On the importance of monetisation strategy

So far, I’ve been working in advertising for a couple of years. And now, I’ve come to realise that many clients lack crucial knowledge that would help them prioritise their marketing budget. That vital knowledge is understanding your monetisation strategy and a key revenue stream.

Why is it essential for me to know as a brand strategist?

Without understanding what is keeping business afloat it is harder for me (and pricier for the client) to formulate brand essence that corresponds to the product-market-fit. People do not buy brands, they buy well-branded great products instead. And it is way easier to infer what is so great about complex projects and products when we know for which parts people actually pay. Not only will this help me do my job quicker, but also allow for more explicit effectiveness in future communications. Because when brand strategy is directly focused on the key revenue stream, its influence will be more visible in P&L.

What’s a monetisation strategy?

Monetisation is a process of driving revenue out of the value that one gives to their customers. That makes monetisation strategy a plan on how to drive revenue out of the value you can propose to your consumers.

Surprisingly, many entrepreneurs have no idea what their main revenue streams are and utilise many monetisation instruments without devising monetisation of which proposed value is more profitable. Instead of shooting for the stars, they hit all the way around and get lost.

Monetisation strategies are sensitive to the life cycle stage your business is in and the category, you’re working with.

If your business is operating in the market development stage, you’re probably a startup, and your sales are low at best. For this period, the most viable monetisation strategy is sponsorship. Therefore, when building brands and communication startups, the strategist has no choice but to consider investors’ goals and primary investment motivations.

If your business is operating in the market growth stage, you’re probably striving to capture the rapidly growing demand before the competition gets too tough. Here is the golden opportunity to claim the Top of mind throne. For this to happen brand has to be associated with the right kind of job, while this product job has to be connected to the revenue stream. Otherwise, it might become a lost cause.

For instance, we have a brand strategy built around stability for a travel insurance app. Since insurance is about financial stability and predictability. However, it turns out that their main revenue stream is not the insurance bundles that they sell but sponsored travel tour advertisements. It is counter-intuitive, but the wiser decision here would have been to build a brand about continuous adventure and continue developing the product not as a financial one but as a multi-tasking travel companion instead.

If your business is operating in the market maturity stage, you’re probably facing intense competition. The main marketing task here is to highlight what makes your product superior in the industry, and which job it does like no other. A wrong highlight here may cost one a lot of profits. A couple of wrong associations and you’re facing off an even harder competition.

For instance, we have a campaign with a key message that highlights how fast your food delivery is. But the market has matured, and all the players deliver food at around the same rate and speed, while your key revenue stream is what restaurants pay for being present on your platform. Therefore, to drive your revenue you need to broaden your restaurant portfolio. Knowing that it might be wiser to use the broadest cuisine range as our USP (unique selling proposition) instead of speed. And therefore, to build a campaign with a wide palette fitting all tastes as a key message.

What is true for every stage is that for your efforts to be efficient your brand strategy has to reinforce your monetisation strategy.

Which monetisation strategy is suitable for a product?

When choosing a monetisation strategy for your business, one needs to remember that the success of this strategy depends very much on the user experience and longevity.

A profound understanding of UX will allow you to choose a monetisation strategy that will seamlessly fit into your customer’s experience. The less monetisation disturbs the experience flow, the more effective it will be. Just as in the way the less product diverges from the expectations set by the advertisement, the more satisfied customer will be.

To successfully monetise you need to be mindful of the actions that people would really take. For example, if an ad is put in a way that disrupts the UX flow, it won’t grab user attention — it may scare off them instead. To avoid this, one should either include ads in a less pesky way, give an in-game incentive or choose another way of monetisation. It is almost always better to ask for less from more people than ask too much and get nothing from no one.

When you find a way to monetise your business efforts without disturbing users too much, think about whether this monetisation strategy will preserve in a long term. Just like a brand strategy, a monetisation strategy is not easy to switch on a whim. You’ll usually be stuck with it for years and changing it would require significant efforts and investments, so choose wisely.

To conclude

All exemplary strategies are backed by an in-depth understanding of the matters, which can be acquired from a mix of sound research and experience. This is as true for business strategy, as for monetisation or brand strategy. For research to be relevant to the cause one has to ask fitting questions at the start. The right research question is like 80% of research success. And I need to understand what the product’s monetisation strategy is to ask the right question for the research that will yield the most suitable brand and communication strategies.