Internet Marketing Business Models

Before you open up your "online business" you must choose an appropriate business model in order to determine and incorporate the business activities that you will undertake on a daily basis. People are so busy focusing on Internet Marketing buzzwords such as, SEO, pay per click, keywords, meta tags, paid inclusion and social networking that you must back up one step and choose a business model. Choosing the right business model for your product or service is essential for success. From there, your business and marketing plan will then evolve.

The following is a list of Internet business models :

• Merchant Model - Wholesalers, distributors and retailers that sell products or services.
  
• Direct Sales by a Manufacturer – A manufacturer that sells directly to the consumer. The manufacturer can track buying habits and determine customer tastes and preferences.
• Manufacturer Service Model – A manufacturer who uses the Internet to provide customer service in order to reduce costs and support sales growth.
• Subscriptions – Customers must subscribe to a site and pay a fee in order to gain access to the website’s content or services. The advantage is that subscribers will be highly involved customers. The disadvantage is getting users to pay a fee when substitutes are available at no cost.
• Utility Model – Where a customer pays as they go or when demanded for a fee. The advantage for the user is that they have to pay for the content requested.
• Infomediary – An Internet site that generates revenue by gathering information about people’s buying habits and then rates online merchants. The online merchants then pay for that information.
• Licensing – Where a customer pays a fee to download or use a software package.
• Advertising – Where an advertiser pays a fee to place an advertisement on a website. These include banner ads, preferred listings, pop up and text ads that generate revenue by clicking through. To be effective high volumes of website traffic is needed. Banner advertising is the least effective method. Google Adwords are very effective.
• Affiliate Marketing – Where two websites collaborate in order to drive sales by banner and other advertisements. The affiliate is the middle-person between the retailer and the customer. The retailer is able to reach new, potential customers through the affiliate’s networks, friends, and family. The retailer pays the affiliate for promoting their products and services when a customer clicks through an affiliate’s advertisement or complete a purchase a product or service. A common practice of affiliate marketing is to publish personal reviews about products and services.
• Community – Where people with similar likes, interests and hobbies create a community site in order to share information and create a sense of belonging. Or it could be a site featuring information about a town, city or municipality.
• Brokerage Sites – A site that brings buyers and sellers together to facilitate business exchange and transactions by either a virtual mall, classified advertising, market exchanges, auctions, reverse auctions, order fulfillment or search sites.