Monetization 2.0

31 08 2007

Technorati teaches:

A four year old startup is pressured to answer how investors will make money. Is it going to be an acquisition or maybe even an IPO? And if neither is the case, then is there reasonable revenue to hope for in the future? It is very likely that these questions caused Technorati to start making changes that ultimately got the company to its current state.

So how does a site like Technorati make money? A simple and fashionable answer is: advertising. But maybe it’s not so simple. Firstly, Technorati could not use straight Google ads. That would not look good and would not fit with the spirit of the company. Banner ads are an alternative, but it is harder to make them relevant. When you are showing people popularity rankings and news stories, banners may be out of place. Technorati ended up using generic banner ads , but how effective these are is unclear.

What Technorati also tried to do, it seems, is refocus on things like books, music and movies. This refocus could allow the company to monetize popular content via affiliate programs. This a straightforward play, but the problem is that people do not come to Technorati for that. The users are there for popular stories, hot blogs and trends. You do not exactly think of Technorati when you are thinking about buying a book. For that you go straight to Amazon.

Monetization is a big issue that cannot be ignored. After all, just having a cool service that makes no money is impossible. Read the rest of this entry »