If you have a social media start-up and are looking for a business model to monetize it, you have come to the right place. In this article, we will discuss various business models you can use to fund and grow your start-up.
First and foremost, it is important for you to keep in mind that while the early Internet start-ups were mostly funded by advertising revenue, these days there are a number of options available to start-ups. This offers a number of advantages as start-ups do not need to rely only on advertising and can keep running by following other business models.
One of the more popular business models for social media start-ups is a freemium model. Simply put, this model works by providing some of the basic services for free but members have to pay to use advanced features. The biggest challenge for this model is to segregate the free and paid features in a way that people are willing to pay for using the premium features. In case the users are entirely satisfied with the free services, they might not want to upgrade to the paid plan. Also, the paid plan has to be so good that it attracts a lot of users.
Another business model that is applicable to companies in social media space is the affiliate model. If you do not know anything about how affiliate model works, you should read up on it as there are thousands of blogs online that can help you get started with affiliate marketing. Simply put, you will sign up with a few affiliate networks and drive traffic to the merchants on the network from your social media website.
If the users click through your affiliate link and make a purchase on the merchant site, you get paid a commission. The commission amount and percentage will depend on different merchants as well as the affiliate network. It’s a highly profitable model when it is implemented in the right spirit. Keep in mind that social media users tend to be really picky and therefore, you should never push your affiliate links too aggressively.
There is also the subscription model wherein users are required to pay an annual or monthly fee in order to access a particular service or a product. There are several platforms that use this model successfully but you need to provide something very valuable to the users in order to make them to pay for using your service.
Some of the other models you can use for your social media start-up is the virtual goods model and advertising model. In case of virtual goods, users pay for buying certain virtual goods such as points, upgrades or other such things. Most video games make their money by selling virtual goods in their games and many of these gaming companies have built huge businesses based on this model.
As far as advertising is concerned, it is also a good model but you need to be careful. Users do not like too much ads on a website. You also need to worry about the quality of ads that are allowed to be displayed on your platform.
Overall, there are a number of business models that can be used for a social media start-ups but it’s important for you to keep in mind that users these days tend to be picky and if you are too aggressive about monetizing your platform, they might go elsewhere. So, keep the above mentioned tips in mind and pick a business model that suits your particular social media platform.