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Ch6 – Monetization & Ch9 – Metrics, G2 member, Network Effects,…
Ch6 – Monetization & Ch9 – Metrics
Ways to monetize
(2) Charging for access
third-party producers
Increase the value of the platform to users
Charge
(3) Charging for enhance access
charging producers
Increase exposure
Ex.Google Adwords
Charging users
Dating site, pay to view object information
(4) Charging for enhance curation
Platform too much thing
searching cost
Paid for good
Ex.Skillshare
(1) Charging a transaction fee
percentage of the transaction amount
fixed fee per transaction
Which fee level
is appropriate?
The transactions are carried
outside the platform
reduce direct contact
between seller and buyers
more information
standardized goods and services
rating goods and services
interaction facilitator
Charging who?
Charging all users
Reduce users, but attract people who really want to come in
Golf club
Charging one side while subsidizing another
Ex. Bar - boys pay, girls free
economic status, motivations, objectives, incentives
Charging most users full price while subsidizing stars
platforms choose to subsidize or incentivize stars—super-users whose presence attracts large numbers of other users
Charging some users full price while subsidizing users who are price-sensitive
Free to fee
Users first, monetization later
Free to expand users and network effect, charging increase users friction
Point
Avoid charging things that are already free
create new added value, the charge is reasonable
When initially building a platform, consider potential sources of profit
Ch9 – Metrics
STAGE 2:
METRICS DURING THE GROWTH PHASE
metrics
change over the life cycle of the platform
measure number and quality of interactions in the ecosystem in growth phase
in the platform’s development
most relevant to the decisions you face
as platform growth continues
make the balance between two sides (producer & consumer)
monitored by calculating the producer-to-consumer ratio
platform specific interactions minimum rate
For a traditional two-sided platform
producer
frequency of producer participation / listings created / outcomes achieved / Producer fraud
consumer
frequency of consumption / searches / rate of conversion to sale
lifetime value (LTV) models
churn rate
encouraging loyalty programs
increase the value-creating activity
STAGE 3:
METRICS DURING THE MATURITY PHASE
Eric Ries: for the mature company, incremental innovation and metrics must be closely related to each other.
MATURITY PHASE
2.have a high signal-to-noise ratio
3.facilitate resource allocation
1.drive innovation
find the way to extend and absorb it
Cisco Application Extension Platform (AXP)
ELEMENTS OF SMART METRICS DESIGN
simplicity
3 A test
1.actionable
provide clear guidance for strategic and managerial decisions
2.accessible
comprehensible to the people who gather and use the information
3.auditable
real, meaningful and accurate data
Are people happy enough with the platetform to continue participating in it actively?
How Platform Managers can measure what really matters
how long it would campaign
the quantity of resources- food, firewoord, animals
how far the army could march
For example; automobiles firm
source raw materials
assemble them
sales
From pipeline to platform: The New Measurement Challenge
BranchOut - professional networking platform app
enable job-hunting via Facebook
Reasons why BranchOut's collapse
changes in fb's app developer platform
blending job search capabilites
having a pesron's name and mail doesn't promise success for a platform
Successful pipeline business - minimal waste of resources and deliver a large quantity of goods and services
Platform metrics - measure the rate of interaction success (facilitation) and the factors (activities) that contribute to it
Designing Metrics that track the life cycle of the platform
in startup phase - track growth of asset: producers & consumers
greatest value from activities
additional value can be created
in growth phase, designed metrics - develop answers to questions
in mature stage, innovate the user rentention and growth
crucial to measure the participation of producers and consumers
STAGE 1: METRICS DURING THE STARTUP PHASE
core interaction and benefits for producers and creators
to define success or failure for a platform, three main metrics: liquidity, matching quality and trust
Liquidity
percentage of listings of interactions within a time frame
rate of growth (ratio) in active users
matching quality
sales conversion rate - percentage of searches that lead to interactions
Eg. 200 people visitors and 50 sales (50 divided by 200) - 25%
trust
Eg. Airbnb - high-risk industry player
allows hosts & guests to review each other
Others focus on co-creation, consumer relevance, market access, producer participation
G2 member
IBS3 邵渝恬 Katharine
IBS1 Loy
IBS3 陳偉良 Wee Liang
SoM1 黃文勝 Victor
Network Effects
Positive
Network Effects
a large, well-managed
platform community
(+)
value created
for each user
main source of value creation
HOW TO CAPTURING THE VALUES?
Ad World
charge the Ad companies?!
charge the firms that are seeking Ad services?!
Problems:
building a base of users
encouraging interactions
charge for posting a deak?!
should be levied on deal completion
charge ad agencies for postmortem service
FREE PRICING
Gillette
blades > razors
Printer Market
cartridges > printer
Freemium Model
premium services > basis services
Two-sided Market Pricing
Nestcap
web servers > browsers
Microsoft's/Apache
web servers for free
SMART
MONETIZATION STRATEGIES
For consumers:
Access to value created on the platform
YouTube/Android/Skillshare
For producers or third-party providers:
Access to a community or market
Airbnb/LinkedIn/Alibaba
For both consumers and producers:
Access to tools and services that facilitate interaction
Kickstarter/eBay-PayPal/Youtube
For both consumers and producers:
Access to curation mechanisms that enhance the quality of interactions
right consumers - right producers
General Implications
attract more users
Zvents
Quantity
Filter
Quality
3 more items...
generate more excess values
Meetup
Negative
Network Effects
a poorly-managed
platform community
(-)
platform can be quite complex
make management less effective
the more you measure, the less prioritized it will be
what
when to Identify and vet
for example
decrease
in order to
EX:
Three fundamental strategic choices - Caesar