by Martin De Saulles

5 reasons why your business model may need an API

Feb 15, 2019
APIsIT StrategySaaS

APIs offer businesses more than just an efficient way to get data to end users. They can also be used to generate new revenue streams and extend your market reach.

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Credit: isarapic / Getty Images

We all know the benefits that APIs can bring in getting the right data to the right people at the right time. There are enough tools out there to make offering API access to your data a relatively easy experience. However, a common problem has been too great a focus on sorting out the technical issues, often at the expense of building a compelling business case for having an API in the first place.

A closer integration with core business objectives and the commercial needs of the organization can help design better APIs as well as increase the likelihood of internal funding approval. Here are five ways your company’s or product’s business model may benefit from incorporating an API.

1. Syndicating content

If you’re in the business of producing and selling information, then an API can help extend your reach across different online platforms and to new audiences. How most people access information is far more fragmented than in the past and there are multiple access points, portals, sites and apps they use to find out what they need to know.

170-year-old news agency, Associated Press (AP) distributes much of its content to partners via a number of APIs that allow users to search and download AP images as well as stream breaking news across a range of categories. Financial information provider Bloomberg provides unrestricted access to raw financial data to corporate customers through its API, leveraging and reinforcing the dominant position it has in that market. The BBC offers standard program listing data through an API but is also conducting innovative trials in adding value to current broadcast outputs with additional data.

2. Adding value to Software as a Service (SaaS) products

SaaS-based products lend themselves well to integrating APIs as the software is already built on a distributed model. While many users are satisfied with the functionality and interface provided by the vendor, power users and large corporate clients often require access to the backend to better integrate the software into their work flows. CRM vendors, Zoho and Capsule both offer free API access to the backend data for all their customers creating a more compelling proposition for potential subscribers.

3. To upsell services to SaaS customers

While some SaaS vendors bundle API access with their packages such as Zoho and Capsule mentioned above, others restrict this functionality to higher end subscribers. Global CRM SaaS provider, Salesforce has adopted this model and uses its API to tempt larger customers up the subscription ladder. Rapidly growing project management provider Monday does something similar, offering full API access to tempt users from their basic $25 per month subscription to their $39 package.

4. Build a platform for innovators

The development and commercialization of platforms and digital ecosystems have clearly formed the basis for the most successful companies of the last 20 years as Google, Apple and Amazon demonstrate. However, you don’t need to be a technology behemoth to profit from building a platform. Niche providers across a range of sectors are successfully doing this. Marketing data provider Majestic allows third party developers to repackage its data via an API and build innovative products from that.

5. White labelling data with an API

Extending your reach is often best done via leveraging the networks and marketing expertise of third parties. The larger travel sites have been doing this for a number of years to better monetize their data assets. Kayak offers a feed to its massive trove of travel data built up from the 2 billion searches they handled in 2018 and the 60 international online properties they own. Expedia offers greater functionality with its APIs allowing third party sites to handle bookings as well as hotels to manage reservations via their own sites.

These are just a few of the reasons why an API might improve your data-driven business model. Deciding how the API revenue model fits within the broader business model requires a good understanding of client needs and use-cases as well as what competitors are doing and the price sensitivity of end users. Whatever the case, ignoring the potential benefits of extending your market reach through leveraging APIs is not a wise move.