6 ways to monetize your products!

The ultimate goal of a product is often to realize profitability through certain means. The prerequisite for realizing product monetization is that the product side needs to understand user needs, satisfy and ensure user experience, and then improve user retention and dissemination. In this article, the author explains the definition and main methods of product monetization. Let’s take a look.

You may often encounter:

• When shopping on Taobao or Pinduoduo, they will recommend the products you need.
• When browsing Douyin, personalized content and related ads will be recommended;
• When you browse your Moments, you will see several ads related to you.
• Use Amap to check routes, and it will recommend various travel methods and services...

These situations can be seen everywhere in the 5G era of the Internet and have been deeply integrated into everyone's life. While we are accustomed to them, have you ever thought about the logic behind them?

Next, we will explain why these platforms do this through product monetization. The following analysis is from four aspects: understanding product monetization, the main methods of product monetization, product monetization planning, and balancing user experience .

1. Understand product monetization

Monetization refers to achieving a surplus through certain means by which one's own products or services can generate revenue or expenditure. Monetization is also the ultimate goal of operations. Product models and operations that are not aimed at monetization are rogue. After all, not all companies are philanthropists.

To put it simply, product monetization means using existing users, traffic, services, and resources in a certain form to achieve the purpose of profit. This process is called monetization.

When we talked about the recommended advertisements or services in Pinduoduo, Douyin, WeChat, and Amap, they realized their own monetization in this way. On the one hand, it is to verify the market value of the product, and then launch and provide better products and services; on the other hand, it is to achieve sustainable growth of products and businesses by obtaining higher resource investment in the market.

2. Main Ways to Realize Product Monetization

1. Online Advertising

Online advertising is the most widely used monetization method for Internet products. It has the characteristics of wide coverage, rich forms, and precise targeting. Common online advertising billing methods include CPC, CPM, CPD, CPS, CPA, etc. For example, Baidu search ads, Toutiao’s information flow ads, and Douyin ads.

2. Product Trading

Product transactions are carried out by setting up one's own e-commerce platform or finding a sales agent to sell the products. It has the characteristics of strong scalability and large space for scale development.

According to the transaction model, it can be divided into direct-operated platforms, agency-operated platforms, and commission-collecting platforms; according to the product model, it can be divided into B2B, B2C, C2C, O2O, C2M and other major models; B2B includes Alibaba and HC360; B2C includes Tmall, JD.com, Xiaomi Mall, Huawei Mall, etc.; C2C includes Taobao; O2O includes JD.com and Tmall; C2M includes Pinduoduo, etc.

3. Service Monetization

Obtain income by providing services; such as one-on-one online training and coaching, various website building or APP development services, various outsourcing platforms, etc.

4. Value-added Services

Get more benefits and functional experience through payment; such as:

• Functionality: Get faster network disk download speeds by paying;
• Privileges: If you open QQ VIP, you can get corresponding privileges;
• Services: Free shipping if you become a JD.com member.

5. Data value-added

The premise is to pay attention to data security and protect user privacy, such as:

1. Draw user portraits: Open to demand platforms through APIs in a paid form to achieve precise advertising;
2. Data processing: Create industry analysis reports and provide them to demand platforms on a paid basis for use in market research.

6. Marketing plan

Output planning, promotion, and execution of chain marketing services, or cooperate with other platforms by leveraging its own traffic advantages.

3. Product Monetization Planning

1. Position the product features well

Only by understanding the characteristics and advantages of your own products can you avoid deviating from your core business.

• Product positioning: What is the product positioning and which users are it aimed at?
• Business scope: What types of products are produced, such as music, video, content.
• Market size: What is the user scale and market share?
• Product areas: The product areas are tools, community, and IM.

2. Plan your user profile

Through technical means, user tags are created based on the following attributes:

• Basic attributes: gender, age, region, etc.
• Financial attributes: monthly consumption, customer order consumption, etc.
• User behavior: retention, bounce, usage time, etc.
• Crowd positioning: culture, occupation, industry, interests, etc.;
• User stratification: ordinary users, moderate users, heavy users, etc.

3. Target the user’s main behavior

• High-frequency user behaviors include: page visits, dwell time, and action behaviors;
• Monetization module: high-frequency action module, high-visited pages, and value-added functions.

4. Develop appropriate monetization methods

Let’s use the monetization methods of Toutiao and NetEase Cloud to illustrate.

Today’s headlines:

• Product positioning: Personalized information reading recommendations.
• User behavior flow: watching information content, that is, information flow.
• Monetization model: Use big data to achieve precise advertising delivery/points redemption tasks (i.e. insert an advertisement into each task, and tasks with advertisements will earn more points).

For example, NetEase Cloud Music:

• Product positioning: online music playback platform.
• User behavior flow: find playlists, listen to music, and download music.
• Monetization model: advertising (open screen, horizontal bar), membership services (high-quality audio), comment area advertising (the comments under each song are the soul of NetEase Music. It is a first for NetEase Cloud Music to allow users to express their feelings while listening to songs).

4. Balanced User Experience

1. Precision

1. Expose content precisely and consider the relevance of the content. It is about being needed, not harassed;
2. Exposure user labeling, based on interests, hobbies, age, gender, city, region, keywords, consumption level, etc.
3. Improve adaptability and build your own user profile (big data analysis) based on user tags, keywords, interests, machine learning models, and page content;
4. Cooperate with third-party data companies to obtain user attributes through data acquisition, data evaluation, data merging, and data delivery.

2. Scenario-based

Show up where you should be and become a warm greeting; go with the flow and anticipate what the next move will be.

To put it simply, scenario-based development means launching the right product at the right place and at the right time. For example, use Gaode Map to search for the destination and recommend corresponding travel services; search for buying flowers on Baidu and it will recommend the nearest flower shop and calculate the travel time; when the car is ready to park, Baidu Map will tell you where the parking lot is, etc.

3. Content

Content is also a commodity. Making content valuable is the way to increase the value of content. For example, e-commerce Q&A promotes user purchases by introducing and recommending products through content, while self-media accounts offer reading rewards and Zhihu pays for knowledge.

4. Functionalization

Turning functions into a means of monetization, strong demand is the basis of monetization. For example, Baidu Netdisk provides basic services and paid membership services, and Xunlei provides free downloads at normal Internet speeds and paid high-speed download services.

V. Conclusion

The ultimate goal of product monetization is operations, which involves continuous optimization and efficiency improvement in terms of products, users, channels, data, etc., thereby driving healthy business growth.

The basic guarantee for product monetization is to create products that users love, which is reflected in data as high retention, high dissemination, and high interaction. By exploring user needs while improving product experience and building our own controllable core capabilities, we will gradually achieve our ultimate traffic or product monetization goals.

Author: Minghang Talks about Operations

Source: Minghang Operations (minghang0205)