We’re always grateful when paid-for apps are suddenly made available for nothing, but just what’s in it for the developers? The CEO of Lonely Planet explains why the travel guide developer is happy to run continuous giveaway promotions.
It’s pretty evident that Lifehacker readers like it when Lonely Planet gives stuff away. When the travel guide provider offered its Melbourne iPhone guide for free for a limited period, our post about it wound up being one of the most popular we ran that week. There was a similar deal for the Sydney guide recently (though neither is still valid).
But why does Lonely Planet — a commercial outfit which makes money from selling guides — keep pursuing that strategy? The answer, as CEO Matt Goldberg explained at last week’s Gartner Symposium, is that an initial experiment with giving away European city guides following this year’s Icelandic volcano disaster which left many people stranded proved more successful than the company had imagined.
“We wanted to do something for travellers,” Goldberg explained, so it decided to offer the guides for key European cities for free for a limited period to help people stuck for an extended period find additional things. It didn’t do any publicity for the venture, save promoting it on its blog and Twitter account, but that proved enough to attract massive interest.
“We introduced ourselves to 4 million customers,” Goldberg said. “Our run rate during those days went up and became a new base that was 50% higher.” While lots of free guides were given away, the overall sales for paid guides also rose, Goldberg said, demonstrating that giveaways could be a viable business model.
As a result, Lonely Planet decided to run regular giveaways tied in with particular events and cities. “We try to do that frequently,” Goldberg said. Indeed, his appearance at the Symposium was the reason for the Sydney guide being free last week.
The notion of a ‘freemium’ model, where basic services are available for free but additional options cost extra, is not an unfamiliar one here at Lifehacker HQ. That approach underpins many of our favourite applications, from Dropbox to Gmail. The Lonely Planet approach is slightly different, and one seen more often in the world of mobile apps — using occasional giveaways to stir up interest, while drawing paid customers who buy other apps (or become tempted to buy the free app if they get in on the deal too late).
Whatever the approach, it’s always good to hear that giving things away actually work as a successful business strategy, because that way we’ll keep getting free stuff.
Lifehacker Australia editor Angus Kidman wants more Lonely Planet content for his BlackBerry. His Road Worrier column, looking at technology and organising tips for travellers, appears each week on Lifehacker.