Revenues are an important success indicator. Photo: Pixabay.com
A startup usually looks up to the big technology companies and their business model to innovate and disrupt the market. A classical startup tale. Amid the recent discussions around the way Facebook operates, I was wondering how they generate their revenues. Moreover, what are its close technology company competitors do to earn money?
FAAMG dominating S&P500 and NASDAQ
Last year, in the middle of 2017, the financial services operator Goldman Sachs, introduced the acronym FAAMG. FAAMG stands for the initials of Facebook, Apple, Amazon, Microsoft, and Google (Alphabet). The reasoning of Goldman & Sachs for the coining of the term is the market power of the five players. Because they dominate the S&P500 as well as NASDAQ.
FAAMG Market Capitalization between the GDP of Germany and France
Market Capitalization of FAAMG, in the middle of 2017, was between the value produced in Germany and France, in 2017 (Statistica, 3.65 trillion US$ for Germany and 2.57 trillion US$ for France). That means Facebook, Apple, Amazon, Microsoft, and Alphabet (Google) represent an unimaginable 2,9 trillion US$ in combined market capitalization. The visualcapitalist.com website tells us more about the revenue streams of the top tech companies:
Revenue Streams of Facebook, Apple, Amazon, Microsoft, and Alphabet (Google)
FAAMG Sources of income
Here it becomes exciting! Most companies have diversified their sources of income. But most operate in distinct categories for their principal revenues:
- – Apple is a hardware company with 84% of their income arriving from product sales
- – Alphabet is generating 88% of its revenues through advertising
- – Facebook is also relying on advertising for their income which counts for 97%
- – Amazon: For Amazon product sales amount to 72% of its income
- – Microsoft is the company with income balanced in the hardware, software and services categories
More details are in the above mentioned, vast infographic prepared by the visualcapitalist.com
Facebook and Google (Alphabet) count on advertising
Knowing where the revenue streams stem from helps us to understand the positioning of these two companies and the need to use the data collected from their users to maintain their leading positions. The better Facebook and Google know their users the better advertising works. This principle is age-old and well illustrated by the specialized press, for example, which displays advertising for particular audiences.
So, I am not taking a position on how good or bad the practices of Facebook and Google are because I do not know in detail what they are doing. The key is their operating mode fits their business model and companies -large and small- keep adapting their business model to market conditions, needs and requirements.
What is your Business Model?
My main interest was to determine the business model of the tech giants. If you are interested in evaluating your business model because you are a technology startup or any other business already operating, contact us!
Influencer marketing is a major trend that has a record of increasing brand awareness and profits for major companies. But it’s also becoming increasingly accessible to smaller businesses as well. In fact, marketing efforts using “micro-influencers” have proven to be very successful for small businesses whose other attempts at building an online presence have faltered. Read on to learn more about what influencer marketing is and how your small business can get on board.
Influence Marketing uses social media and other channels to reach target audiences. Photo: Pixabay.com
What Is Influencer Marketing for Small Businesses?
Influencer marketing involves brands partnering with online influencers (people with a large and invested social media following) to promote their products. Influencers have the ability to change how their followers think and feel, and in doing so, encourage them to buy products that they promote, either directly or indirectly. Influencers already have the eyes and ears of your target market (provided you’ve chosen the right influencers) meaning they can help you connect you with these people much more easily than you could through other marketing methods.
Influencer Marketing a More Natural Form of Promotions
Influencer marketing has the added benefit of appearing more organic than other marketing schemes. If you plan your campaign well, a casual observer might think the influencer is endorsing your product purely because they enjoy using it.
Influencer Marketing: Finding Your Niche
The idea of influencer marketing is to leverage the fan base of your chosen partners to build your brand. This means you need to choose people whose audience closely aligns with your own. Identify the niche your business fills and look for people whose content appeals to the same niche. If your company sells a fitness product, look for Instagram accounts focused on fitness. If your company sells gaming equipment, seek out streamers on Twitch who stream games of the type your product is intended to pair with. Create a list of people with a significant following who appeal to your niche.
Influencer Marketing becomes more successful through strategy and frequency. Photo: Pixabay.com
Engagement is Key in Influencer Marketing for Small Businesses
A large following isn’t enough, though; you’ll want to look for influencers who frequently engage with their fans, responding to comments and building lasting relationships. Popularity isn’t equivalent to influence; strong influencers not only attract attention, but they also connect with the people that follow them. Also, as a small business, you probably don’t have the budget to partner with influencers who have millions of followers. Instead, you’ll want people with fewer followers, but more engagement. While massive accounts have engagement rates around 2-3%, micro-influencers have rates as high as 10%. These influencers are cheaper to partner with. And their endorsement will mean more to their dedicated followers, meaning the return on your investment will be much greater.
Small Businesses: Free Products Can Lead to Big Profits
Influencer marketing doesn’t have to be massively expensive, especially when you’re working with micro-influencers. Many of them may be willing to endorse your product if you send them one for free. After all, if you’ve done the proper research, the influencer you’re targeting for partnership is likely a part of your target market,. Meaning they’ll be able to make use of what you’re selling. Reach out ahead of time to see if they’re interested, and if they are, send a care package. If they use your product in a picture or a stream, you’ll see a surge of traffic as their followers investigate further.
Invest If Necessary
Influencer Marketing – Paid Promotions
A freebie won’t be enough to get every influencer on board. But if you’re certain that their endorsement will improve your brand’s visibility and boost your profits, it’s worth paying them to leverage their influence. Work out a deal amenable to both of you and make sure you have it in writing. If possible, pay them a small amount for their initial posts, with the option to spend more if you see profits increase as a result.
Influencer Marketing for Small Businesses
Influencer marketing isn’t just for the big brands. Micro-influencers can attract attention to your small business from people likely to buy. Do your research, reach out, and start influencing. Or better, talk to us about your need and we will create a plan for mastering the next steps. If you prefer GrowthDriver.biz can take care of the entire process.