One of the most prevalent business models in Internet companies is advertising. Here is a look at different types of business models that exist on the Internet around advertisements. The basic aim of advertisements is to generate leads for the advertiser. The beauty of CPC (cost per click) advertising on the Internet is that the vendors (advertisers) need to pay only when they actually get the traffic, which makes their marketing costs much more accountable compared to traditional banner advertising. Realizing the ROI that this promises to the advertisers, in the US, people have set up companies that solely do this - generate leads for online vendors. Of course any website that has google ads already does that. But let’s talk about sites that are dedicated to generating leads without focusing on any other content at all. One of the categories of sites that is quite popular in the US markets is the “deals” sites. These sites publish the latest and the greatest deals and discounts regularly, some updated throughout the day. People hungry for deals keep coming back to the site to check out the latest deals. Because of the timely nature of these deals, the daily traffic volume is high and since these sites publish hot deals that tend to expire soon, the clickthrough ratio is also very high. FatWallet is the big daddy of all such deal sites. There are dime a dozen other deals sites like edealinfo.com, deals2buy.com and more.
Naturally the trend is already beginning to catch on in the Indian markets. If you look at the google trends data for “online deals” India is not too low down on the list. So we had a chat with a couple of players - allindiadeals.com (publishes deals in online shopping space), tripmela.com (publishes deals in online travel space) - to get insights into what they are doing to get the latest deals on their sites and to drive the hungry for deals traffic on their sites:
Sources of data: Both of these sites use a combination of feeds from vendors and handpicked deals from variety of websites.
Freshness of data: allindiadeals updates the site once a day while tripmela does that 2-3 times a week.
Business model: The source of revenue for both of these sites comes from a mix of CPC based listings plus google ads on the site.
Marketing: Both the sites realize the power of SEO and are doing things to promote their site high up in the organic search results. allindiadeals uses the power of social networks like orkut and other online communities to spread the word. tripmela has used techniques like press releases and Search Engine Marketing to buy sponsored listings in search engines. tripmela also delivers weekly newsletters to the inboxes of the registered users and a lot of customers seem to like this feature. (Tip: Doing RSS based subscription could also be quite useful)
Problems they are facing: This is probably the most interesting data that we got:
1. allindiadeals says initially people were not really familiar with the concept of online deals, although with the competition increasing among the online merchants, people are starting to get it now.
2. Both players mentioned that a lot of the online vendors do not understand the power of CPC based advertisement, as a result of which they are not willing to give data feeds. This is starting to change as well, with the increasing competition and increasing advertising budgets for online companies.
It’s clear from our conversation that a lot of merchants still do not understand the concept of lead generation and CPC advertising. We think as the market evolves, lead generation phenomenon will pick up steam - online vendors will realize the importance of CPC based advertising and they will start providing feeds of their data. As a result, we will start seeing more players who will get into lead generating business in the form of comparison shopping, vertical searches, affiliates and deals publishing sites.