Free Still Sells

Posted on September 18, 2007
Filed Under Business Management |

James Cherkoff has an eye for the dollar on the Web, and a sound understanding of marketing that many, many of the executives who should know better simply don’t get. Peter Drucker might never have existed for the way the mainstream management layer goes about its business.

It’s especially hard for traditional economic thinking to grasp the benefits of giving goods and services away for free.

The trick to understanding this new free world is firstly to see that it comes in many shapes and sizes, but vitally to appreciate that it’s all about joining in with what is rapidly building around us. For brands the lessons are legion. Suffice to say that as the global mega-networks that drive the modern web flourish, the companies that are out there freely contributing in significant ways are finding themselves inundated with goodwill - which falls right through to the bottom line. - Why Free Sells

The point about the economics of free is the same point about the fundamentals of all business - to make more money (absent monopoly) you have to increase your sales. Giving product away increases users of the product. Only recently have we come to see that the value of a network increases exponentially rather than arithmetically as its user numbers increase: so there’s the extra margin of wealth, waiting to be monetized if you can think of ways how to. This is why free works.

James Cherkoff’s piece above has several examples of this, with a lot of valuable references (which is a great part of his value as a commentator and thinker). His new post below reveals in detail a great story showing exactly how to derive benefit from free. In this case the network is being created by Cherkoff, voluntarily evangelizing in a pre-launch beta test of a product he was given to test for free.

And now I am writing about it on a highly Google-juiced blog. What’s that worth to O2? A darn sight more than the cost of getting in contact and popping the phone in the post to me. And if the phone had been problematic they would have got an early heads-up about the issue.

Of course, there’s nothing new here. Ironically, in fact, it’s the terrifyingly straight-forwardness of this approach that has big brands scratching their organ-o-grams. It’s just becoming more relevant and do-able. That said, innovations in measuring the effectiveness of such networked media campaigns are new and potential gold dust. - Why Free Sells - Timely Example

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