Unique Business Models: FreeWater

Innovation comes in many different forms ranging from new technology, a different way of marketing a product, and even a unique business model. 

It is a common misconception that building new technology is the only way to innovate. Developing a unique business model using preexisting products and services can also be an innovation.

FreeWater did just this, merging the worlds of a typical beverage company with that of an advertising firm.

A Unique Business Model That Gives Away Free Water From FreeWater

FreeWater is a Texas-based beverage company that distributes drinking water for free. People can simply get a bottle from a distribution site, often situated in high-traffic areas such as tourist sites, and walk away with no catch or hidden costs.

The company uses spring water which is packaged in an eco-friendly paper carton or aluminum bottle. Its bottled water is touted as a novel yet effective advertising medium.

Another way of looking at it is the company is putting mini-billboards in people’s hands.

Instead of putting its own brand on bottles, FreeWater puts advertising space on the packaging of each carton and bottle where brands can place their ads and messages. 

But how can it afford to give away water in expensive aluminum bottles or paper cartons for free while making a profit?

Is FreeWater An Advertising Agency or A Beverage Company?

This is where FreeWater’s business model deviates from beverage companies and becomes a successful innovation in and of itself.

Typically when purchasing a bottled beverage, end customers like you and I cover the costs of the drink. 

But instead of putting costs on the consumers, costs are shouldered by advertisers or brands in exchange for the advertising space on each water bottle or carton. What comes out is a business model that is somewhat of a hybrid between an advertising agency and a beverage company.

Each FreeWater bottle or carton is prepaid for by advertisers, which is how the company is able to make a profit while giving premium spring water away for free. 

“Basically, we transform product packaging into ad space. Those ads cover the cost of the product’s manufacturing, distribution, the salesperson’s commission, donation to charity, and our profit. The product is then free for the consumer, said FreeWater founder Josh Cliffords in an interview with Austin Monthly.

To actually get the bottles in people’s hands, the company distributes water bottles in areas where the advertiser’s target customers walk by. Alternatively, advertisers can distribute the bottles themselves.

And according to the company, this unconventional way of advertising brands and events outperforms some traditional advertising and marketing channels.

FreeWater says that its unique advertising channel produces 10x more impressions than direct mail, is $2.5 cheaper per 10 impressions than direct mail, and boasts a 29% return on investment.

The company plans to bring this advertising channel to other products.

“After we prove ourselves with water, we are going to scale into other free products and services,” said Cliffords in an interview with Irish Tech News.

“Our startup is opening the world’s first free supermarket and our first product is FreeWater,” added Cliffords.

According to the company, the free supermarket will host even more free products including food, beverages, clothing, medicine, computers, transportation, and travel. 

What Companies Are Like FreeWater?

Another company making headway with a unique free ad-supported business model is Telly.

Telly is a US-based company that, just like FreeWater, gives away a physical product to their customers for free. In this case, instead of a bottle of water, it’s a $1,000 TV. The company passes on the $1,000 cost of the TV plus shipping to advertisers – making the TV completely free for end customers. 

So what’s the price that customers pay?

One, ads on the TV set’s secondary screen run for 24 hours a day, 7 days a week, essentially putting a billboard in the homes of customers that availed a TV set from Telly.

Two, customers hand over data to Telly so the company can tailor-fit the ads displayed on each TV set according to the customer’s self-reported personal information, viewing habits, purchasing behavior, and brand preferences.

Both FreeWater and Telly’s business models seem to be popular and may prove to make the traditional retail model extinct. According to Telly, customers have reserved 250,000 of the initial batch of 500,000 TV sets. The majority of these were Gen Z and Millenial individuals – two of the most ad-averse generations which may point to shifting preferences.

Of course, other companies that have this free ad-supported business model are the ones that pioneered it in the media industry such as free-to-air TV channels, social media platforms like Facebook, and streaming platforms like YouTube and Pluto TV.

FreeWater For Communities That Need It The Most

Beyond ROI’s, ad performance, and revenues, FreeWater works to provide free water for communities that need it the most – combining innovation with social impact.

FreeWater donates 10 cents per bottle or carton to WellAware, a non-profit that builds water wells in East Africa. According to the company, the donations from 150 bottles is enough to provide clean drinking water for one person for the rest of their life.

“We only need 10% of Americans to choose FreeWater so we can solve the global water crisis permanently,” wrote FreeWater on their website.

Furthermore, the company provided free water to residents of Jackson, Mississippi, a city affected by a water crisis after severe storms and flooding hit the area.  

However, the company’s mission doesn’t stop at just providing free water.

According to Cliffords, the company plans to support even more charities as they roll out more free products in the future.

Go In-Depth Into Unique Business Models And Innovation With Embiggen

Because innovation has become almost synonymous with inventing new tech, many organizations have difficulty successfully executing their innovation initiatives.

Many fail to remember that there are plenty of ways to innovate without involving entirely new tech such as business model innovation, just like what FreeWater and Telly did, and non-tech product innovations like the Axios Smart Brevity.

Explore all these and equip yourself with what you need to innovate successfully with the Global Innovation Management Institute (GIMI) Level 1: Associate certification program! GIMI is the US-based worldwide standard certification body for innovation management. Embiggen is GIMI’s exclusive certified training partner in the Philippines.

The GIMI Level 1: Associate certification program equips working professionals with the skills they need to innovate successfully in their organizations. 

Participants will get an introduction to the world of innovation from the country’s top innovators, learn tried-and-tested innovation frameworks, tools, and methodologies, and join a worldwide community of over 15,000 GIMI-certified innovators, including some from Fortune 500 companies.

Learn more about the program here.