Online Communities Offer Myriad Opportunities for Marketers

The rapid rise of online communities such as MySpace and YouTube, both of which were recently sold for tremendous profit, hasn’t gone unnoticed by young entrepreneurs, looking to cash in while the market is hot.

“The coming three-year period, which I call ‘the age of communities,’ is the perfect time to start a business,” according to David Silver, an entrepreneur and author of the new book “Smart Start-Ups: How Entrepreneurs and Corporations Can Profit by Starting Online Communities” (Wiley, 2007, ISBN:978-0-470-10742-3, $24.95). “By using online communities you can create a profitable and unique business using very little capital ... and you can do it without having much business experience,” Silver says. Here are a few tips excerpted from Silver’s book on what you need to know to create a profitable online community.

* People’s desire to interact. Understand that people have an urge to collaborate with others who share a common interest. You’re providing a forum for this interaction.

* It’s O.K. to charge for membership. If you create a community where you provide valuable information to others, the ability to share information amongst themselves and the assurance that you’ll keep out defectors, then people will pay for the benefits you offer. It’s necessary to gain the trust of the community and not break that trust with purposeless fees. Make sure that what they are paying for they’re getting.

* Don’t sell ads. By selling ads, you could appear to be cheapening your brand. Offer the members of your community every benefit you can think of, allowing them the freedom to move in their own direction. This helps to create a community that can generate revenue through other methods.

* Search for alliances. You won’t need to spend more money to bring in more users if you form strategic alliances with other communities and old-content-owning corporations that’ll bring new members to you. “If I’m offering music on my mobile-phone-based social network,” Silver says, “then I will make a list of every organization with a theme song that might swap its song, which I may offer to my users as a ringtone, in exchange for my logo or Web site beamed to their group.”