How Advertising based pricing models function (with regards to cloud computing)

5th Oct 2016

Including a look at how this funds activities like new software development

Using advertising money to cover the costs of operation so that services can be offered to potential customers for free is not a new concept. It's essentially a symbiotic financial and marketing relationship between two companies;one company gets paid to offer their service to customers in the hopes that they will also be lured in by the strategic advertising of the other company. Advertising based models with regards to cloud computing essentially serve a dual function, they are both a service and a vehicle for another company to sell its products.

There are some people that might decry this type of (advertising based model) arrangement, feeling that it exploits cloud computing users. But in reality it is actually helping them in at least 2 different ways. First off, they're gaining access to a useful cloud computing service that probably includes software, apps, virtualized hardware and other tools. Secondly, they're being presented with the most popular (and often times most useful) products for their particular demographic.

Companies like Google base their advertising model on a very complex algorithm that (through a series of data collection techniques and calculations) is able to approximate the interests of each individual user and present them with customized ads that feature products that they most likely would have purchased anyway. From a business or logical standpoint this is a match made in heaven, and simply mirrors the kind of symbiotic relationship echoed by other companies that produce goods or services that are compatible with one another.

In the world of cloud computing, there are several companies that are embracing the idea of using part of their advertising revenue to jump start their new or ongoing software development projects. Since cloud computing is still largely unexplored / unexploited there is a lot of potential in the arena of software development. It's only a matter of time until the next series of software breakthroughs occur in the field; whoever is responsible for these breakthroughs will be leading the pack (scientifically and financially).

The facts are pretty clear, cloud computing is definitely on the rise globally, and new developments are emerging every day. If you take into account the forward momentum of the cloud computing movement, combine that with the realization that it is still an undeveloped field and then take into account all the software and application research that's being done you'll quickly discover that there is a huge potential there.

By using excess funds (which could actually be construed as profit; due to the low cost of running and maintaining a cloud computing network) from advertising to develop the tools that will become integral to the next phase of development in cloud computing, companies are literally investing in their future at virtually no risk. As long as their operating costs are lower than the amounts they receive from advertisers they stand to lose nothing from the venture. This is especially true because the longer a free cloud computing service remains active on the net the more popular it becomes.