Week 3 - Digital Business Models and Advertising Flashcards
What is a Business Model?
- Description of an Organisation and How that Organisation Functions in Achieving its Goals (e.g., Profitability, Growth, Social Impact
- Identify 3 Interpretations i.e. the business model…
1) as an Observable Attribute of a Real Firm
2) as a Cognitive or Linguistic Schema or (tacit) Interpretations of Real Systems Held by Managers
3) as a Formal Conceptial Representation Describing the Acitivies of a Firm - Example of Simple Business Model : Producing Goods or Service and Selling Directly to Customers
- Example of More Complex Model : Media Broadcasting
Explain VALUE CREATION
- about How to Create and Capture Value
- Value Creation is both a Supply-Side and Demand-Side Phenomenon
- Value can be Created Not Only by Producers, but Also by Customers and Other Members of their Value Creation ‘ecosystems’
Explain the Internet’s Impact on Business Models
changed Business Models by :
- Giving Rise to New Kinds of (digital) Business Models , e.g. Google, Facebook
- Reinventing Tried and True models , e.g. eBay
- New Business Model Dimension of Innovation that Complements Traditional Ones (e.g. Product, Process or Organisational)
- Many of these new, digital Business Models are Referred to as “Disruptive Models”
State the Template to Help Dissect the Different Aspects of a Business Model and it’s 9 Components
Osterwalder’s BUSINESS MODEL CANVAS
- Key Partners
- Key Activities
- Value Proportions
- Customer Relationships
- Customer Segments
- Key Resources
- Distribution Channels
- Cost Structure
- Revenue Steams
Explain a Way to Classify Business Models
Into Different Categories or Look for Common Patterns
e.g.
- Brokerage
- Referral
- Subscription
- Rental
- Freemium
Explain the Business Model Category : BROKERAGE
- Brokers are Market-Makers : they Bring Buyers and Sellers Together and Facilitate Transactions
- Usually a Broker Chargers a Fee or Commission for Each Transaction it Enables
takes place on many forms : - B2B e-marketplace - Online Auction Sites etc
Explain the Brokerage Example : ONLINE AUCTION SITES
- Match Sellers and Buyers through Sequential Bidding Process ; Auction Broker may Charge Listing Fee and Commission Scaled with Value of Transaction
Different Types
- Forward Auctions : Sellers place Items for Auction and Buyers Bid for the Items ; item Goes to the Highest Bidder
- Reverse Auctions : have 1 Buyers, Usually an Organisation that Wants to Buy a Product/Service ; Suppliers are Invited to Submit Bids
to Make Auctions Work in Online Setting, need ‘Proxy’ Bidding
- Bidder states Maximum Bid for an Item
- Place New Bids Without actually being In Front Of their Computer
Explain Example of Business Models - DIRECT MODEL
- Company that Produces a Product or Service Reaching Consumers Directly and thereby Compressing the Distribution Channel
Explain Example of Business Models - CONTNET PROVIDER
- provides Digital Content (e.g. News Service)
- Very Often Advertising Provides Revenue
- Customer can Also be Charged a Periodic Fee to Subscribe to (premium) service
Explain Example of Business Models - SOCIAL MEDIA
- e.g. Facebook, LinkedIn, Instagram etc
- Members Upload and Share Content, may comment on eachothers entries
- the Real Value is In Its Users, the Content they Create and the Time they Spend on the Platform, Not the Software
–> network effects - Business Model Based on Opportunities for Targeting Advertising or Additional Services
Explain Business Models using “freemium” pricing model
- a Product/Service is Provided Free of Charge to a Large Number of Users but a Premium is Charged for Advanced Features
- e.g. Skype, Dropbox etc
Explain the common trait that digital business models share - Multi-Sided Platforms
- are “technologies, Products or Services that Create Value Primarily by Enabling Direct Interaction Between 2 or more Customer or Participant Groups
- e.g.
‘Sharing Economy’ platforms (Uber, Airbnb etc) Enable Interactions Between those Willig to Share an Asset or Offer a Service and Those who Want to Make Use of It
Explain Common Properties of MSPs (Multi-Sided Platforms)
- Create Value by Reducing Search and/or Transaction Costs for Participants or Even Product Development Costs (e.g. by providing APIs for App Developers
- often Cross-Side (indirect) Network Effects - Value to Participants on One Side Increased with Number on Another Side - “chicken and egg” problem –> High Barriers to Entry
- Economies of Scale
- Potentially High Switching Costs or High Costs to Belong to More than 1 Competing Network
Explain Challenge for Multi-Sided Platforms
How many sides to bring on board?
- More –> mean Greater Cross-Side Network Effects, Large Scale and potentially Diversified Sources of Revenues, but..
- Viable Proposition for Each Party?
- Greater Complexity/Conflicts of Interest
- Ability to Bring in Innovative Features?
Decide on Pricing Structure
- Different Prices for Different Sides (perhaps free or subsidised for some) Depending on Price Sensitivity or Value Created
Governance : Whether/How to Regulate 3rd Party Actions
- Who can Join and What are they Allowed to do?
- “Outsource” environment to Users? (e.g. User Rating Systems)
State 6 Reasons why Online Advertising is Important
- Consumers Spend ever More Time Online
- Powerful Mechanisms to Target Ads to the Right Audience, at the Right Time
- Generates Data used to Measure Return on Investment and Optimise ad campaigns
- the Lifeblood of Much of the Digital Economy, Providing a Revenue Stream for Lots of Services
- Increasing Programmatic Control Over Whole Process (“programmatic ad buying”)
- Different forms Available, Each with their Own Attractions to Advertisers
Explain what is DISPLAY ADVERTISING
Digital Rethinking of the Traditional Media Publishing Model
- Publisher, most Often via Website or app, Provides Content (usually but not necessarily for free) and/or Services (like email) Mixed with Advertising Messages (in the Form of e.g. Banner Ads)
- Works Best when the Volume of Viewer Traffic is Large, it’s Highly Specialised or Ads are Highly Targeted
- examples of Sites Serving Display Ads : Portals, New Sites, Social Media etc
- to Help Match Supply and Demand for Ad Inventory, Different Kinds of Intermediaries have Emerged Between Advertisers (or the agencies representing them) and Publishers
Explain Native Ads vs Display Ads
- some Distinguish Between Traditional Display Ads and Content-Based and Native Advertising
- Native Ads Designed to Match the Form and Function of the Platform Upon which they Appear
- Common form : in-feed native ads
e.g. promoted stories in news feed
State 3 Ways Display Advertising can be Categorised According to :
- Ad Formats Used
- Pricing Model
- Target Mechanisms Used
Explain the Online Advertising Concept - AD FORMATS USED
- may Vary from Simple Text ds to Various Banner Ad Formats (Sky scrapers, leaderboards, etc) and Video
- Popups, Popunders
Explain the Online Advertising Concept - PRICING MODELS
Pricing Models Based On :
- CPM : Cost per Thousands Impressions (i.e. Number of Times an Ad is Served) ; e.g. you Buy a Guaranteed Number
- CPC (aka PPC) : cost (pay) per click; Fixed Prices or Auction
- CPA : cost Per Action - Generated Lead (e.g. visitor registers or Requests info via online form) or Actual Sale (lead Conversion)
- (mobile ads:) CPI : cost per Install of an Advertised app
Explain How to Target Display Advertising
Display ads Increasingly Target to Individual Users so as to Make them More Relevant
Traditional Types of Targeting Included :
- Geographic Targeting
- Demographic (e.g. males aged 18-34) or Psychographic (e.g. travel enthusiasts) targeting
- Dayparting (e.g. only business hours), day of week, etc
- Bandwidth (e.g. rich media only on broadband)
Explain the Types of Targeting - CONTEXTUAL and BEHAVIOURAL TARGETING and RETARGETING
CONTEXTUAL : Based on Publishers’ Content (e.g. through keyword matching and/or analysis of page content)
BEHAVIOURAL TARGETING and RETARGETING : based on Browsing Behaviour (site to site)
RETARGETING : Form of Behavioural Targeting whereby Former Visitors who Didn’t Convert, get Ads Specifically Chosen to Try and Drive Them Back
Explain the Concept of AD EXCHANGES and PROGRAMMATIC AD BUYING
Traditional Process of Buying Ad Inventory through Ad Networks Required Human Interaction, Price Negotiation etc
AD EXCHANGE : Technology Intermediary Providing Real Time Bidding (RTB) to Facilitate Buying and Selling of Online Media Advertising Inventory from Multiple ad networks or publishers
- Price Agreed in Real Time, on an ad-by ad Basis
- RB one Popular Form of a Broader, Highly Popular Trend in the Online Advertising World - “PROGRAMMATIC AD BUYING”
Explain the Concept of PAID SEARCH
PAID SEARCH : Payment to a Search Service to Display a Sponsored Link to Company’s Website to Search Results for Particular term (s)
-can go for Range of Keywords and Specify How Much you Would be Willing to Pay per click for each of these
Google AdWords campaigns
- Continues to Account for over Half of UK Digital ad spend
Explain the Concept of SOCIAL ADVERTISING
- facebook provide this
- Advertising Delivered on Social Platforms, including Social Networking and Social Gaming Website and Apps, across All Device Types, desktop, laptop and smartphone and tablet
- Facebook ad types includes news feed ads and right column ads
Explain the Example of Social Advertising - Facebook
fb Collect Data from Outside its Original Platform Boundaries, e.g.
- Browsing on Website where you Use Facebook Login or that Create Custom Audiences Based on Website Events
- Activities on Apps you Linked to Facebook account (e.g. Spotify) or that were Acquired by Facebook
- Way to Leverage Social Links is by Using the Anotherm to Personalise the Ad Message (to enhance response)
Explain the Concept of MOBILE ADVERTISING
- further distinguishes between advertising on desktop or mobile device
- is Advertising Tailored to and Delivered Through Wireless Mobile Devices. Typically taking the Form of Statistic or Rich Media Display ads, text messaging ads, search ads, or audio/video spots
- by means of SMS, mobile Web, apps etc
- fastest growing category
State 3 Other Digital Marketing Activities
- Email Marketing
- Search Engine Optimisation (SEO) - i.e. Improving Ranking in Organic (i.e. main) Search Results
- Social Media Marketing
