I was asked by Toby Green of OECD Press to deliver a presentation at the June SSP conference in San Francisco. I will summarize that presentation briefly here. The slides have been posted to SlideShare and are embedded below.
“Freemium” is a conflation of “free” and “premium.” Although most people focus on the free part of this, the real emphasis is on the premium side. Freemium marketing is essentially a form of product sampling. Since the marginal cost of bits approximates zero, product sampling is a natural way to entice customers to purchase something from you. Unfortunately, just about everybody has the same insight, so the amount of product sampling makes it hard to break through the noise.
For freemium marketing to be effective, it has to be integrated with the overall marketing plan. How do you get people to come to your Web site in the first place? How do you get them to return? And how do you get them to stimulate others to come to your site (viral marketing)? Once all these steps have been set up, the freemium model could be a good way to seek conversions to paying customers.
There are some examples of this in the slides. I would be interested to hear of readers’ successful freemium programs.