We all know that offering value for nothing is one of the best weapons for success on the Internet. If you can offer a good percentage of your service for free without affecting your results, this will ultimately have a positive impact on your business.
Something that those of us who have been creating businesses on the Internet for years know for sure is not always easy to explain to third parties. In talks and classes I see skeptical faces when we discuss this topic. People ask themselves, “How can I make money by offering free stuff?” or they think that if you give away part of your content or whatever for free, you are spoiling users, or they also think that you are devaluing your image… nothing could be further from the truth. But how do you explain it to them so that they understand?
The explanation is simple: the viral marketing generated by something free is much greater than that generated by a paid product. So if you are able to transform the users who come to your site into clients, you have won the game.
For a few days now, I have new arguments to convince my students…
oGame
If there is something that I am passionate about, it is video games… and of all games, strategy games. Since the beginning of January 2005 I have been playing oGame (http://es.ogame.org) a strategy game framed within the genre of massive multiplayer turn-based games (MMP). It is one of those that is played over the web, without requiring software installation. Typical game of colonizing planets, (note for those over 30: it is like VGA Planets but without sending turns by email). It is free. It is addictive.
At the moment we are more than 7,000 players playing in the same game.
I've been monitoring oGame's growth since I joined. Can anyone guess how much the player count is growing daily?
The number of new players is growing by 6% daily. Daily!!
Can you imagine a business that grows at a geometric rate of 6% per day?
Well, it's certainly hard to imagine. In this case, it would be cheating to consider oGame a business. At least as far as the Spanish version is concerned. The German and English versions are a different story.
The game's German developers have ruled out the Spanish market for the time being. The business model for the other versions is as follows:
Business model: advertising sales in the German and English communities + paid version of the game without advertising and with more features that make it easier to organize your strategies.
There is advertising in the Spanish version, but it is minimal, poorly segmented, it is pop-up-based (so you can skip them all if you want)… and worst of all… it is all in German. Hence my assertion that the Germans have decided not to exploit the Spanish market, for the moment.
But let's get back to what interests us in this article. How can we prove to the skeptics that by offering something for free, we end up increasing our turnover?
Let's analyze the growth of the game:
The secret lies in the network structure behind the game. It is not exactly a Metcalfe network (to find out what a Metcalfe network is, read: Analysis of “Why eBay (and possibly Google) open their source code to developers”. If we analyse its growth, we will see that it does not follow a typical potential curve of Metcalfe networks (growth = number of users ^2). It also does not follow the growth curve of a group network (growth = number of channels ^ users), but rather it is a kind of mix of both, which ends up showing a graph similar to the implementation curve of a new technology, the Gartner hype curve (see attached image). That is, it first experiences very strong growth (in January we reached a growth of 15% per day), then it suddenly drops, and ends up stabilising a little above the minimums at which it has fallen (at the 6% per day that we are now).
Viral marketing for oGame also works like a network of contacts… in small bursts as the recommendation reaches small groups of friends or communities. That is why it ends up showing a curve that combines group growth with Metcalfe's network growth.
Whatever the case, we ended up with a steady growth of 6% per day. That's a lot of new visits to a website, every day. Many more than we can attract with any marketing campaign, search engine indexing, Adwords advertising, or anything else we can come up with to increase visits to our website.
Once again, I repeat, the secret is knowing how to convert views into clients. And that is where viral marketing or free content have nothing to do with it. They have already fulfilled their purpose: bringing users to the page. Here, only our ability as business managers counts.
How do we convert users into customers?
This will be the subject of another article. But so as not to leave readers unsatisfied, I would like to point out that there are several models:
- Online games: offering a paid version of the game, with more features and without any inconvenience such as advertising. This is the model chosen by the German managers of oGame for their other communities.
- Content selling sites: offer expanded and higher quality content, but from the same authors, for a reasonable price.
- Online and classified markets: offer a value-added services package that complements the services that all users receive for free, but that we know from interviews with some of the users, that some of them would be willing to pay to obtain. These packages can offer advertising for your products, more visibility, extra functionalities, etc.
There are more models, but as I mentioned before, the topic deserves a separate article. The important thing to remember is that there is no better way to attract users to your website than by offering free content that generates viral marketing at hyperluminal speeds 😉
Related links:
oGame: http://es.ogame.org
Article about Metcalfe's networks: Metcalfe networks
Power Point presentation about Metcalfe Networks: Metcalfe networks
