Slides for a presentation on Freemium marketing, delivered at the SSP annual conference in June 2013.

1. Putting Freemium Marketing
into Context
Joseph J. Esposito
SSP Annual Conference
San Francisco
June 7, 2013

2. Topics
• What is “freemium marketing”?
• The economics of digital marketing
• Freemium as a form of product sampling
• Kinds of restrictions on the free component
• Consumer vs. institutional marketing
• The broader context of online promotion
• Freemium in the not-for-profit arena
• Building a plan

3. What Is Freemium Marketing?
• Use free goods to build an audience, then try
to upsell them to premium goods and services
• Essentially a form of tactical marketing
• Virtues: bits are free; form of product
sampling
• Limitations: how to attract an audience in the
first place; cost of maintaining free service;
challenge of converting users; inherent
limitations in institutional markets

4. Economics of Digital Marketing
• Are bits truly free? (Fixed vs. variable costs)
• N.B.: As wireless overtakes wireline, data
limits could impose cost on bits
• Low (or zero) variable costs leads to free
promotions and extensive product sampling
• Free component converts editorial investment
into marketing expense
• Challenge is how much to give away to
encourage best conversion rate

5. How to Think about Product Sampling
• Read 10 pages for free; then buy the book
• Free sharing of journals articles; now purchase
hosting services (Mendeley)
• Free cheese sample; now buy the wheel
• Free luncheon seminar; now buy vacation real
estate
• Don’t romanticize freemium marketing; it’s
simply product sampling by another name

6. Restrictions on Free Component
• By time (5 minutes free)
• By channel (free to individual, cost for library)
• By feature (free content, paid search or
hosting, etc.)
• By capacity (one user free, multiple users pay)
• Etc.

7. Consumer or Institutional Market?
• Free to individuals: market D2C
• Upsell to individuals
• Upsell to libraries
• For many scholarly publishers, the issue is not
free vs. paid but consumer vs. institutional

8. The Broader Context
• Free is one marketing tactic of many
• Consider using free alongside other marketing
tactics (advertising, social media, issuance of
white papers, etc.)
• With no Web traffic, freemium tactic is useless
• Successful implementations have solid Web
traffic and high conversion rates

9. 4 Steps to Successful Web Marketing
1. Get a user to come to a site for the first time
2. Get a user to return to the site
3. Motivate a user to help bring others to the
site (viral marketing)
4. Have the user take some action on the site
(disclose personal information, make
purchase, etc.)
Freemium marketing is an aspect of #4

10. Mission-based Freemium Services
• Free component does double duty:
disseminates information first, premium
conversion second
• Examples: free books online, but pay for POD;
free content for target group, but pay for IT
services
• Very challenging to get reasonable conversion
rates
• Cost of supporting free component

11. Building a Plan
• ALWAYS PUBLISH THE BEST CONTENT
POSSIBLE; NEVER COMPROMISE
• Insert freemium model into overall marketing
plan
• Use any means possible to get people to site
for the first time
• Assess marketing funnel carefully; focus on
conversion rate

12. Thank You!
• Please contact me at espositoj@gmail.com