If you’re a news publisher or media company you will have likely been seeing a gradual decline in readership numbers and advertising revenue in recent times.
Even with a boost to online traffic as a result of the Covid-19 pandemic, there has been a rise in individuals moving away from searching for publisher specific content and rather choosing to search directly for specific news content or for their preferred authors.
Now more than ever, publishers are being challenged to find new ways to make up for this change in behaviour and find new ways to engage with their audiences and keep them coming back for more.
But fear not, let’s look at one of the ways publishers have been increasing their revenue by utilising their existing communities.
Contents
- What is an online marketplace?
- Utilising your existing community
- How do online marketplaces make money?
- Want to discuss a new revenue opportunity?
Whilst traditional streams of publisher revenue like display advertising are still important, relying on a single source of income can be daunting and exploring new revenue stream options can kick-start alternative income for publishers. So let us tell you about online marketplaces and how they can put you in a great position to start growing a profitable and sustainable business.
What is an online marketplace?
An online marketplace is an eCommerce platform that enables multiple buyers and sellers to transact with each other. Think of it like a traditional buy and sell magazine, but online and with limitless possibilities.
The recent success of platforms such as Etsy, Not on the High Street and Airbnb has generated an unprecedented interest in marketplaces. They have proven that the model can be applied to just about any business in a way that is scalable and with potential for huge prosperity.
Utilising your existing community
One of the biggest challenges a new marketplace will face when coming onto the market will be attracting buyers and sellers. And this is arguably the most important step, as by increasing the number of sellers and in turn the number of items listed on your marketplace, you will organically grow your user base, which will inevitably lead to more sales.
And that’s where your existing community comes in. Since you already have a core user base, your only predicament will be how you communicate your new offering to them, whether it be via onsite banner ads and promotions, email campaigns, or by utilising the power of social media.
How do online marketplaces make money?
You’ll want to build a marketplace that lasts, and that means choosing a revenue model that is not only lucrative, but also sustainable. It’s also worth noting that marketplaces that can’t be scaled to ensure long term success are usually the ones that fail.
Most online marketplaces use one of the following six revenue models:
- Commission – A popular business model for marketplaces is to charge a commission fee for each transaction made. This can either be charged as a percentage fee or a flat fee.
- Listing fees – A listing fee is where the seller is charged a fee when they post new product/listings.
- Featured listings and ads – Featured listings and ads are a way for sellers to buy advertising space on the website to promote their offerings.This could either be on the homepage or at the top of a specific category.
- Membership/subscription fees – A membership or subscription fee is a recurring revenue model, where buyers and sellers can be charged a recurring fee to use the platform.
- Lead fees – Lead fees are similar to commission based models e.g. the customer posts a request and the providers pay a fee to bid for the customers request.
- Freemium – A freemium marketplace can be monetised by offering premium services. For example, the marketplace could offer insurance that guarantees the item will be replaced if it is lost, stolen or damaged.
Once you have chosen which revenue model works for you, you’ll need to work out the appropriate amount of commission to take – this is especially important if you have selected a commission model. After all, it’s that figure that will add up to make your revenue so you need to get it right.
“Publisher’s advertising revenue saw a 30% decrease between 2019 – 20201, whilst global online spending has continued to boom, with 62%2 of online transactions now coming through online marketplaces.2”
Want to discuss a new revenue opportunity?
Here at Code23, we design, build and support successful online marketplace businesses. Our specialist team creates profitable marketplace platforms by taking a user-focused approach to increase engagement and boost conversions.
Using our advanced headless development approach, we are able to offer a completely unique customer experience, one that isn’t based on templates or pre-made layouts. Our experienced marketplace developers will build you a fully scalable and lucrative multi vendor marketplace to increase your revenue and keep your users coming back for more.
Get in touch and we’ll set the wheels in motion for your new revenue stream.