An Unconference: Social Media Business Plans and Revenue Models

Today I spent the day at Kennesaw State University to attend SoCon10. First things first – my goodness how this school has grown. I am so impressed that the local college that most kids scoffed at when I was in middle and high school has grown so much in reputation and size.

Unfortunately, I didn’t fully realize this until after I had walked over a mile across the campus from my parking spot before I found the Social Sciences building. Oops.

Even though I was 20 minutes late and out of breath from my trek across campus, it didn’t take long to know that my $50 was well-spent. SoCon10 was a fun and interesting event, and well-attended by friendly people with a common interest in all things social media.

For the second time at an event, Sherry Heyl, founder and CEO of Concept Hub led the talk that I found to be most valuable.

Sherry Heyl’s break-out session, Social Media Business Plans and Revenue Models was similar to the last time I saw her speak, in that she opted for the unconference style. What was completely different this time was the audience. The last time I saw her speak I was the only person in the audience with *any* understanding of or experience with social media. Obviously, that time she had to keep things pretty basic.

At SoCon10, the breakout session was full of folks representing a multitude of industries and professions, and armed with intermediate to advanced understandings of social media, strategies and tools.

Sherry began by asking the group for ways we have seen social media being used to make money. Here are just a few of the things we came up with:

• Freemiums
• Gathering information
• Creative commons
• Transactional costs

What we realized was that while social media is revolutionizing many things, one of the most noteworthy is the revenue model. There are so many products/services/tools available online for “free”; however free has shifted to now mean no charge to get started. . . but it’ll cost you to really get to the good stuff. If you want to benefit from its full capability, you’ll have to upgrade for a fee. Think LinkedIn, PJTV.com, wordpress.com . . . the list goes on.

Interestingly, I learned that when a freemium is not the case, it is likely the provider is collecting comprehensive data from its users to either sell or to create a more targeted and popular product down the road to make a profit off of.

Creepily, I learned that this is what is going on behind the scenes of Google Voice. Google is collecting data and analyzing users’ voices to create a tool/database to optimize voice recognition technology.

After discussing how people are making money, we discussed why we pay for upgrades for online products/services. Here is what the group came up with:

• Ease (think how easy it is to purchase from the App Store on your iPhone)
• Donations
• Premium content for junkies
• Micro-payments
• Content delivery
• Necessity for our way life

Sherry emphasized the importance of finding your community – these are the people who would be willing to pay if your product/service/tool has value and the price is right.

The most valuable takeaway from Sherry’s session was her list of things to consider when creating a social media business plan:

1.          What are your assumptions about your market?

2.         What does the competitive landscape look like?

3.         Who needs what you are offering?

4.         Who is willing to pay for what you are offering?

5.         What are they willing to pay for?

6.         How will you get their attention?

7.         What are the barriers to entry?

This list is a very helpful starting point to determine the structure of your potential million dollar social media idea and how to leverage it for a profit. Several questions on the list translate to any social media idea, and should be considered regardless of whether or not you are looking to make money.

Well done, Sherry! I look forward to learning more from you.

Disclosure: Sherry was kind enough to give me a ride back to my parking spot in Alabama. However, I promise this fact did not cause any undue bias on the opinions reflected in this post. I already thought she was awesome.