The Online Community Monetization Imperative will not be Advertised

Most community managers and directors with whom I have contact share the estimation that their net revenue targets for 2009 will not be met by their current sources. Here is one example of how negative incremental rewards kick into the community space:

• Increases in the site layout/allocation in banners, skyscrapers, boxes and other advertising devices result in a degradation of the visual landscape, as well as an increase of intrusion upon the users’ quest to find and interact with in the online community. Thus, the usability and user experience declines as advertising placements rise, resulting in less value to the member (ceterus paribus), which in turn leads to lower net revenue gains (or actual declines) for the community site as membership growth and activity are inhibited by the ecosystem impacts of advertising placements. Conversely, we expect the contra-positive to also be true. Shaped around the same social dynamics, it is also likely that clickthrough rates decline as the use of advertising intensifies, thus capping potential ad revenues further.

In the past six months, most communities have witnessed declining budgets for current and subsequent quarters. More than a few of the managers and directors who we know are at risk or have gone elsewhere. Until more and better research confirms the necessity of redirecting community growth initiatives beyond the scope of those which are perennially established at-this-point, one should expect to discover (lamentably) an increase in the failure rate of active communities.

I theorize that there exists an estimable, robust, actionable, and business-intelligent relationship between a community’s increase in net value delivered to its’ membership and the increases in net revenue accrued to the community’s operation. Subsidiary to this theory, I wish to extend three hypotheses:

1. Opportunities for net revenue growth may come in the form of new services and programs which enhance members’ perceptions about the value gained and taken in perspective of the amount of time and resources that they invest in their community. Such perceptions about improvements in value received, better usability or ease-of-use, etc. will the subject of conversations within the community.
2. Metrics will be needed to track the improvements being made, so that such measures can be shared and can guide further redirection of community resources toward programs that reward the membership and the community operation. For example, if a program generates net revenue in proportion to the extent that members participate in that program, then the membership should somehow be partially compensated by improvements that benefit or appeal to all members (e.g. better discussion software, lower membership renewal costs, less page-space allocated to advertising, or creator/influencer recognition rewards). This creates a member-focused incentive to make a net revenue enhancing program work.
3. The decision to change, and the implement of such change, has to be a no-brainer/slam dunk, as opposed to a board-of-directors battle. Thus, for net revenue growth opportunities to be accessible to communities, they will have to be manager committed and led, as well as implemented / maintained initially by existing staff with minimal risk at little or no hard-dollar expense.

Perhaps a survey is in order, though I doubt that the outcome would do more than confirm what most of us have already learned through our day-to-day associations. Secondarily, if members are launching new net revenue generating campaigns, tools, or strategies, it would be helpful for all to hear about their initiatives.