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The money funnel

By January 13, 2007No Comments4 min read

AKA How the major players are keeping their fingers in as many pots as possible
A while back I wrote about the death of the signup, and how all the major players were making it as easy as possible for the everyday web developer to leverage their existing username systems to authenticate users. Well after looking back at the situation, it seems to me that the players are all moving their pieces around in ways to best capture asmany pieces of the pie as they can.Ebay
Look at eBay, they may or may not let you use their authentication system (haven’t checked yet), but they do manage your billing/payments through Paypal. They are setting things up to make it as easy as possible to run recurring payments now with their payflow pro system (they will hold the credit cards, and the transactions on their end, thus eliminating one potential liability/weakness from the CC system). Where can ebay improve? Open your reputation system to the world. This is one of ebay’s key strengths, no other company has as widely used of a system for rating people’s reputations. Let others integrate ebay ratings into their sites. seriously. Ebay is also sitting on another killer tool: Skype. skypeYou thought skype was overpriced? HAH! wait till they start rolling out click to call, and every page on the web that sells stuff has a skype me button included. Skype’s next killer move: toll-free click to call system (have the seller pay the phone call costs).

Y! started this game before everyone else, remember yahoo stores? Well that was the first foray of a big name player in dipping their fingers into other’s transactions (remember when ebay first started you had to handle payments offsite, they bought paypal years later). Y! also has a user authentication system I think (I’ll have to verify that). But they are really looking at a 2 prong approach to capturing a share of the ecommerce/web services pie: offer dead easy to use integration with their apps, and serve google adsense-like ads to certain publishers. Not quite as ambitious as I would hope (seeing as I’ve been pushing long on yhoo lately), but the Panama search advertising system could be good. Yahoo’s killer move: turn yahoo stores into an api, handle payment processing for external sites, and then couple it with the panama search marketing tools so that marketers can tap into Cost Per Action tracking and truly analyze their web ROI.

So why is google last? Well if I put it first, none of you would have kept reading! Actually google could warrant its own blog on just this topic. Right now google is making the most aggressive moves to monetize everything known to man. For those of you who think that google is a search engine company, well you are sadly mistaken. Google is an advertising broker, first and foremost. Their job is to find any nook and cranny of the web they can that could benefit from advertising and then proceed to slap it there. Don’t get me wrong, their search engine is their draw, their hook, but their cash is all ad based. So now how are they facilitating the money funnel? Well where do I start?First up google has turned the search marketing game upside down, and basically reinvented what was never as prolific a market before they got involved. They found an efficient way to monetize search, then applied it to personal publishing. Then they allowed people to use their systems for login/authentication (easiest way to increase your ratio of signups to visitors= reduce friction). Now they’ve got google checkout, which if you are selling a webservice doesn’t yet support recurring payments, but you can use it to sell products from your site, and save yourself on merchant fees for the year. Google’s killer moves are already in play: CPA advertising, the evolution of CPC is already becoming apparent with the tight integration of their products. Why are they spending this money on less profitable things like spreadsheets, etc? Because it gets consumers coming back, and they need to sustain traffic to keep the advertisers in their ecosystem.

So who is making the best moves? Right now its a bit fuzzy to be honest. If yahoo can succeed in ramping up their monetization per user, then this could be a HUGE year for their bottom line. If google keeps pace, they will be on track to sustain growth, even if search volume is nearing a peak thats expected in 2009 (US based searching). Ebay? We’ll have to wait on that one, the recent turnover at skype HQ could be disastrous.