Billing: Looking a Little Less ‘Alternative’ Every Day
While the estimated decline differs from one company to the next and across different industry sectors, there’s little question that for many online adult entertainment businesses, the last five or six years have been a rough ride.
With both revenue and conversion ratios dropping substantially against prior performance, businesses are working harder than ever to squeeze every nickel from their billing solutions, including by diversifying their processing options and methods.
As a result of this diversification effort, so-called “alternative billing” solutions (loosely defined here as any method of charging consumers that doesn’t include directly billing their credit card) have become increasingly important in recent years, leading a lot of online adult merchants who have long eschewed or ignored various alternative billing options to rethink their strategy.
Clark Chambers, director of business development for 2000Charge.com, told XBIZ that when it comes to alternative billing deficiencies, “misuse is the most common issue.”
“Alternatives are often left at the bottom to be found by the end user,” Chambers noted. “This approach is very obviously not the smart way to monetize foreign traffic.”
Chambers added that the problem of alt-billing options lacking visibility to the user is easily remedied using existing technology, like the 2000Charge “smart button” product, which uses geo-ip detection to return local currency pricing and geographically-optimized billing options to customers automatically. Technology like the smart button “should be on every join page to address your surfers at the point of sale,” Chambers said.
Daniela Ganick, senior sales manager for iTeleBill, concurred with Chambers, adding that the most important billing options to include are any that number among “the best converting solutions locally” for any given user that lands on your sites.
“I would always recommend to have a phone payment solution, as it literally gives every single user who visits the site the option to join,” Ganick added. “All the user’s phone has to be able to do is send a text message or make a call, so it doesn’t even have to be a smartphone.”
Asked which alternative billing methods would be most advantageous to adopt, Chambers cited establishing a EuroDebit solution as priority number one for any company in the adult web space that hasn’t already done so.
“EuroDebit is without a doubt the payment method with the largest market reach,” Chambers said. “525 million European residents will have automatic access to EuroDebit as of February 2014, when Single Euro Payments Area (SEPA) migration goes into effect.”
Chambers advised that merchants be “certain to offer local preferred billing method,” an aspect that varies by country, and observed that when you look at the numbers involved, a billing solution like SEPA seems less “alternative” than it does primary.
“89 percent of the population of the Netherlands has used iDeal to make a purchase,” Chambers noted. “Giropay in Germany is automatically available to 64 percent of online shoppers. These are striking examples of how our idea of what is ‘alternative’ can actually be the local preference.”
Yarka Svalekova, the vice president of business development for First Mobile Cash, agreed with Chambers and emphasized the importance of testing different methods to determine which are most effective in any given region.
“Site operators should test options that provide a smooth payment experience and are mobile user-friendly without lengthy registration process, and methods that are commonly used to pay for digital content,” Svalekova said. “I believe in testing different options and sticking to the ones that prove to be the most efficient, based on the geographical and demographic factors, as there are many cultural and behavioral differences in usage.”
Ultimately, from an American adult entertainment entrepreneur’s perspective, making effective use of alternative billing methods involves thinking a bit less like an American entrepreneur in the first place, and acknowledging that some of the best opportunities for growth in the current market lay outside the shores of the U.S.
“Europe overtook the U.S. in 2010 to become the biggest market in the world,” Chambers remarked. “The EU28 account for 88.7 percent of European e-commerce. A single broad reach product like EuroDebit, which covers the entire E.U., is a necessity.”
It’s also important to be aware of usage trends on the consumer side, of course, and to understand that as more surfers switch to mobile devices as their primary browsing machines of choice, it becomes all the more important to offer mobile-friendly billing methods, even if the site being joined is not mobile-optimized, itself. Once a merchant has their billing solutions in place, the final piece of the puzzle is tweaking and refining those methods based on the traffic to, and performance of, each site.
“After a base is established I would suggest the answer can be found in the in the site’s traffic stats,” Chambers said. “Review the top five referring countries, then be smart enough to offer the preferred local payment methods.”