Every kind of online business have some monetization strategies. There are mainly two types of model of monetization one is advertisement and another is subscription model. These models can prove profitable if used after good research. We are going to look at advantages and disadvantages of both models.
Advertising model
Advertising is the most profitable and the most successful type of monetization models for any online business. Advertising has many advantages over subscription model.
Advantages of advertising model:
- Success rate is high as users can get free services and also purchase products shown on your online service. Hence generating some commission.
- You can achieve more bigger customer base as the services you are provided is free.
- Advertising revenues has shown a great growth in past few years. If your service is not much popular even you can generate good revenue.
Advertisement models help small businesses reach their customers. If anything has advantages it also have some disadvantages.
Disadvantages of Advertising model:
- Revenue of advertisement depends on the product you are advertising. The product can be anything. Any fluctuations in the economy or in the sector can create a downtrend in revenue. Today's advanced advertising systems takes care of it and shows ads which are going to make profit.
- Ads can sometimes make user feel uncomfortable. So ads should be shown in a neat way.
Subscription model
Subscription model is the next type of model that you may prefer after advertising model. This type of model generates revenue less than advertising but it also has some benefits along with some drawbacks:
Advantages of subscription model:
- Unlike in advertising model the subscription model shows less fluctuations. Subscription model are good if you have less competition and high demand for the type of service you are providing.
- Subscription model has a regular customer base. Customers are found much more engaged in those type of services.
Disadvantages of subscription model:
- Customer base is very much lower in this type of model.
- Subscription model have less success rate until you are popular.
Well, above is the discussion of two different kind of monitization models. There is also a premium model which can be said a hybrid approach of the two models discussed above. Have you ever seen websites where they have advertisement as well as subscription strategy. Those services shows you ads and ask for some monthly or annually subscription to remove ads. By paying for subscription the user have access to services without ads. This model has the most chance to succeed and generate even big revenue than the models we described earlier.
