Why Products Suck #11: Wrong Business Model

Part XI in an ongoing series of Why Products Suck (and what we can do about it).

A company’s business model can affect—seriously affect—its products’ user experience. Picture this: you pay for a service, a not inconsequential sum. You then buy things to enjoy while doing that activity. And then the activity starts and the first thing you see is an ad. Does this affect your experience, how you think about the service? Hell yes it does.

If you haven’t figured it out by now, I was talking about going to the movies. Imagine if, say, Disneyland did the same thing. You’d be even more outraged, and rightly so.

But it’s not just services, but products too. Advertising is slipping into apps and devices that users pay money for in the expectation that their fee is the actual cost of owning and operating the product. Just because you can put an ad into a product does not mean that you should, because it can negatively affect the users’ experience of the product by breaking users’ trust and expectations for the product. It’s brand-damaging.

This is not an anti-advertising rant. People who design and build products, as well as those who create content, deserve to get paid for their efforts, and advertising can fund that. This is about the proper use of advertising.

The rule is this:

If users are paying money for a service, they expect that it will be free of advertising, unless the cost is so low that clearly advertising is subsidizing the service.

Likewise, if the product is advertising-based, but has to cram half a dozen ads on a page to make the product profitable, the business model is likely damaging the user experience. The product becomes an advertising-delivery system.

Companies should choose whether or not to fund their products via advertising, a one-time fee, a subscription, or the compromise position of having both a free version, funded via advertising, and a paid version free of advertising. People understand these models. There is no in-between. Mixing them feels like “double-dipping” and users (often rightly) suspect greed is behind it and feel taken advantage of. The feeling that the company has their best interest at heart is broken.

Note that products that exist without a business model for generating revenue only exist to be acquired, in which case paid and advertising models are often eschewed in favor of rapid user base growth, making them attractive to buyers.

If you can’t make your product work using advertising or a fee/subscription alone, the solutions that don’t interfere with the user experience are as follows:

  • Raise your fee. You might be charging too little.
  • Lower your costs. Find efficiencies, do a Six Sigma review or whatever it takes.
  • Offer a free version that is advertising-supported, and a paid version without ads.
  • Grow your user base, so you get some efficiencies of scale. This often requires spending up front to improve/innovate the product and marketing to attract new users.
  • Find partners who can license your content or technology or (anonymized) user data.
  • Instead of ads, consider corporate sponsorship.

Many of these require you to make hard choices, but the result will be a product that won’t suck. Or at least, will suck less.

Companies just need to pick the appropriate business model that won’t overturn user expectations and betray user trust. Because those products suck.