Ideas for those looking to join the Internet millionaire's club.Targeted AdvertisementA slew of random eyeballs won't cut it anymore--today advertisers want a direct link to consumers and a proven return on their marketing dollars. "Targeting techniques dramatically improve [advertising rates] and make businesses viable that might not have been," says Howard Morgan, a partner at First Round Capital, an early-stage venture fund in New York that invests in Web-based companies. Entrepreneurs can make a buck either by running Web sites that appeal to a specific demographic or by writing nifty software that captures information on how people shop on the Web.
Example: 33 Across, a Manhattan-based software start-up, is developing software that sniffs out online "influencers"--those who might share an advertisement with other, larger groups of people--whom advertisers can target directly
Niche E-commerce
Amazon.com might sell a little bit of everything, but there's room for smaller e-tailing sites that mine specific lucrative niches. The best of these sites generate revenue both by taking a cut of every sale and by selling advertising. And while the recession is spanking retailers across the board, "people are doing more price discovery and shopping online," says Morgan.
Example: Avelle.com, formerly BagBorroworsteal.com, employs a Netflix-style model for luxury accessories. Customers can rent Chanel earrings, Balenciaga tote bags or Hermès watches at a monthly or weekly rate. The company also charges $60 for an annual "membership" that offers discounts on those rates.
Lead Generation
Be an online broker and take a cut of the business you scare up. Add value not just by driving customers to other businesses but by helping advertisers learn more about their target audiences. Another alternative: simply make it easier for customers to make purchases.
Examples: Opentable.com peddles restaurant-table-management software that lets consumers search for reservations and book online. Diners make reservations for free, but the restaurants pay per lead.
Mint.com offers users an online bookkeeper that can categorize and graph all spending, as well as outline ways that users can save money (strategies provided, of course, by Mint advertisers). For instance, Verizon might offer a combination package of cable, cellphone and landline service that could save Mint.com users a $100 per month; Mint.com then captures a fee for each referral.
Software
While software development costs have plunged in recent years (thanks in part to the "open-source" revolution), small programmers still face the challenge of marketing and distributing their work. Enter Facebook, the
iPhone and a host of sites and gadgets that efficiently corral a massive potential user base for the next killer apps. On Facebook, software developers can advertise directly on each application they create. On the iPhone, developers can sell apps through the Apple store online and take a 70% cut.
Example: Esgut makes applications that run on Facebook and MySpace. One of them, called Superlatives, lets visitors rate their friends as the smartest, cutest or best looking; the Entourage app lets users post pictures of their favorite friends in a Brady Bunch-style frame. Esgut, recently bought by
Social Gaming Network, generates revenues by selling advertising on its applications.
Vocational E-learning
This increasingly popular arena includes software and video. Classes and programs aimed at developing specific, commercially attractive skills will perform best, says Adam Dell of Impact Venture Partners. "Becoming accredited as a service technician, a nurse or in a specialized field attracts many more dollars than learning how to play the guitar," he notes.
Example:
Knewton.com, an online test preparation site, charges $1,390 for a GMAT-training course, including video classrooms, test preparation questions and examinations. The company recently raised $2.5 million in venture funding.
Subscription-Based ContentFor all the free stuff online, people will still pay to enter gated communities--and with the rise of social networking (Facebook, Twitter, et al.), the options for virally marketing such sites are myriad.
The challenge: offering such valuable content that people are willing to pay for it.
Examples: The Ladders.com charges $30 per month for listing of open jobs paying $100,000-plus salaries. Meetup.com charges "organizers" a monthly fee to arrange meetings in U.S. cities for groups devoted to any imaginable interest.
Infotainment
Even in this tough economy, if you can wrap a compelling video around useful, practical information that appeals to a specific audience, large sponsors will pay good money for it.
Example: Foryourinformation.com, founded by Paul Kontonis, has multiple online video networks devoted to infotainment, and one comedy network, on which advertisers buy space. Companies can also buy shows created around a particular brand--an even more lucrative model, in terms of revenues per view, says Kontonis.
"Freemium" ServiceThis model--in which you give basic service away for free while banking on an up-sell for the premium stuff later--often sounds better than it is. Newspapers certainly have had trouble with it: In September 2007, The New York Times scrapped TimeSelect, its subscription-based access to op-eds and other content, because too few readers were signing up.
Example: Photo-sharing site
Flickr.com lets users upload and store up to 100 megabytes' worth of digital photos each month for free, while its "Pro Account"--with unlimited storage--goes for $24.95 a year.
Software as a ServiceStruggling small companies are looking to cut costs anywhere they can. That's where on-demand software--also called "
software as a service" (or SaaS)--comes in. Instead of having to shell out for and maintain their own information technology systems, customers can simply rent information technology time from a SaaS provider. (For more on trimming costs, check out
"14 Creative Ways To Keep Costs Down.")
Example: Publicly traded NetSuite peddles a range of SaaS services--from customer relationship management programs to e-commerce functions.
SOURCE:FORBES
