Question

The digital world opens up a whole set of potential revenue sources which a digital entrepreneur could easily shift between. What are these revenue sources? Identify them and describe each, giving examples to justify your answers. What revenue source have you chosen for your digital business? And why?

You can discuss the assignment with other members of your team but you need to submit your own document separate. I therefore need a different document from each one of you based on your own input and views.

Answer 1

The potential revenue sources of a digital entrepreneur could be:

1) Advertisements: Entrepreneurs, having their own website can charge advertisers for displaying their ads on site. The charging amount can vary as per the type of advertisement, i.e., cost per click (CPC) or cost per thousand (CPM).

CPC is a type of digital marketing criterion that measures the amount of money paid for each click in a pay-per-click marketing campaign. Paid advertisements are a significant source of income for digital entrepreneurs. Entrepreneurs can run pay-per-click marketing campaign through online platforms, such as Google AdWords and Facebook. The advertiser needs to understand the cost of these campaigns and implement them in selling their products.   

CPM is a type of digital marketing metric which measures the cost of an online advertisement per 1000 impressions. When an ad is displayed on a web page that forms one impression. Generally, bidding systems use CPM type of advertising to measure the cost amount for every thousand people exposed. The advertiser needs to pay the fixed amount of CPM for every thousand impressions of their ads.

2) Featured Listings: In this highly competitive market, sellers are willing to pay more to showcase their products and services on top of a digital platform. Sellers want to list their products on popular websites, so that more people will come across their products and may have a desire to buy it or recommend the products to their friends or relatives. Here the site owner acts as a media between buyers and sellers.

Featured listing helps seller to establish contact with buyers and bring extra revenue for the site owners.

3) Affiliate Partnership: In this digital marketing, entrepreneurs can partner with third party website owners and work as their affiliate partners. They redirect visitors to third party sites and earn commission whenever these redirected visitor purchases a product on the third party site. Many online fashion social networks are working on affiliate marketing model.

4) Subscriptions: Many websites use subscriptions as the main source of their revenue generation. These websites charge a subscription fee from the visitors who want to avail or access or buy or sell the products or services available on the website. Even some websites charge a subscription fee from the visitors who want to take information or read an article from the site.

We have choosen advertising source of revenue for our digital business. We are running a software company providing web designing and development services, so for our business we think it will be the good source of revenue as we have created a mark in thousands of our clients' websites, this will help others who want to promote their products through our website.