Zagat Launches Zagat.mobi, an Ad-Supported Web Site for Mobile Devices

(via Clickz.com)

Highlights:

Zagat Survey has launched its first ad-supported Web site for mobile devices, a platform it believes will be a primary way to serve, and advertise to, “affluent and engaged” customers. The site, Zagat.mobi, is sponsored at launch by the entertainment- and dining-themed Visa Signature credit card, which appears in clickable banner ads on the new mobile presence. Visa Signature will be the exclusive advertiser on Zagat.mobi for the first two months. (…) Mobile services player Starcut helped Zagat design the new Zagat.mobi site, which features Zagat restaurant, nightlife and hotel content for all major U.S. cities, London and other select international destinations. (…)

The mobile site differs from the company’s main Web site, ZAGAT.com and from its $30-per-year ZAGAT TO GO smartphone software (…). It is optimized for quick display on all Web-enabled mobile devices, offering free access to restaurant, nightlife and hotel information. Mobile-friendly features include links for directions, movie times, airlines and other information as well as the ability to use SMS to communicate with friends, said Zagat. Mahle said ZAGAT.com subscribers will be able to view Zagat ratings and reviews of businesses.

What it means: A couple of interesting insights on that roll-out:

  1. Zagat has redesigned their site specifically for mobile access. That’s a smart decision. (It’s funny how everyone uses the iPhone now to showcase their mobile site…)
  2. They’re promoting it using the .mobi extension. I’m still not sure .mobi domain names will catch fire but I think it can help brand recognition at this point.
  3. They say they’re going ad-supported but, in reality, they kept their freemium subscription model in place. You need to pay to see their trusted ratings and reviews. BTW, an interesting debate around the freemium vs. ad-supported model is happening currently.

Freemium Model Conversion Rates

I’m alway a fan of business model discussions and Don Dodge this week had an interesting post regarding conversion rates of the freemium business model.

I am at DealMaker Forum today. We just finished the speed dating sessions with start-ups and I was struck by one common theme. The most common business model is Free Service with an up sell to paid premium subscriptions, commonly known as the “freemium” model. I asked each of them what kind of conversion rates they were seeing. The average is less than 3% conversion. The companies presenting include; Echosign, Seriosity, Smartsheet, Central Desktop, Oddcast, Yugma, and others.

Freemium business models usually involve a Free service, sometimes time limited or feature limited, supported by advertising. The ads rarely cover costs. The goal is to convert these free users to paid subscriptions. Most services start with a $10 per user per month subscription and scale up to $20 or $50 per month based on a small, medium, large usage scale. They all have slightly different measurements and cut-off points, but most have some notion of small, medium, large.

What it means: keep those numbers in mind when building a business case around the freemium model.