Business model An architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenue. Key elements Value proposition-products & services to offer Market or audience Revenue models and cost base Competitive environment Value chain and marketing positioning Representation in the physical & virtual world Organizational structure Management Complete Activity 2.3 on page 79

Business Models & Revenue Models Business model- Alternative Perspectives Marketplace position perspective Revenue model perspective Commercial arrangement perspective Revenue model It describes how a business generate revenue What are traditional ways? The New Ways

Figure 2.13 Alternative perspectives on business models

Revenue Model- Publisher Example Advertising CPM (cost per thousand/mille) is a single instance of an ad appearing on a website. Advertising CPC (cost per click) means you pay for each click your ad receives. If you are spending $1 for each click, then 10 clicks will cost you $10. Sponsorship of section, content, or widget is a specific and distinct section of content located on a Web site that is often sponsored by a single advertiser. Affiliate Revenue from CPA or CPC Kick back part of a sale to the third party website that drove a customer to your site.

Revenue Model- Publisher Example Transaction Fee are the charges a company pays for using their service. Subscription access to content or services allow customers to access a library of information or entertainment, or receive an on-going service for a set-free. Per-per-view Access to document determine how much advertisers will pay for their advertisements. Subscription Data Access for e-mail Marketing

Figure 2. 15 Example spreadsheet for calculating a site revenue model Figure 2.15 Example spreadsheet for calculating a site revenue model. Available for download at www.davechaffey.com/Spreadsheets Continued …

Online Business Revenue Calculation- What factors to consider? Number and size of ad units, Ads Capacity to be sold, Fee level negotiated for different ads models, Traffic, Visitor engagement (time to stay) Figure 2.15 Example spreadsheet for calculating a site revenue model. Available for download at www.davechaffey.com/Spreadsheets (Continued)

Figure 2.16 Econsultancy (www.econsultancy.com)

Revenue Model- Auction Example Roles for auction (Klein 1997) Price discovery Efficient Allocation mechanism Distribution mechanism—attracting audience Coordination mechanism Types of auction English—forward or upward, initiated by seller this is more of conventional auctions we commonly seen in physical world and on virtual market Dutch—Reverse, downward, initiated by buyer This is more commonly seen in large manufacture procurement Read the Case Study 2.1 on page 87-88. Discuss the questions. Research on the web to find Reverse auction examples in Canada

Business Model-Start-ups Many dot.com start-ups failed. Some succeeded and newer ones are still created. Value the Internet start-ups (pp. 90-91) Concept Innovation Execution—promotion, performance, availibility, security Traffic Financing Profile—publicity and awareness in the market