An Explanation of the Four Basic Business Models

Save
Online business is increasingly important in the economy.
Online business is increasingly important in the economy. (Image: David Sacks/Lifesize/Getty Images)

The four basic business models of online business is a concept popularized by Web marketing guru Marko Hurst. Almost every online business fits into at least one of the four basic models. Some businesses diversify by overlapping two or more of the models to tap into broader customer bases. The four basic models, according to Hurst, are content hosting, e-commerce, lead generation and customer support.

Content Hosting

Content hosting is a business model derived from the traditions of ad-funded print and television media. Content hosts provide helpful or entertaining content intended to draw a large viewership pool and make a profit by selling ads on the hosted Web property. The content hosting model requires steady advertising of its own to generate the high levels of traffic required to turn a profit. Advertising a content hosing website is an economical way to drive traffic, so long as the ad budget stays small and focuses on demographic groups interested in the website's theme.

E-Commerce

E-commerce is a fairly simple business premise. The online merchant sells a tangible product via a website, ships the product to the customer and repeats the process. eBay, Amazon.com, Craigslist and Kijiji are all big names in the e-commerce world, though it is relatively easy to start a smaller niche-specific e-commerce project. E-commerce business owners must avoid shipping pitfalls such as charging a package insurance premium to cover for lost orders or using a private courier service rather than the public mail system.

Lead Generation

Lead generation is a somewhat controversial online business model because it requires gathering and selling Web visitors' personal information to turn a profit. Within the world of lead generation there are two main philosophies: white hat and black hat. White hat lead generators are open with visitors about how their information is used and why, but often provide a useful service or entertainment in exchange for the information. Black hat lead generators use underhanded tactics to gather information and do not tell users that their private information is being sold. The onus is on the user to avoid getting duped. Black hat lead generators are often associated with “spam” email advertising campaigns and may have trouble finding online business partners like website hosting and ISP services, because legitimate companies often seek to distance themselves from the disreputable practice. Regardless of how the lead generator gathers the information, the profit is in selling the data or using it to generate sales leads.

Customer Support and Outsourcing

According to Hurst, customer support is a money-saving business model. Having an automated, self-serve problem resolution center on a business website mitigates the cost of having a live agent resolve customer issues, thus saving money. Of course, it is not possible to have an automated solution to every problem, so some level of human-to-human contact is still necessary to avoid upsetting customers. Expanding upon Hurst's ideas, it is possible to create a customer support online business that makes money by offering outsourced customer service to companies unable or unwilling to have an in-house customer service department. A customer support for-profit business can even market automated resolution databases customized for each client for additional revenue.

Related Searches

References

Promoted By Zergnet

Comments

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!