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In today’s digital innovation landscape, consumer product brands may be uniquely positioned to leverage a custom social platform, not just for enhanced customer engagement, but also as a significant new customer experience and a new revenue generator. Quite simply, by creating an Instagram-like platform tailored to their audience, brands can unlock new dimensions of monetization that could potentially increase revenue growth by 12% to 15% or more.

Strategic Monetization Through Exclusive Platforms

Direct Sales and Premium Features: Most consumer brands are already advanced and adept at selling products and building brand story on social media, but they may be missing a big opportunity to extend their brand value online. Some brands are in an industry (and have the products) that could fuel and promote topic-based social groups, events, activities and content partnerships. Experiences on large social platforms like Instagram and TikTok deliver a broad experience and subject matter, but cannot deliver the specific experiences, content, activities and experts an industry brand can deliver.

CHatGPT generated sample of the Carhartt brand with its own platform.

A branded social platform can start with seamless e-commerce functionalities that encourage on-site purchases by featuring exclusive products or early releases, which many consumer brands are already doing. But that’s just the tip of the iceberg. Creating a brand-driven Instagram-like experience for users to interact with other users, activities, articles, videos, podcasts, events, programs from partners, and content from experts can generate significant additional revenues.

The Platform model:

A brand-owned social experience platform is what we are really talking about here. It means a CPG company can shift away from a ‘pipeline’ model to the ‘platform’ model or at least employ both. Whereas, there are many platform models to pick from, a consumer brand would benefit from decreasing manual processes, moving away from high transaction costs, realizing significant productivity gains from no-touch processes, increasing visibility to their partners and members, and dramatically improving their customers (and partners) user experience and brand loyalty.

Subscriptions and Memberships: Within the platform model, brands can offer tiered membership levels, providing basic access for free and premium features under a subscription model but a better approach would be to use the freemium model to attract millions of free members and shift the revenue model to 3rd party contributors, just like other social platforms. This not only fosters a new and valuable revenue stream but also enhances user value and brand image.

Advertising and Partnerships: With a highly engaged community, brands can attract lucrative partnerships and sponsorships, turning the platform into a high-margin advertising (boosting) space. Tailored content and services from complementary brands and contributors should be integrated, ensuring that promotions are non-intrusive and add value to the user experience.

“Now ask yourself, it’s 2022, can you really afford not having a platform strategy considering that the 6 most valuable companies in the world are platforms? You don’t have to be the next Amazon (that ship has long sailed), but without a platform strategy, you could be left behind.”

– Marco Torregrossa (Medium)
https://medium.com/euro-freelancers/platform-economy-the-4-key-business-models-1fc0eda7241e

The Financial Impact

Let’s use “Carhartt” as an example of what could be accomplished. By leveraging a platform strategy, a brand like Carhartt could see an increase in revenue growth by 12% to 15% or more. The combination of increased sales, premium subscriptions, and strategic advertising can transform these social platforms into major revenue pillars, offering a sustainable and profitable revenue line that complements traditional sales channels.

Although Carhartt is a private company and does not disclose its numbers, some estimate its sales are in the $1 billion range per year. Therefore, if we do some very simple calculations, we can estimate that Carhartt is bringing some 3 million customers in per year. And it’s logical to assume that at least part of this audience would value additional digital services, experiences and content on a tailored platform. Perhaps finding out about events, watching videos about hobbies or expert guides, joining groups or even starting their own events and content.

Suppose just 10% of all customers were to try a digital experience each year, that means that approximately 300,000 users would try out the experience per year, or perhaps with some luck, 450,000 would try (15%).

Using Instagram’s per user revenue statistic as a goal, we could surmise that Carhartt would see an additional $15m in revenues growing possibly at a rate of 15% per year.. One could argue that Carhartt is not Instagram, but we could counter that users being in a more targeted, specialize experience may spend more. Or more users would spend less. Either way, new revenues would be generated under zero-touch design, and at 5 to 10 times the profit margins of their other Carhartt revenue streams. As Carhartt also has the ability to add these users each year, and refine their online experience, in just 5 years, they could be adding $50m-$100m to their annual earnings. Probably worth a serious look.

“According to Oberlo, Instagram’s revenue per user averages just over $50, based on an estimated 1.4 billion users worldwide. In the US, Instagram’s ad revenue in 2023 reached $39.7 billion, which is $23.54 per user.”

In conclusion, as consumer product brands strive to distinguish themselves in a crowded market, those willing to invest in their own platforms can reap substantial benefits. This approach not only solidifies a brand’s position in the market, but also creates a new, high-margin revenue stream that fosters long-term customer loyalty and engagement. The integration of community-building with direct monetization tactics will transform these platforms into pivotal revenue pillars for brands, turning everyday users into engaged community members and brand advocates.