Direct Sales are a Whole ‘Nother Type of Money

[Dorian Benkoil]

Here are more details on our bullet points to help you predict whether your media business can be viable. We’ve thoroughly explored advertising (including classifieds and listings) and helped you figure out how to figure out how much money you might make monthly and yearly from different kinds of ads. But ads are not only just one potential revenue stream, they’re also just one kind of revenue. Ads are not so good for cashflow (a finance term that basically means real money you receive and spend) because of a few factors: You get paid AFTER you’ve spent money to deliver the service, the money can be hard to collect and campaigns are easy to cancel. In sum, ad revenue comes in late and can be unreliable. You’ll want to explore other ways of bringing in income.

Direct selling such as subscriptions and e-commerce can help, beyond being an additional bit of money. Selling directly, subscriptions, products, and so on, can be a more reliable source of income over time. You often control more of the process, and have broader leverage in determining what to charge. Your products and services can be rare or unique -- something someone can get only through you. From a financial perspective, people pay upfront, before you deliver the good or service, so you have the cash to finance your operations.

In addition, subscriptions, events, training and the like are a buffer against an advertising market that can fluctuate wildly with the economy. The revenue stream is usually more reliable. People who buy a subscription for a year tend to keep it, and you’ll have renewals. Imagine having all that money in hand today and knowing you'll be able to have it for the whole year. People may buy a packet to a series of events. By contrast, most advertising campaigns can be canceled with two weeks' notice, if that.

And the stuff you sell, especially events, can help you as marketing. Those who’ve bought something from you have given you their information and have expressed an interest, so you may be able to serve or sell them some more over time. You might be able to use the list (judiciously) in other ways, such as to send emails on behalf of other carefully chosen clients. Events are great exposure, too, and a way to solidify loyalty to your brand, not to mention the added exposure people get through products with your venture’s name and logo. And all of it might help boost your ad rates: If you can say to a potential advertiser that you’ve sold subscriptions and tickets to events, that shows a more engaged community of higher interest for which that advertiser should pay a premium over someone who can't show those metrics.

The list below fleshes out our original bullet points with some more suggestions.

Direct Sales and Services

• E-commerce. What products might you sell? Logo hats, mugs, pens, etc. To start, you can go through third-party vendors like CafePress or Amazon.com, but they take quite a cut, so once you reach a higher level of sales, you’ll want to figure out your own fulfillment solution when you're at a level beyond what you can fulfill manually by yourself or with your small staff. Believe it or not, the book The Four-Hour Work Week has a chapter on solutions that might help and a way to structure an operation. (The link provided has other interesting tips on running an online business as well.) Search "fulfillment solutions" to find many many vendors.
• Reprints. Can you sell them? If you’ve profiled a local business or professional, they might pay to have print versions of what you’ve written they can put in their establishment as handouts, mailings, in the window, etc. They also might want to pay for the privilege of offering the entire story on their Web site, and have the right to put it in e-mailings, etc.
• Print versions of your publication. There are technologies to let you print out your website and/or blogs and sell them as print publications. This can also help ad sales, as some local companies still are more comfortable with print ads than those online. One of the easiest for local, blog-based publications to use is Printcasting.
• What expertise might you have that you can offer to the community? Writing, printing, Web design, publishing, consulting, etc., that you might charge for? There may be courses you and your staff can offer in person or online, or services that relate to what you already do. If you’re a wizard or even just plain pretty good at blog-building or Web designing or some other skill related to running your site(s), why not do it for local businesses? You can offer the service separately or in a package with ads you’ll help them build and place, as well. This can greatly boost their productivity, on a revenue-per-hour basis.
• Events. Can you put on events that will bring in revenue, and have the added benefit of marketing your media and solidifying your community? There are a lot of ways to structure events, financially: charging for them, getting sponsorships, getting a cut from a local bar or restaurant for the food and drinks they sell for people who attend, and more that you may be able to come up with.

• Are there subscriptions you can sell, perhaps to a special area of your site, or for special access?
• What access or technology might users pay for? Anything from Web storage to the ability to specially parse and save clippings, special access to databases of local businesses, etc. Let me know of any solutions you have available for others. The ones I know have all been proprietary and built in house, so let us know if you have any off-the-shelf or low-cost solutions for these kinds of things.

What else? Got some more ways to generate revenue from direct sales, beyond ads? Let me know!

[GP Hughes]

Dorian:

Let me weigh in with a few opinions on this general topic. I've borrowed your headings:

* E-commerce. What products might you sell? Logo hats, mugs, pens, etc.

In general these items fall in the category of specialty advertising items. I bought about four-dozen 'caps' when I launched the site and they were popular. I gave them out for a while with the purchase of personal memberships - free. I chose that route because if you start selling things at retail, then you end up having to do the sales-tax thing. The sales of memberships - a service - are exempt from sales tax in my state so I chose to avoid the state's watchful eye by not selling items directly.

More recently, I've just licensed the logo to some specialty advertising folks, including some who've put the logo on Tees, shirts and caps. I typically will charge them a license fee of $1.00 per item and get a $100 check. I'm not terribly worried if they sell 110 items as I'm benefiting from the advertising as well as ... well the ad specialty folks are business members on the site and pay that membership to boot.




* Reprints. Can you sell them? I can't :)


* Print versions of your publication. There are technologies to let you print out your website and/or blogs and sell them as print publications. This can also help ad sales.

I have toyed with the idea of this but in all honesty, despite my requirement that members provide a working email address, I figure, from the bounces I get daily, that about 10 percent of the email addys in my database are obsolete.

The thing that I've had some success doing ... and expect more success from doing ... is an ad-book/coupon book of our better customers.

The version currently under development will generate, over the next five months, about $4,000. We'll be producing 12,000 booklets (basically a std. letter page folded in half for a panel - one letter page printed both sides equals four pages with four ads per page.) This is pretty common/commonplace so I won't go into it other than to say, I was resistant to this as a project until another member decided to do it and kind of 'cut me in' thus establishing, by action, the marketing viability of the project.

But a book of coupons and regular ads is really boring in my book. Nothing particularly compelling about it. So, what I've done to hype this project is include a bingo game called "PCOMFUN" in with the book.

The PCOMFUN cards are all unique and are generated by a $30.00 program you can buy on the Net that will print up to 10,000 unique cards. This does mean that you print each of the cards uniquely.

Let me back up a moment. I've wanted a low-cost 'environmentally responsible' color printer for a while and so I decided to enroll in the Xerox Free Color printer program that offers up solid-ink printers if you buy the ink from them. The printer is free provided you print 'so many copies every month. I needed to hype marketing and this was the tool chosen.

Anyway, when you use a computer printer, you can vary each page which means that it is feasible to print unique Bingo Cards.

Oh, the way you play PCOMFUN is to tune in to the PCOM TV channel where we've got guests that come in and visit while we call the bingo numbers. It is a multi-tasking thing for those who watch ... i.e. they can see the numbers on the screen (we copy them shortly thereafter to a forum post) while they listen to our 'community guest.' Think dialing for dollars, sort of. We're trying to build audience for our streaming TV show.

* What expertise might you have you can offer to the community? Writing, printing, Web design, publishing consulting, etc., that you might charge for?

While I have the skills and have done a few ... maybe three web sites for others ... I avoid this because there are a ton of folks out there that do web design as a business. I choose to sell them advertising and business memberships. I think, if you include the technical fix it guys, about seven folks in these business categories. To me it doesn't make good sense to compete with my customers. Generally speaking, these folks - because I have the 'audience' - become great supporters of the site and encourage others to come and participate.

* Events. Can you put on events that will bring in revenue, and have the added benefit of marketing your site and solidifying your community?

Yes ... we've done several and have several on the books. For instance this August 14th & 15th a local promoter is putting on his 'fourth Paulding County Rodeo'. I did the video spot for the Rodeo as a freebee and as Comcast is one of the other sponsors (we're listed as a sponsor) we'll get some promotion on the spot. We'll also use a 'booth' at the Rodeo (expected attendance over the two nights of 10-12,000 folks) to distribute the flyers with the PCOMFUN bingo cards/ads.

* Are there subscriptions you can sell, perhaps to a special area of your site, or for special access?

Yes, absolutely, We offer personal and business memberships. Because we use forum software as our content management system (Invision Power board) our site is designed for and capable of handling more than the 18,500 registered members we have (of which over half have posted at least once.)

Personal memberships get access to an adults only area (other forums can have persons aged 13+) where they can share adult jokes, some racier pictures (we remove hard porn but otherwise it is more like British or Continental publishing rules as far as user posted imagry.)

But the real business is for business memberships. Normally spam is frowned upon in most online communities but we license business members for $150.00 a year and allow them to use the social network we have to promote their business ... as well as allow them to present themselves as something more than a unidimensional personality.

We also provide protection to business members which means that competitors or others cannot post, say a lower price in an advertisement for goods and services posted by a business member. We also allow them to have their 'business name' as a their user name, use their business name in topic titles and post telephone and web site addresses.

Non participating businesses can be mentioned on the site as a recommendation but only a city or area can be mentioned as their location. Further, non-members are prohibited the publication of their telephone number or web site address and their name is not allowed in the topic title.

There is more to the benefits - larger images, a blog, photo gallery, larger PM box, etc. for all premium memberships.

Before I leave memberships, the personal memberships do get the right to start personal property for sale topics. Unpaid members are required to post a reply to an existing 'grab bag' topic. (The got the goods grab bag topic has over 1800 'posts' to it and 259,000 + topic views.)

* What access or technology might users pay for? Anything from Web storage to the ability to specially parse and save clippings, special access to databases of local businesses, etc.

The access they pay for is less to the technology than to the audience and network that has been built. The technology, instead, creates a sort of 'gateway' that lets me erect a toll booth.

We do limit access to the daily distro we get from the SO of local incidents and the business members have a special forum where they can do some barter and other exchanges.

Regardless, while I've got a credible history as an editor and reporter, I have enough business/advertising experience in my background to know that the value of the site is its audience.

What differentiates Paulding.com from the traditional local newspaper, though, is its interactivity. Indeed, the next wave of local community 'news-oriented' online publications will expand from the concept of audience as the commodity offered to that of network.

Indeed, if you wanted to define the task, you would do yourself a favor to think of your goal as building a hyperlocal community network.

GP Hughes