The Jennifer Lopez Model vs. the Dolly Parton Model vs. the Kim Kardashian Model

An article by TheEvilGenius    6 Comments

Subtitle: What Classmates, Facebook, and MySpace can learn from the Internet Marketing world.  

Recently I have taken a turn from the traditional business world into the Internet Marketing (IM) and “Guru” world. Having been a senior executive in Fortune 500 firms, I have come to realize there are simply a ton of things that traditional businesses could learn from the IM space if it got off its high horse and began to explore the virtual Wild West without the blinders of disdain.

Three powerful IM strategies in particular are:

• - the concept that “the money is in the list”
  - the concept of the backend offer or continuity program
  - the concept of affiliate marketing.

My theory is that the classmates and facebook’s of the world need to stop thinking of their sites as an end in-and-of themselves.  Right now, the business model seems to be to take advantage of their tremendous traffic to simply sell ad space.  (Dolly Parton Model. Big frontend – no backend.) And it could be so much more.

What if they simply treated their site as a front-end, or funnel, into a backend product portfolio or affiliate program?
 
You see, there is a fairly long standing practice in the IM world of giving away valuable content in exchange for becoming a member of their “list.”  From there they have very scientific strategies and sophisticated metrics on how best to “convert” prospects into customers.  Giving away the cow for free is not a big deal when you know that you have dozens of products in your backend and your list has a 10% conversion rate, that your squeeze page has a 65% effectiveness rate, your OTO has a 10% sale rate, your upsell/downsell adds 16%,  and your average customer has a lifetime value of $3000.  (JLo Model. Small frontend – big Backend)

Some of the biggest gurus in the IM space have a list of around 100,000 to 200,000 members. Many of these players are in the $10M to $30M yearly profit range with as little as 10 employees!  Imagine what they could do with lists of 30+ Million!

Now to bring us back to the traditional business model. What if classmates.com developed a catalog of back end products targeted at their niche while maintaining their enormously valuable front end? (Kim Kardashaian Model. Big Both Ends) Instead of selling ads to other sites, they built into the system the ability to market and sell their own wares.  So many possibilities are available. Any product or service tailored to nostalgia, keeping in touch, getting older, memorializing the past, to even having and raising kids, staying healthy, or planning reunions would work.

Even if they chose to form joint ventures with marketing and fulfillment companies “affiliate marketing in the IM world” that would still work, if not as profitable as the creating their own back end. In the “guru” world, affiliates often earn as much as 50% of the product sale (more on big back end products or chains) for simply directing a customer to purchase.

It is my honest opinion that the biggest and most groundbreaking new strategies are coming not from the established business world (And yes, even most of web 2.0 still falls in that camp), but from the new crop of vagabond warriors blazing new paths in the IM community.  I’m still working out the reasons why, but I can tell you as a businessperson starting to straddle both worlds, I will do everything I can to apply the strengths and weaknesses of each to put me in the forefront of business 2.0.

JJ aka Evil Genius