Tuesday, June 28, 2011

Why Not Charge The Customer?

It was recently reported that Twitter is progressing on its plans to launch advertisements in users' feeds. According to Twitter executive Sean Garret, Twitter has "been talking about Promoted Tweets in the timeline since we launched Promoted Tweets.” And who can really blame them? Something has to keep the lights on at the social network that's home to more than 300 million users. But maybe there is another way to go about making money.

Advertising appears to be the automatic default for monetizing social sites and content-related businesses on the internet; however, I believe that in most cases executing such programs dramatically lowers the users' experience. Perhaps they should approach the problem in a different way, such as charging people who truly value the service for the right to use it.

When a customer is willing to pay for a product or service, they have decided that it has real value to them. It's worth both their time and money, which is always more difficult to part ways with. Oddly enough, a lot of startups have the opposite mindset. They make the service free and completely devalue its worth in order to grow it fast (and flip the company). But this short-term thinking creates a long-term problem. Therefore, paying for Facebook, Twitter, or even the news feels absurd because these organizations have been telling us all along that they provide nothing of value. In the end, the startups bank billions of dollars and then the real problem kicks in when someone is actually charged with making real money.

Instead of trying to reinvent a broken wheel, perhaps marketers should try to improve the user experience even more, giving the services a greater value that they can sell to consumers. Consider the examples of HBO, Sirius, and Pandora Radio as companies who have taken this different approach to their brand's value. Would you consider it worth paying a premium for online news if it respected your time and attention by getting rid of annoying advertisements, stupid keyword links, filtering out irrelevant junk stories, and exceeding today's current standard of news distributors?

Lastly, it may just be me, but I believe this is a much easier and realistic task for marketers to accomplish. It's obvious marketers have become very good at selling premium values for products and services to consumers despite the existence of cheaper alternatives. However, it's becoming just as obvious that marketers are not good at hiding the fact that a product or service has little to no value at all.

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