Why giving it away can be more profitable

Why giving it away can be more profitable

Recently, I’ve become fascinated with the possibilities of giving free content away as a legitimate – and highly successful – marketing strategy. Some of you reading this may already be nodding in a “tell me something I don’t know” kind of way. After all, blogging is a free content marketing model. But the fact remains that most businesses still look to monetise the wrong end of their business model by charging up front and providing free ‘value-adds’ after sale.

Jeff Jarvis – in his new book What would Google do? – discusses how providing free, flexible and open tools and content with as few restrictions as possible allowed businesses such as Google, Flickr, Twitter and more to amass astronomical audiences that can then be monetised by a secondary method, such as advertising or selling related products or services.

Charging customers stops some unknown number of them from getting your product or using your service, which stops you from having a relationship with them. Money costs money.

The value of the audience

This ability to monetise through secondary channels while amassing followers through free distribution is still not perfect. Twitter has yet to monetise their enormous audience. Facebook has struggled with various advertising programs. YouTube was predicted to post a $470 million loss by Credit Suisse back in April. Yet no one would criticise these businesses or assume they have failed. We know they have achieved the impossible by attracting a massive, highly active audience and we know that has incalculable value. What we are seeing now is the experimentation and innovation in extracting that value.

Yet most businesses have the reverse problem. They have a monetisation mechanism – selling a product or service, most commonly – without the mass active audience commanded by these online behemoths. For them, the problem isn’t monetisation, it is in finding the free and open mechanism that builds the audience that they can then monetise.

Obviously, you can’t give the product away for free, as that’s your monetisation. Therefore, the key needs to be to find a complimentary free service or content strategy that would attract the right audience in their droves.

Giving content or services away for free may seem counter-intuitive. After all, where’s the ROI? It will cost your business to produce the content or staff the service. But no business ever questions the ROI of their customer service or IT support departments. Businesses see those as legitimate expenses that increase the value of their sales proposition and thereby build ROI through more indirect routes of customer retention and loyalty.

Building an audience – consumer engagement – should now be seen as the third core business activity, sitting between sales and customer service. You may argue that the third activity is always marketing, but increasingly for many businesses, particularly SMEs, marketing is no more than an adjunct to sales, pumping out advertising with a clear measurable goal of direct response sales conversions.

Customer engagement is genuine marketing, not advertising, and is measured by completely different metrics to counting conversions or totting up dollar values in and out within a week of campaign launch.

If you really need to explain it to a CEO or manager in terms they are comfortable with, it is all about better lead generation over time. The goal is to amass a previously unimaginable number of focused leads that can then be converted by the sales team or through other traditional methods, thereby monetising the audience. After all, they’ve demonstrated their interest by downloading your free ebook or availing themselves of your free seminars, or using your free web tools. Planned correctly your free marketing strategy can in fact produce highly qualified – and therefore highly convertible – leads in amounts you’ve never experienced before.

But before you start building massive lists of leads from free content and then hammering them into submission with your sales team, remember that even a free offer becomes unattractive if it results in spam or heavy sales pressure. Be smart about maintaining this relationship and understanding when they may be ready to buy and when they are content to just stay in your audience for now.

Free – the future of a radical price

Chris Anderson, the editor of Wired Magazine and the best selling writer of The Long Tail recently released his new book Free – The future of a radical price. Ironically, Anderson invited controversy by lifting some of his material without attribution from Wikipedia – thereby plagiarising the authors whose work had been cited. (Hat tip to @likeomg for tweeting this.)

Profiting from ‘Free’!

Guess what? I’ve just given you some free content that is hopefully of value to you. Then again, this entire blog is produced at no charge to the reader. What is my ROI on this blog? At the moment, negligible. Yet the reputation I create, the authority I build and the subscribers and audience I cultivate can develop career opportunities and increase the value of my professional work. Pay rises, extra freelance contracts, magazine articles. The ROI is an indirect result of using a free content marketing strategy.

What are you prepared to give away for free?