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A New Way of Doing Business

A couple of business programmes on the Telly recently reminded me of how many companies are doing business in a new way and it is thanks mainly, to the Internet.

In the early days of the Internet, it was perceived as a place where services were free and products were cheap. A handful of companies have used this perception to try and bring it to reality and in my opinion, have succeeded.

Who else would start this?

The first of these companies was Google. When they started their search engine in the late 1990s, they had no idea of how it would earn money. They just knew that it would. Several years on and they are one of the biggest recipients of advertising revenue in the world. As a web designer I must say that many of my customers pay out money to Google. The happiest of those customers are paying out a fortune!

Stealth marketing or unobtrusive marketing?

So the model they use is that we get to use their superb services for free. In return, we are exposed to advertising. However, the advertising is not imposing and in some cases, such as on their mobile applications, it is not present at all. However, Google can afford to do this as they know that much of the time, we are exposed to their adverts. Their business model becomes really clever here because the advertising we see is specifically targeted. It follows what you have searched for or what you have been talking about in your emails (if you use Google mail).

Facebook have followed a similar principle. The number of registered users they have is so enormous, they can sell effective advertising to big and small companies alike and our exposure to the publicity is quite easily palatable. Some may call this stealth marketing whilst others would consider it to be unobtrusive marketing.

They admitted that one day that their mobile applications may need to carry advertsing but for the moment, advertising on the website was enough even though many people access Facebook through mobile phones these days.

Manufacturers get in on the idea

Where this business model gets interesting, is when it is used in manufacturing. Did you know that Sony sells its Play Station for less than it costs to manufacture? Not only that, they added in a Blu-Ray player in their latest version even though it was not essential to game play and added even more to the expense of an item on which they were already losing money.

However, this shrewd move allows them to sell more games (which earn them a commission), and it also ensured that Blu-Ray became the de facto standard for high definition video allowing them to exorcise the Betamax ghosts. Each Blu-Ray player and each Blu-Ray disc earns Sony some money. So selling Play Stations at a loss turned out to be a risk that paid off handsomely.

I think the Internet is an environment in which we can become creative in the unobtrusive ways we can earn money in business. These are interesting times indeed.

Wed 18 May 2011 17:59:30

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