Digital Thoughts: Market Share and Low Barriers
by Sam Harrelson
Generating leads through co-registration or through means
such as pops,
email or general website traffic can be a very laborious,
expensive and
resource-consuming proposition. The days of 1998 when anyone
with a 56k
modem could hook into the web, design a quick site and make
money by lead
generation or banner farms have long disappeared into the
haze of the past.
Now, the lead generation game has become more complex, time
intensive and
much more difficult to play. However, the barrier to entry
into lead
generation is still relatively low compared to many other
sectors of the
industry and the offline world. This is due to many factors
including the
insatiable appetite that many advertisers have for leads,
the large amounts
of money still available for the market, and the relative
ease of building a
site based on an already existing and successful model.
We've hit on the
booming $.50 PPL model in this column before, however we
left unexplored the
ways that a company with a successful model such as the $.50
PPL platform
can protect itself from the "copy-cats" and others out there
looking to make
a quick profit from another company's hard work and
investment of time and
resources.
Since lead generating sites rely on traffic coming into
their site,
affiliates are often used and relied upon for inflow of
visitors. However,
how does company A protect itself from falling prey to
affiliates or even
advertising partners who can copy the site model for their
own uses? There
are two major forms of protection, or proactive measures,
against such
actions. One is co-opting the competition and the other is
creating
multiple brands to take a controlling stock in the market
share. Both of
these options exist in a variety of formats that have
endless opportunity
for interplay and mix/matching. However, for our purposes
here, we'll
explore them separately and then in depth and make
conjectures about their
applications as hybrid models at the end.
Co-opting the competition is never easy but can be
rewarding. Analyzing your strengths and weaknesses vis a vie
your competition. You might be able to find that you can
offer your core strength as a rev share / licensing deal /
or simply commission-based to your competition. Doing so is
a win win as your competition ends up generating revenue for
you, and you provide a piece of the puzzle for them that
might have been expensive to replicate. We see examples of
these services in the network space, in the incentive space,
and in the lead gen space. Other less friendly options
include
non-circumvention agreements, which are frequently broken
in our industry. More often, companies have tried to beat
their competition
by either giving out better payouts, stressing the
relationship factor or
simply establishing their place in the market with an
unforgettable
marketing ploy or super-hype. As any free market economist
and believer
will tell you, there is no way to completely stamp out
competition,
especially in a marketplace as heavily dependent on the free
market as
online direct response. The companies in our space that try
to squeeze off
any attempt at competition often end up failing or costing
themselves more
in revenue than if they would have focused their energies
elsewhere.
Creating multiple brands to seize a larger
market share is
another tactic used to secure a company's place in the
market. By replicating their previous success in a model,
then mass-producing it on a similar series of offers, a
company can effectively provide publishers enough
alternatives to drive the traffic needed and give their
publishers satisfaction through a variety of options.
Perhaps the most savvy way to keep market share and long
term viability is a hybrid of these two tactics that
respects publisher needs and diversity and the healthiness
of a free market.
Sam Harrelson is the Co-Editor of the Digital Moses
Confidential. He can be reached at sam@digitalmoses.com
Sam Harrelson
is the Co-Editor of the Digital Moses Confidential. Send comments and questions
to sam@digitalmoses.com
