Internet Marketing and Leveraging the Power of Networks

Creating a network -- meaning a community of users -- for your company is something that has always been valuable, but has become virtually indispensable to the success of any Internet company. The leaders of the Internet -- such as Google and Yahoo! -- all apply the idea of creating a network, and have profited substantially from it.

The best way to create a network is to provide your users with free services. This accomplishes two vital goals:

Attracts Users. Getting qualified traffic to your site is one of the most fundamental objectives of any online business. If you don't get people to your site, you're probably not going to make any money.

Giving away quality content and/or services free from your site is probably the best way to attract users. You increase the likelihood of other people linking to you -- as your site will have quality content worth linking to -- and thus will boost your rankings in search engines. By giving away something for nothing, you also encourage word of mouth; people enjoy informing others of free offerings, and virtually all of us love the idea of receiving something for nothing. As a result, giving away free content and/or services can be one of the most cost-effective ways of getting new users to your site.

Builds Trust. One of the biggest factors in determining how easy it will be for you to sell products/services online is how much the user trusts you. The more expensive your product/services are, and the less recognized your brand is, the more trust will be required of you for you to sell your product/service.

When you provide your users with a quality product or service that is free, they are going to like you. They are going to realize that unlike the vast majority of other companies out there, your firm actually offers something of value -- and best of all, does so for free. As a result, you have earned the trust and credibility needed to sell other products/services to them.

So, what should you offer as a free service? That depends on what industry you're in. One of the best free offerings a firm can deliver, though, is digital content. This can be as straightforward as text or as complex as video editing software. Digital content is a great free offering for two reasons:

1. Digital information is one of the few assets that one can give to another person without losing it oneself. This encourages the spread of your freely distributed product/service, which in turn increases its value to you as a promotional tool.

2. It has no variable costs. Once you've created it, the cost of distributing it is probably close to negligible. As a result, the marketing tactic of delivering a free product/service will not cut too deeply into your bottom line.

Once you have a free product that can attract a large user base, you should be in a great position to sell services to your user base. If your product/service is particularly good and is one that is conducive to repeat usage, you can easily sell services based around your free offering. This can be extremely effective and lucrative if done properly.

Generally speaking, there are three categories regarding ways you can develop revenue streams around your free offering:

Selling services
Selling add-ons/accessories
Selling network access

Let's explore each method in greater detail.

Selling Services

Selling services essentially involves selling expert consultation or customization to the free product that was offered. The concept is best illustrated through a few examples:

Software companies: An increasingly common practice amongst software developers is to distribute a version of their software that is completely free. No functionality is withheld; the product is available free of charge in its fullest form. Many of the users, though, will require customization to the software -- which the developers of the software are in a prime position to provide. As a result, some software companies are beginning to distribute their product entirely for free, knowing that they can sell custom services to a given percentage of the users. In this way, the free offering becomes a marketing tool that paves the way for closing sales. Such marketing tactics are increasingly replacing advertising as a more effective means of obtaining clients and establishing a brand name.

Consultation: At the turn of the millennium, Internet marketing guru Seth Godin published his book Unleashing the Idea Virus -- and, instead of accepting the hefty advances and publishing deals he was offered, decided to distribute the book for free online. The decision, which was greeted with much skepticism at the time, seems to have been a wise one: the ebook has been downloaded over 1 million times, thus helping to establish Godin as the premiere Internet marketing consultant, and allowing him to command a premium price on consultation and public speaking services. The free distribution of content attracted users and allowed him to earn trust. He could then monetize this by offering service components such as consultation and guest lectures.

Selling Add-ons and Accessories

Another method of creating revenue streams around your free offering is to offer add-ons and accessories that supplement your free offering. One of the most prolific examples of this occurred when bookseller Barnes & Noble began to offer free online courses in a variety of topics. The courses are completely free, but students are encouraged to buy the books that serve to supplement the education provided in the classes. The strategy has proven to be immensely successful, as Barnes & Noble's online courses are a prominent part of the company's offering to this day.

Selling Network Access

With networks being the fundamental concept that drives everything about the Internet, creating a network around your free service - and then monetizing that network -- is something that most certainly can be done. This is most typically done through advertising, premium interaction, or matching services.

Now that you understand the basics of creating a network the last and most important step is to start implementing a network building strategy and test out your ideas in real time.

This article was written by David Waring, CEO of The ActoNetwork. For more information on the power of networks and online marketing in general check out our free Internet Marketing eBook located at http://www.actonetwork.com.