21 6 / 2010
Monetization, Sales Complexity and Finding a Business Model
The most challenging part of doing a web start up in Vietnam has to be monetization and sales. The problem is very few people here have credit cards. Mobile payments is very accessible, but the rev share with telcos and how much you can charge makes things tough. The CPM rates that advertisers are willing to pay; is probably barely enough to cover your monthly burn rate… if even that.
With those conditions in place… in order to make money, you really need to make brand advertisers see your unique value. How we differentiate from the competitors or our unique selling proposition, is that we tie in all 3 tv/web/mobile platforms together and influence our huge web community to like the advertising brand. This increases the sales cycle complexity in a big way. This increases our barrier where it would be very difficult for a particular individual web-only community or traditional TV production house/channel to compete against us (they might be good in one area, but have no experience in the other).
The problem with having big sales complexity, is that the costs of customer acquisition shoots up through the roof compared to a self serve PPC ad words model. The other problem is the lumpy deal flow which makes revenue forecast very difficult to do. Where as SaaS and self-serve ad platforms, is easier to predict with it’s linear growth.
But until the payment solutions develop further and the market matures some more; I think the key is to run to a combination of monetization models; pushing mass number of micro-transactions on from the audience side (hopefully the life time value of each user increases as time goes on), and doing complex sponsorship sales deal with big brand clients. And then gradually, shift the outbound sales to less complex inside sales deal as more clients are more familiar on what we do. Or allow the Ad Agencies to do all the pitches, and we just up sell to the clients later.
Finding that balance is the business model that is hopefully can be scaled up well and easily repeatable.
