The commercial value of the website = number of users (frequency) X value of a single user (frequency) (advertising revenue or purchase revenue) - website operating costs
For example: (number of users = absolute number of users X average access frequency of users)
Tencent’s commercial value = number of users X (income from purchasing Q coins + advertising exposure and clicks) – operating costs
Baidu’s commercial value = number of users
The commercial value of Alibaba and Taobao = number of customers X (membership fee + advertising exposure) - operating costs
Sina’s commercial value = number of users X advertising exposure – operating costs
Ctrip’s commercial value = number of users
The number of users is the basis of any business model, followed by the unit price, that is, the consumption or advertising revenue that each user can bring (for specific cases, please refer to my previous article "Analysis: How Twitter's market value is overestimated by 2/3" 》). In the traditional business model, the same is true, the number of customers of physical goods or services X the price of goods or services = operating income
Therefore, for any business model, economies of scale are important. For example, Microsoft in the software industry, Google in the search engine industry, and Tencent in IM have all relied on economies of scale to achieve revenue scales that are difficult to match with traditional business models. Economies of scale are more typical in the field of information services than in the field of traditional goods and services. But even in traditional fields, standardized economies of scale represented by Wal-Mart, Dell, and Starbucks also have strong economies of scale.
There are several key factors to achieve economies of scale:
Standardization and replicability: Obviously, standardized goods or services and processes can be quickly replicated and expanded in scale.
Technology or platform barriers: Strong technological advantages, as well as platform advantages, are the guarantee for establishing and consolidating competitive advantages.
Cost and channel advantages: Low cost and scale complement each other. Low-price or even free high-quality services are always very attractive to users. Google and Tencent QQ are examples of free models. In addition, rely on channel advantages to acquire users. For example, hao123 initially relied on Internet cafe channels, but now website websites rely on installed software to obtain new users.
Brand and user habits: For new physical products to be accepted, they must go through a process of user education. Therefore, actively building a brand and cultivating user habits are important guarantees for consolidating advantages and obtaining economies of scale. For companies such as Tencent and Google, technology and platforms are important, but they are no longer their absolute advantages. Only through the development of brands and user habits can loyal user fans be formed.
User value: Finally, there is user value, which is the consumption or advertising value that a single user can bring. We have seen that users of Tencent and Shanda Online Games can bring consumption of virtual currency; users of Baidu can bring frequent advertising clicks; users of Alibaba or Taobao can bring direct transactions. Compared with the traditional Sina advertising exposure model, the business model that can directly bring visible benefits to users is the most powerful.
Therefore, let’s take a look at the SNS models that are very popular nowadays, including Facebook and Twitter. The essence of their business models is also inseparable from the above formula. Although the number of users is huge, how to convert it into user consumption or advertising revenue still needs to be explored. Domestically, the SNS community Renren (Xiaonei.com) has a lot of revenue thanks to the largest community of college students; and Tencent's Qzone community is also a successful example of revenue from virtual products. However, in a topical community such as Tianya, too many advertisements can easily damage the user experience. Therefore, in addition to advertising revenue, how to provide value-added services that are valuable to users is undoubtedly an important issue. In addition to the platform model, It is also worth noting the software model and service model. Software models, such as stock trading software, can charge users directly. For example, Oriental Fortune Network and others are website platforms built on the basis of software sales. At present, in China, due to the proliferation of pirated software, there are not many software that charge ordinary users. However, software service companies such as IBM and Kingdee provide enterprises with systematic e-commerce solutions through software. SEM companies such as Adsage , which is based on software development and provides systematic SEM services to enterprises. The advantages of IT technology can not only be sold directly through software, but can also be combined with service sales to form the advantage of scale effect.
Discuz, such as Qihoo 360 and Kangsheng, acquire users through free software services and build brand awareness, and then generate revenue through advertising or value-added services. This is why Google continues to launch free software such as Gmail and promotes the concept of "cloud computing" to attract users. Free is the bait to acquire users and build a brand, while the revenue from various advertising and value-added services is the ultimate goal. (Author: Song An [email protected] QQ: 67678157)