Business Models Matters (#3)

Is this Business-Models-for-Innovation ? Or innovative Business-Models ? Even innovation of (in) Business-Models ?

Rethinking Business Model for Innovation : Lessons from entrepreneurial cases is an e-book, edited by Valérie Chanal in late 2010. For teasing, copyrighting and coherent editing issues, the proposition is to release few focused excerpts. Here is the introductive part of the chapter written by Valérie Chanal, Jean-Luc Giannelloni & Romain Parent.

& :
– To download the full book for free (shortcut : from HAL-SHS, France’s academic publication platform).
– To unfold the chapter about SENSEI and collaborative projects (Lavoisy, Eurich, Akselsen, Ytterstad).
–  Business model ? (webOL).

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Building a profitable Business
Model where clients don’t want to pay :
Sportganizer and the use of sponsoring in a Web 2.0. platform
| Introduction

Websites for the general public of the so called “Web 2.0” or “social network” type such as YouTube, Facebook and Flickr are characterized by the fact that users can deposit and edit content and, in doing so, contribute to the value of the service they use (Tapscott and Williams, 2007). Insofar as it’s the users who create and develop much of the content, these services have mostly been developed on a free basis. This raises the question of financing and the Business Model of these platforms providing free services.

Web 2.0 sites tend to use the same economic logic as the free press i.e. they are financed essentially through advertising. The fact that they are provided for free and have large audiences of people with common interests brings a large qualified audience for advertisers. In addition IT tools allow Internet users’ activities to be traced along with their clicking behaviour and centres of interest. This is one of the main explanations for the considerably higher growth rate of Internet advertising in comparison with advertising through traditional media.

Despite this, use of the Internet advertising as the sole means of financing faces criticism, both from advertisers who question the cost-effectiveness of banners and sponsored links, and users who develop resistance to these messages which are often perceived as being intrusive. Given these limitations, are there any alternative methods other than advertising to finance free, or almost free, web services?

The objective of this chapter is to reply to this question by showing how sponsoring can be an effective alternative to advertising. Sponsoring is a form of association by which an organization makes funds available to an entity involved in a socio-cultural activity in order to reach communication goals (Walliser, 2006). Sponsoring is based on the existence of the entity being financed. For example the combination of the BNP bank and the Roland Garros tennis tournament is possible because the latter exists. Also, representations generated by the event (values, beliefs …) are what the sponsor aims to capitalize on. On the other hand, the sponsored entity (and its message) especially when it concerns an event, often couldn’t exist without the sponsor’s support. On this level, there is therefore a real symbiosis, almost in the biological sense, between the sponsor and the entity being financed.

The encounter between the “message” and the audience is also less passive than advertising and the sponsor benefits from the positive image associated with the entity being supported through a transfer phenomenon.

The value of sponsorship in this context will be analysed through the presentation of the Sportganizer platform. Sportganizer’s business is to provide tools to facilitate the organization of those participating in sports events i.e. typically helping a trainer prepare a team for a trip to a match or competition. Firstly we’ll present the platform and show what a two-sided platform consists of and in what way financing this type of Business Model is a problem. Secondly, the differences between advertising and sponsorship will be shown and we’ll explain how Sportganizer uses sponsorship. Finally we’ll conclude on how sponsorship appears to be better adapted for this type of platform than advertising and how it could be developed to provide new value proposals.

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