value in their brand from a combination of useful, inexpensive and mass-appealing products and services. Their online-only presence creates huge cost advantages and therefore price advantages, whether they sell products such as books or services such as advertising.

An offline brand such as Walmart recognizes the threat from Amazon among others. Go to the Walmart website to see how it has evolved from a brand extension of the brick-and-mortar stores to a more pure online brand. Compare prices to see how much Walmart is now acting or trying to act like Amazon.

Model #2: Audience

An offline brand protects brand first in an online environment and then goes looking for an audience. A pure web brand does it the other way around.

Websites can’t build brand, sell advertising or sell products and services without a large enough audience. At the same time, an offline brand already has the “brand”, which in theory leads people to their website. A pure online brand doesn’t have that advantage. So it must build audience and brand at the same time to get returning visitors.

Model #3: Advertising

Pure web brands have grown tremendously in pursuit of the massive growth in online advertising, which has shifted in double digit growth for years from offline media.

Some found six-digit advertising revenue mostly from just lucrative ad networks such as Google AdSense. They found additional revenue from affiliate sales. The larger and more successful ones even sold advertising directly to clients.

But this online business model also is running into some bumps on the road because of slowing growth rates in online advertising and tremendous competition from other websites.

It means successful online businesses that have any chance of surviving have to find other sources of revenue. Ecommerce is the answer for many of them.

Model #4: Ecommerce

Amazon again is an interesting example of this model, especially book publishing. Authors can independently publish their own Kindle and paperback books on Amazon for sale and get a substantial royalty. But Amazon took this traditional model a step further.

The company began selling monthly subscriptions to Kindle books. Authors get paid according to how many pages of a book a subscriber reads.

Likewise, many content websites have moved beyond just advertising sales into their own ecommerce opportunities. They may offer someone a chance to subscribe to a version of the site that doesn’t have any advertising. They may sell their own products and services. Newspapers readers can subscribe only to the online edition and not the print division.

Regardless, there is no such thing anymore as a single online business model for many successful websites. Survival depends on a hybrid approach.

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