How your non-profit can earn revenue with Web 2.0: Part 5 - Product sales
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April 22nd, 2008 by Alex
This blog post is part of our series on Social Media for Social Enterprise: How non-profits can earn revenue with Web 2.0.
What bake sales once were to PTAs, online storefronts are to today's non-profits. We're used to thinking about participants in non-profit web sites as members or supporters, people we are trying to reach with a message or mobilize around a campaign. But your online community members can also be customers -- customers who may be delighted to spend their dollars in a way that supports their values and your work.
Here are some of the forms that online product sales can take:
- Schwag: Your site can earn money by selling promotional items (t-shirts, mugs, posters, bumper stickers, yo-yos) with your organization's name or a related message. (I'm waiting for someone to buy me an Obama Mama t-shirt.) This is a great way to get your message out and earn money at the same time. While you can earn more money by mass producing these items for sale, you can limit your risk (or test the waters) by using a print-to-order service like Goodstorm (a printing service set up to support non-profits, and recently acquired by Zazzle) or Café Press.
- Educational materials: If your organization engages in education or issue awareness work, your web site can be a great way to sell or distribute educational materials like books, DVDs or CDs. Think carefully about how to weigh your revenue goals against your desire to get the message out: selling your products at high prices may limit their circulation. On the other hand, shipping stuff for free may make it hard for you to fund development or distribution.
- Media downloads: Selling educational or cultural products electronically is a terrific way to earn revenue while limiting distribution costs. If your organization has produced a book, magazine, poster, DVD or CD, could you sell it in electronic form? Once you create an electronic version of any of these products, the marginal cost of each additional sale is zero: selling a thousand copies of your Christmas concert in MP3 form costs no more than selling ten. Again, think about the trade-off between revenue and mission: distributing media products electronically for free (or very cheap) is also a great way to get out your message.
- Social enterprise: If your organization supports community enterprise, you can sell the products of that enterprise on your site. Tilonia.com is an online store specifically created to sell the products of the Barefoot College.
- Mission-aligned products: Even if you're not directly involved in a community enterprise, you can still find mission-aligned products to sell on your site. For example, an organization promoting responsible forestry could sell recycled paper products. You can stock a warehouse and ship products yourself, or you can partner with a retailer or social enterprise, and earn transaction fees from each sale that is processed by or referred from your site.
- Affiliate sales: If you don't want to deal with the costs of production, fulfillment and credit card processing -- or you want to test your visitors' appetite for on-site purchasing before you make an investment -- consider setting up affiliate sales. The Amazon Associates program is a great, unobtrusive way of generating revenue from books or other products you happen to mention on your site; linking those recommendations to an Amazon account earns you dollars and makes the follow-up process easier for your readers. The BookSense affiliate program is similar, but sends your visitors' business to independent booksellers. For a wider range of potential advertisers, check out Commission Junction, which runs affiliate programs for many major retailers.
Before you setup your virtual storefront, here are some issues to consider:
- Do our visitors like to shop online? Unless your site visitors include a meaningful number of people who already buy products online, they're probably not going to start with you.
- What products do our visitors want? If you're already selling products,you know which t-shirts or community products are most popular with your members and supporters. If you've never sold products before, do some market testing before you commit to production or sales.
- How much will it cost us to set up our sales capacity? There are lots of e-commerce options, including Paypal, that make it easy to set up storefronts and complete credit card transactions. Be prepared to invest some money to make your storefront look good, and to make it easy for people to shop. Invest in airtight security for credit card transactions -- ideally avoiding any in-house handling of credit card numbers.
- How much will it cost us to fulfill our orders? Look for products that have low marginal costs to produce or ship. Information products (like document, music or video downloads) are ideal because once you produce your first unit, every additional unit sold is virtually 100% profit. If you're producing physical products look carefully at the costs of both product design and fulfillment, and figure out the price point and sales volume that optimizes your profit margins.
- Can we outsource production or fulfillment in a way that aligns with our mission? Outsourcing the production of your product or fulfillment of your orders can save you time and money, and keep your organization focused on its core mission. But be sure that you outsource in a way that supports your mission and values. Find out about the wages and labor conditions of your contractors; if you wouldn't feel comfortable seeing that information disclosed with your organization's name attached to it, look for another option. Better yet, look for contractors who actively reflect what you stand for: if you're a women's organization, look for women-owned businesses. If you're a development organization, look for partners in countries where you work.
I'll venture to say that most non-profits have at least a couple of good options for products they can produce and sell online. If you have loyal members or active supporters, you have a message that people want to hear. Figure out whether that message fits better on a t-shirt or in an e-book, and you're on your way.
How your non-profit can earn revenue with Web 2.0: Part 3 - Earning revenue with advertising
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April 1st, 2008 by Alex
Welcome to the latest installment in our series on revenue sources for non-profit social media projects. Today, I'm looking at what many non-profits first think of (and often, recoil at) when it comes to earning money online: advertising.
If your site attracts a lot of visitors -- or even a niche community of visitors that advertisers want to reach -- you can place advertising on your site to generate revenue. There are three types of advertising to consider:
- An ad service. Ad services handle all the work of finding advertisers, and place ads onto your site based on your content or keywords. In return, they take a (usually large) percentage of ad revenue. The most widely-used service is Google Adsense, which places advertising on your site based on keywords; this means you may have some ads appear on your site that don't fit with your message (for example, a web page about endangered fish may end up displaying ads for fish recipes) but you can veto ads as you identify problems. Other services focus on building specific communities of content based on quality; for example, Federated Media is an ad network for high-traffic bloggers. Some ad services place plaintext ads; others place images; Google itself gives the option of text or images.
- Your own ad system. If you want more control over the ads that appear on your site, you can sell ad space yourself. You can sell ads on a "per impression" (advertisers pay for how many times their ads get shown) or a "per click" (advertisers pay for how many times people actually click through to their ads) basis. You can sell ads that show up anywhere or everywhere on your site ("run of site" advertising) or you can sell ads on specific pages (for example, a youth-oriented brand may want to place ads specifically on your youth services page). You can place multiple ads on a single page, and you can charge higher rates for more prominent pages or spaces -- for example, the top banner ad on your home page will likely command the highest price on your site. Selling your own ads means you can keep all the revenue you generate, but be aware of both cost of sales (you'll need someone to sell those ads) and technical costs (for payment processing and setting up a system for placing your ads).
- Sponsorships. As a non-profit organization, you may prefer advertiser "sponsorship" to traditional advertising. A sponsor (or set of sponsors) typically supports the entire site, though it is also possible to have specific sponsors support specific programs or areas of the site, particularly if they are highly specialized or resource-intensive. You could have one organization as the supporting sponsor of your main site, and another organization as the sponsor of an online community for a specific group of users (e.g. a community of young mothers). Sponsors will typically be credited as the sponsor of a site with a (potentially quite prominent) display of their name, logo, and possibly a tag line, but rarely place a full message on the site as they would with an ad (although in some cases sponsorship could include advertising). Sponsorship can feel less commercialized than an ad (which some organizations feel uncomfortable placing on their sites) and may have tax advantages for the sponsor, compared with advertising.
Advertising is one of the most obvious ways for a non-profit to earn revenue from its web presence -- and if you use a service like Adsense, one of the easiest ways, too. But many non-profits are wisely cautious about placing ads on their site. Typical concerns include:
- possible conflict with non-profit tax status
- appearance of being overly commercialized
- driving traffic away from the non-profit's own site
- introducing off-message ads or content
Before you decide whether advertising is the right fit for you, consider:
- How much revenue do you stand to earn? If you a have a low-traffic site, the upside of advertising is limited.
- How will ads affect the perception of your site and organization? Ads feel particularly inappropriate on sites with a deeply personal or difficult message. Imagine how you'd feel if you saw an ad on a campaign page about Darfur.
- What form of advertising would earn the most revenue? Consider whether to go with "per click" ads (which pay only if your visitors follow the links) or "per impression" ads (which pay simply for appearing).
- How can you test advertising options? Ads aren't all or nothing. Consider placing ads on a few pages on your site, and asking for feedback before you proceed.
- How will advertising affect other possibilities for revenue generation? Be sure to look at the other options we cover in this series. It might be that an option like premium service would yield more income -- and your premium service could be an ad-free version.
Resources to help you learn more:
Using Google Adsense to generate income for your church or non-profit organization
A look at some Adsense alternatives
How your non-profit can earn revenue with Web 2.0: Intellectual property
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March 1st, 2008 by Alex
This week, I return to the questions I recently posed about social media and social enterprise:
- How can non-profits assess the financial value of their social media investments?
- And perhaps even more fundamentally, how can they find the money to pay for sites that can be costly to build, and just as costly to run?
One potential answer lies in the value of intellectual property that non-profits create or distribute through their social media projects. The creation of a sophisticated web site involves the creation of a lot of intellectual property -- property that has financial value. This property can be monetized in a number of ways:
Software licensing: If you create a software service or web platform that is useful to other nonprofits, too, they may pay you to use it. You can license your software by selling it (one-time fee), by licensing (monthly or annual fees) or by hosting (including web hosting along with the software license itself). Before you take this opportunity, though, consider the potentially benefit -- for your mission and your brand -- of giving the software away to the people you serve, or organizations that are working for the same ends.
Content sales: If your staff or site visitors create original content on your site, you may be able to resell some or all of that content to other sites or media outlets. Just be sure that you are completely clear with your contributors that you will or may repurpose their work -- even if the contributors are staff. Make sure your user agreement on the site reflects how you're re-using content, and consider sharing revenue with your users (à la Squidoo, among others) as a way of motivating their contributions.
Data sales: If you have a high volume of site traffic, or serve an influential or sought-after audience, data on your site's users or usage patterns may have financial value. This an area in which you want to tread VERY carefully -- respecting your users' privacy is crucial to building site loyalty, and is also just a good thing -- so we'll return to it in our "gray zones" post. But you are probably ok if you are selling aggregate data, rather than individual data. For example, you could survey your users and sell the results of that survey -- perhaps as a quarterly "subscribers only" report. Here more than anywhere it is crucial to be 100% transparent about your use of data; burying this aspect of your business model in the fine print of your user agreement may provide legal coverage, but it won't make your users happy if they're caught by surprise. If you can explain how data sales support your work -- ideally, not just financially, but in some way supporting your mission -- so much the better.
mini-case: the Environmental Defense Fund launches GetActive
Environmental Defense is a large US-based non-profit that works on environmental issues, with a 300 person staff and a $72 million annual budget. In the late 1990s, Environmental defense had a total of about 8 staff on its online team, which was responsible not only for maintaining the main ED web site, but also a couple of related projects. One was scorecard.org, which provided information about environmental performance to the public. The other was actionnetwork.org, a site that gathered supporters' email addresses and turned them into online activists -- winning an early victory when they mobilized thousands of supporters to win a ban against the practice of "shark finning" (where hunters catch sharks, amputate their fins for sale, and return the sharks to the ocean to die).
As the team behind these two Internet projects outgrew its place within Environmental Defense's organizational structure, it came up with an innovative solution: spin the Internet project team off into a separate company. The new company launched in 2000, and eventually became GetActive Software. GetActive supplied software and services to Environmental Defense, and Environmental Defense got an ownership stake of less than 20 percent in the new company. GetActive earned an estimated $13 million in revenue in 2006, making it one of the largest software vendors to the non-profit sector, before selling to competitor Convio in early 2007. Later that year, Convio announced its intention to go public -- putting Environmental Defense in a position to reap the rewards of a still-forthcoming I.P.O.
For more see:
- Environmental Defense: From Brochureware to Actionware (2001 interview with GetActive founder Bill Pease)
- Taking Stock:There's Profit in Nonprofit Groups ,(Information Week, 2003)
- Aquisition Frenzy (The NonProfit Times, 2007)
Social media for social enterprise: How your non-profit can earn revenue with Web 2.0
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January 18th, 2008 by Alex
When we work with non-profits to think about the financial model behind social media projects, we encourage them to think not only about the cost of building a site, but the costs of maintaining an active online community -- which can be a much more expensive endeavour than running a conventional site. A social media site thrives on active and ongoing user contribution. That typically demands ongoing infusions of content, skilled animation, participation incentives -- all of which cost money.
The great news is that social media sites offer at least as many opportunities for revenue generation as for spending. Over the years, we've worked with our clients to identify a range of revenue-generation options for social media sites. This is the first in a series of blog posts that will review options for non-profit revenue generation using Web 2.0. Over the coming weeks we'll review:
- Intellectual property
- Advertising
- Fee for service
- Product sales
- Indirect revenue
- Reflected glory marketing
- Danger zones
But first, let's talk about why you might want to earn revenue from your social media venture. Here are some of the reasons that our clients have looked at generating revenue on the web:
- To pay for the operating costs of social media (e.g. content creation, moderation)
- To fund a new online initiative
- To create employment opportunities for your clients (e.g. in product fulfillment)
- To fund upgrades to your site
- To pay for a special program, campaign or initiative
- To support your organization's general operating budget
- To create a model for sustainable, socially responsible enterprise
- Revenue-generating sites are perceived differently by users and the public, particularly for non-profits. Think about potential alignment (or conflict) between your organization's mission, and your sources of revenue.
- Tax laws in your jurisdiction may restrict the kinds of revenue a non-profit organization can generate. Be sure to get legal and/or accounting advice about how different revenue models could impact your non-profit status.
- There's no free lunch. Most options for generating online revenue carry a price -- even if it's just the price of making your site that much better and more compelling.
If there are specific questions or issues you want us to tackle as we work our way through the different kinds of revenue options listed above, feel free to leave a comment below. And if you want to know when the next installment comes out, subscribe to the RSS feed for our Social Media for Social Enterprise series.
Best practices for non-profits using web 2.0
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September 28th, 2007 by Alex
Just how much should you fear the Social Signal vendetta of the week™? Not that much, it turns out: no sooner had I written my tirade against LinkedIn Answers than I spent the evening answering them. The key to my change-of-heart? The discovery of a groundbreaking technology known as cutting and pasting. Sure, I'd rather have pulled my LinkedIn Answer with the miracle of RSS, but this is a decent plan B.
So, without further ado, here is my answer of the day, in response to the following question from Seth Rosen:
Here's my response:Which nonprofits are using Web 2.0 technology in an innovative way to listen and talk with their clients and constituents and further their missions?
A lot has been written about Web 2.0, or the social web, to communicate and share information. Have you seen nonprofits do this effectively? How are they using the power of the web to spread information and have virtual conversations with their supporters?
We work with a wide range of non-profit and change-oriented for-profit organizations who are using the web to deliver their message, but more crucially, to engage audiences in a conversation. Some of the best practices we note:
- Focus your site on a particular goal or conversation, rather than a general mandate. For example, the UN Foundation has had a dazzling success with its Nothing But Nets site, which focuses specifically on providing malaria nets to kids in the developing world.
- Invite your community to make contributions other than money. Non-profits often experience "donor fatigue" because so much of their public interactions hinge on asking for money. The web is a great place to ask for other kinds of contributions -- whether that means connecting people directly with people who need their expertise or services (as in Nabuur) or asking them to share their personal experiences (as with the March of Dimes' Share your Story project).
- Play nicely with other non-profit (and for-profit) organizations. The web is just that: a web of interconnections. Succeeding in an internetworked environment means working effectively with others, colllaborating, and interacting -- it's not just about getting your own message out there. So being a good 2.0 non-profit means engaging with conversations and ideas on other blogs. Change Everything, a project of the Vancity credit union, is in the middle of a contest that will award $1,000 to a non-profit organization -- and the contest has fuelled a great deal of interest and awareness of non-profit activities in British Columbia.
- Don't feel that web 2.0 means building your own online community. In fact, it's a lot easier to ease into the web 2.0 culture by making effective use of existing web tools -- whether that means fostering internal collaboration by choosing a common del.icio.us tag to use when storing your favorite web sites, or creating an iGoogle page that lets you constantly see the latest news in your key issue areas, or creating a photo-based petition on Flickr (check out the Oxfam example). Or try setting up a Facebook group -- we attracted 1300 people to a Flickr group within 3 weeks of launch. Once you're comfortable with the idea of web 2.0, you can starting thinking about whether it makes sense to build some community features into your own site.
- Be gentle with yourself, and your colleagues. It's a big challenge for most non-profits to shift from message delivery to conversation, or from approaching your members as donors to seeing them as content contributors. For organizations that have been all about the message, and have approached that for decades from a paradigm of message control and careful rollout, it is a genuine (and at times frightening) adventure to bring your audience into the conversation in public, and before you've got everybody lined up to stay "on message". Be patient with colleagues who need to get comfortable with this new approach.
- Stay current with how other non-profits are using web 2.0, and learn from their experiences. A great way of doing that is to track the "nptech" tag on del.ici.ous, where people from all across the nonprofit sector share the latest resources on nonprofit technology activities; it's a great place to find blog posts or tech developments to comment on. And Compumentor's NetSquared project is dedicated to helping non-profits make the most of web 2.0.
Looking for Oberlin alumni in social media/nonprofit technology
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March 24th, 2007 by Alex
Turning Words into Deeds: A response to Knight Foundation’s 21st Century News Challenge
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November 30th, 2006 by Alex
What makes for a transformative media moment: a moment when an individual reads, watches or hears a news story and is galvanized to take action on an issue? Social Signal hopes to offer a new answer to that question with the WIDget, a tool that will turn words into deeds by marrying web-savvy media outlets with the latest nonprofit volunteer and donation opportunities.
The WIDget is our proposal to the Knight Foundation's 21st Century News Challenge, a call for "new ways to understand news and act on it...new ways for people to communicate interactively to better understand one another...[and] new ways for people to use information."
The WIDget answers this challenge by by using the latest Internet tools to match issue-oriented journalism with opportunities for concrete citizen engagement. Through a Words Into Deeds widget (WIDget), online media outlets, blogs, audio and video sites will be able to complement any issue-specific story with a set of related volunteer and donation opportunities. You can read about the WIDget and take a look at a mock-up in our draft proposal for the Knight Foundation (PDF).
We've made a conscious decision to share our proposal before the December 31 submission deadline because we think that a community converesation about the proposal can help make it stronger, and help us find the best partners to support the WIDget's development. You can contribute to this process if you are:- A nonprofit organization that maintains organizational databases: contact Social Signal to add your database to the list of databases that will be tapped by the WIDget.
- A nonprofit organization that wants to promote its donor or volunteer opportunities: contact Social Signal to add your organization’s name to the list of nonprofits who want to appear in WIDget listings.
- A media outlet or blogger: contact Social Signal to add your outlet or blog site to the list of outlets that would deploy the WIDget to offer volunteer and donor opportunities to your readers.
- An interested observer: share your thoughts about the WIDget by commenting on this blog post or by emailing Social Signal with your comments.
To contact Social Signal, please e-mail widget@socialsignal.com.
Thanks in advance for any comments or suggested partnerships, and we'll keep you posted on how our proposal evolves.
| Attachment | Size |
|---|---|
| WordsIntoDeeds-30Nov06.pdf | 354.07 KB |
Now en route to NetSquared
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May 28th, 2006 by Alex
Rob and Aaron are both heading down to San Jose this week for the NetSquared conference. For the past eight months, we've been working with the CompuMentor/Techsoup team that is behind this event.
The conference aims at pushing nonprofit engagement with the "social web" (aka "web 2.0") to the next level. The web site (which we helped develop) has built an online community around the same agenda, and will now link the online community to the San Jose conference through a two-day remote conference.
I'm holding down the virtual fort from here in Vancouver, but look forward to hearing updates from Rob & Aaron. And if you're going to be at NetSquared yourself, be sure to say hello.
Now en route to NetSquared
.28.5 | No Comments »
May 28th, 2006 by Alex
Rob and Aaron are both heading down to San Jose this week for the NetSquared conference. For the past eight months, we've been working with the CompuMentor/Techsoup team that is behind this event.
The conference aims at pushing nonprofit engagement with the "social web" (aka "web 2.0") to the next level. The web site (which we helped develop) has built an online community around the same agenda, and will now link the online community to the San Jose conference through a two-day remote conference.
I'm holding down the virtual fort from here in Vancouver, but look forward to hearing updates from Rob & Aaron. And if you're going to be at NetSquared yourself, be sure to say hello.
May 30 & 31: NetSquared’s online conference with nonprofit leaders
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May 26th, 2006 by Alex
as posted on Corante's Civic Minded blog
Where can you find inspiration for online advocacy, guidance for online faclitation, and gossip about online politics? On Tuesday May 30th and Wednesday May 31st, NetSquared is hosting a remote conference featuring live chats and Q&A sessions with leaders from across the nonprofit web.
The remote conference is happening at the same time as a two-day confab in San Jose. After eight months of work on the NetSquared project, I'm heartbroken that I won't be there in person (something about not travelling in the ninth month of pregnancy, mutter mutter grumble) -- and absolutely determined that the online event will be so fabulous that when my colleagues return from San Jose, they're going to be jealous that I was the one who got to hang out in the chat room.
And what better way to get over that morning-after-the-Memorial-Day-before feeling than to spend the day chatting with leaders in nonprofit technology -- leaders like:
- Judith Feder on "Health care and web 2.0 patient communities"
- Rolf Kleef of Greenpeace
- Micki Krimmel of Participant Productions on "Media that Mobilizes: An Inconvenient Truth, ClimateCrisis and more tales from Participate.net"
- Beth Kanter on "Tagging in the Nonprofit World"
- Robyn Deupree of Bloglines Lisa Stone of BlogHer
- Alexandra Samuel of Social Signal on "Building Online Community: Behind the Scenes at NetSquared"
- Mike Linksvayer of Creative Commons on "Leveraging Technology for Free Culture and Your Nonprofit's Mission"
- Enoch Choi of Palo Alto Medical Foundation on "Tech Tools in Medicine: Personal Health Records, Mobile Devices, Blogging,Podcasting, Health Search & Tagging @ Google Co-op"
- Boris Mann from Bryght on "Open Source and your non-profit"
- Scott Heiferman from Meetup.com
- Nancy White of Full Circle on "Online Facilitation Open Discussion"
- Edward Vielmetti from the University of Michigan School of Information on "Superpatron: viewing libraries from a patron's point of view"
May 30 & 31: NetSquared’s online conference with nonprofit leaders
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May 26th, 2006 by Alex
as posted on Corante's Civic Minded blog
Where can you find inspiration for online advocacy, guidance for online faclitation, and gossip about online politics? On Tuesday May 30th and Wednesday May 31st, NetSquared is hosting a remote conference featuring live chats and Q&A sessions with leaders from across the nonprofit web.
The remote conference is happening at the same time as a two-day confab in San Jose. After eight months of work on the NetSquared project, I'm heartbroken that I won't be there in person (something about not travelling in the ninth month of pregnancy, mutter mutter grumble) -- and absolutely determined that the online event will be so fabulous that when my colleagues return from San Jose, they're going to be jealous that I was the one who got to hang out in the chat room.
And what better way to get over that morning-after-the-Memorial-Day-before feeling than to spend the day chatting with leaders in nonprofit technology -- leaders like:
- Judith Feder on "Health care and web 2.0 patient communities"
- Rolf Kleef of Greenpeace
- Micki Krimmel of Participant Productions on "Media that Mobilizes: An Inconvenient Truth, ClimateCrisis and more tales from Participate.net"
- Beth Kanter on "Tagging in the Nonprofit World"
- Robyn Deupree of Bloglines Lisa Stone of BlogHer
- Alexandra Samuel of Social Signal on "Building Online Community: Behind the Scenes at NetSquared"
- Mike Linksvayer of Creative Commons on "Leveraging Technology for Free Culture and Your Nonprofit's Mission"
- Enoch Choi of Palo Alto Medical Foundation on "Tech Tools in Medicine: Personal Health Records, Mobile Devices, Blogging,Podcasting, Health Search & Tagging @ Google Co-op"
- Boris Mann from Bryght on "Open Source and your non-profit"
- Scott Heiferman from Meetup.com
- Nancy White of Full Circle on "Online Facilitation Open Discussion"
- Edward Vielmetti from the University of Michigan School of Information on "Superpatron: viewing libraries from a patron's point of view"
Social Signal in nonprofit blogging story
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February 27th, 2006 by Alex
Today’s Oakland Tribune features a story about nonprofit blogging. I’m quoted, but what’s really exciting is that this is (I think) the first print reference to Social Signal