Day 9 - Monetization

CCarter

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I came up with this post when someone skyped me to ask me some questions. They were a complete newbie and still had the MFA 'dream' of working 4 hours a week - the person wanted the exact blueprint on how to print money. Problem is they had a steady job, and had no actual goals on what they wanted to achieve; if you have no written down goals, you're like a ship in harbor, when you set sail - where do you plan on going? What's your destination? How do you know when you'll achieve it? They wanted to have me give them all my 'secretz', I dunno what that even means, and allow them to quit their steady 9 to 5, for an MFA life.

An MFA life with half-ass 2012 Wordpress theme sites... lettuce be cereal. How long can that last in today's SERPs with only big brands and black/gray hat sites dominating the main SERPs?

Now, lets say there were actual 'secretz', and I gave it to them, an overall plan of just monetizing with Adsense is no better than a plan of just generating traffic with Google. This 3rd party, Google, can still come and knockout their $5K monthly income, then they have no job AND no reliable income - worse off then before they came to me. I told him to set goals and come back when he was serious. It's not the answer that he wanted, but it's the answer that he needed. He promptly deleted me from Skype...

But that got the gears turning about how websites generate revenue from their online presence. Now I don't claim to know everything, but being on the internet since 95, I know a thing or two about websites, and have seen a lot of them come and go. You can tell where the failures are if you step back and look at the underlying business model. If it's profitable and makes sounds sense, the website will generate revenue, just like an offline business. If there is no clear "purpose" of the website, well the market will correct for the market confusion that site is causing upon itself.




Monetization - Generating revenue

First in order to make money, you have to understand the different types of websites which exist. I'm going to assume you have a website, you've at least done market research so you can do proper research on your target audience/demo/niche. I say business, cause after a hustling here and there, you'll eventually have to get serious if this is for the long term. The old MFA days are coming to an end, and with that - things are just going to get harder, everything easy erodes - that's the nature of 'easy'.

The first step in anything in life, set goals. Big goals, then smaller ones, with each lead to your reaching your big goals. Then at least you'll have a roadmap on where it is you are going. Next step, if you decide to make monies online, get a website. But before that, you have to understand the different types of websites which exist, and most importantly their underlining purpose. There are essentially 4 types of websites, and each one has it's own unique way of making money; if you cross patterns you will cannibalize the essence of your website and potential revenue.

A Golden Rule to keep in mind with all business ventures - if you can make your customers/clients life's easier, you'll be in business longer. Make it so they employ less steps or spend less time doing something, they'll reward you with monies. Just keep that in mind. Essentially in online business there are two business models which exist, a website which sells a product/service or a website which advertises a product or service; besides that then you are just a non-profit.



Types of Websites


Definition - Cannibalize: to take (sales) away from an existing product by selling or being sold as a similar but new product usually from the same manufacturer; also : to affect (as an existing product) adversely by cannibalizing sales.

The types of websites are categorized by the PRIMARY/MAIN purpose. Some websites can have additional purposes functionality, but the categorization I'm using is for their MAIN/PRIMARY purpose. This is critical to clearly understand the mindset you should be in when creating each type of website.

1. Lead Generation / Data Collection - The MAIN purpose of this website is to collect data, contact information, or leads of visitors, in order to directly sell them a product or service. The main revenue model is selling the data collected. Other secondary revenue models can be employed, but they are usually for additional revenue, think up-sells or advertisement on the thank you (confirmation) page, which should NEVER interfere with the direct revenue model. You'll see micro-life insurance or local plumbers websites all over the internet using this tactic. If the lead is being collected on the site, you'll have more control. If you are redirecting the person to an off-site, then obviously you'll have less control. I prefer more control when possible, it'll give you leverage and allow you more flexibility when switching providers.

Cannibalization (What NOT to do with this type of site): DO NOT Sell products or place advertisements in direct conflict of generating lead call to actions. This will lead warm and hot prospects away from your site.
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2. eCommerce - The MAIN purpose of this website is to sell products, digital or physical. The primary revenue model is generating sales. This is not an easy task since most small business eCommerce will have to compete with Amazon or the Amazon of their niche if there is one. PPC and great customer support will keep revenues coming in. SEO is a waiting game, but can be employed, Look into shopping cart listing type of websites to implement your store feeds into. You can employ up-sells or advertisement as long as it doesn't interfere or conflict with the main revenue source. So lead generation, CPA/affiliate can be employed for additional $$$, but don't lose the main revenue purpose, since if you lose that, you'll drown in no time if you don't pivot.

Cannibalization (What NOT to do with this type of site): DO NOT sell advertisement or put another CPA offer in areas which are in direct conflict of the buying process. Basically the goal of your site is to sell products or your service. Having ads which lead away from your direct revenue source only negates your efforts. However having up-sells AFTER they've bought your service is just added icing on the cake.
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3. Brands - Think Coca-Cola, and P&G, these websites usually has a commercial intent. They don't sell directly on their website, nor generate any real revenue. The purpose of this type of website is really customer/client relations and informing consumers on different aspect of their products/services. (Side-note: This has nothing to do with what we refer to as "Big Brand" in internet marketing. That term refers to online marketing, SEO and the website's ability to penetrate the consumer mindset. An eCommerce store can be a big brand, a informative website can be a big brand. A SeattleLocalPlumberLongAssDomain.com will never be a Branded site, but can get to 'Big Brand' levels.)

Cannibalization (What NOT to do with this type of site): Positively promoting a product, service, OR IDEA which is in direct competition of your revenue source. This is like TV stations promoting Hulu.com. Might be good for revenue at the current moment, but you are putting the idea in the minds of your audience that they can get access to your same programming - shows and all, with less ads, and on-demand. That Idea is not good for the long term for your business model if you are a TV station.
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4. Informative / Entertainment - Think Facebook, Wikipedia, eHow, Magazines sites, and websites which without user generated content or pure "Authoritative" or entertainment content would not exist. The main purpose of these sites is to inform and connect with people. To generate revenues off these types of sites, you'll employ advertisement models, affiliate marketing models, and even lead generation / data collection. These types of sites are more flexible on what they can do to generate money since they can come at their specific niche from tons of different angles. They can employ multiple facets of monetization without hindering their overall purpose - but they'll still have to keep the main purpose in mind. If their monetization starts to hinder their main objective, they'll start losing their customer/audience base, which will quickly deplete their revenue faster than any of the other types of websites.

Cannibalization (What NOT to do with this type of site): Promoting inferior product/services which will undermine your overall brand, since you, as the authority, recommended them by simply linking, the inferior product/service to your audience. MFA sites do this all the time, but overall they can get away with this since most people rarely return to an MFA site. But if an MFA site evolves to a Big Brand, you'll have to start protecting your brand, and will have to remove 'bad advice' which would tarnish your overall brand in the long term.

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Types of Monetization

  1. Advertisement (Websites Which Employ This Tactic For Revenue: Lead Generation, Informative) - CPC, or Cost Per Click. This is the Adsense model. A visitor visits your website, digests the content, then clicks on an advertisement. If the advertisement is related to the content they just read, you may want to test a CPA (Cost Per Acquisition or Affiliate Marketing) offer since those can generate you more income.

  2. Affiliate Marketing (Websites Which Employ This Tactic For Revenue: Lead Generation, eCommerce, Informative) - CPA. (Side-note: Before you guys get confused, a business/Brand does not employ affiliate marketing ON it's website, that tactic is employed on the AFFILIATE's website). You get paid when someone fills out a lead form or turns into a customer for your advertiser. These are usually one-time payments, unless you can capture visitor's information (Permission Based Marketing) and continue re-marketing to them products/services related to that niche.

  3. Lead Sales / Customer Acquisition (Websites Which Employ This Tactic For Revenue: Lead Generation, Informative) - This is a revenue model based off of lead generation, but where you acquire the leads and sell it exclusively to a single buyer or to multiple buyers. An example would be you setting up a micro-site for "Cambridge Life Insurance", and generating leads for people in that area. Once you have leads flowing in (the first several may not get serviced), you'll then approach a 'life insurance' agent, company, or firm, and work a deal to sell leads to them exclusively or to multiple buyers for a fixed rate per lead or if you trust the person enough, a CPA model.

    These deals, if you have a lead management system in place, will put you in more control, than simply sending it through the affiliate portal. This is the equivalent of going direct to the source. Local SEO is perfect for this setup. You can create microsites for plumbers, locksmiths, any small or medium size local business that wants to only pay for leads or customers, making their jobs easier. Keep the Golden Rule in mind, make things easier for them, if that means creating an APP that delivers leads to their smartphone or email so they can communicate with new prospects faster - do it. Those small things are the unique selling proposition which will make it harder for them to 'stop' using your service.

  4. Customer Mining (Websites Which Employ This Tactic For Revenue: Lead Generation, eCommerce, Informative) - This is basically digging for new or lost opportunities within your current customer base. An example, you can rent out your list or customer base to a company which is not a direct competitor, but has a complimentary product/service, and get paid upfront, or a percentage of sales generated, or both.

    Test out different partnerships and angles to generate sales with your current list of clients WITHOUT ruining the user's experience. If you employ permission based marketing correctly, and send out surveys and utilize additional mining techniques in order to tag and get a better understanding of your user base, you'll be able to see a clearer picture of who you can approach for joint ventures and partnerships to generate sales and revenue for each other.

  5. Advertorials (Websites Which Employ This Tactic For Revenue: Informative) - Pretty sneaky stuff, but an informative / entertainment type of website can sneak in articles/content which are paid by companies in order to give them positive press. The revenue model relies on them leveraging their own brand for sales. There can be some serious backlash if the targeted audience finds out they are being essentially sold.

  6. Product Sales/ Services Rendered (Websites Which Employ This Tactic For Revenue: eCommerce, Informative)
    • Selling a physical or digital product / or intangible service. You can employ affiliates to generate traffic - but be careful with those clowns. :wink:, you can even employ advertising on websites that have CPC models or CPM (Cost Per Impression) to advertise your product. This course in my opinion is more sustainable but can be devastating if there is negative feedback or push back.

    • Recurring Service - My all-time favorite. That AT&T, Comcast, re-bill you forever money. Recurring incomes are probably the best and most sustainable business models if you've got solid profit margins. You can do recurring on physical products as well, think diapers for new parents. To win in this you should employ one or more of the following methodologies:
      • High Quality. Your product is high quality or at least better than anything currently on the market. You don't even have to have the best support - it'd be an extra bonus if you did though. If you are the clear better quality, competitors will look at your every move and compare themselves to you in their activities, in their minds you own the niche, so if you send waves that hit them, it'll be psychologically devastating.

      • Almost as good as the top guys but cheaper. I hate competing on price, since the next man can come in with a lower price, and then you'll be fighting with each other to the bottom. If utilized, this methodology should be temporary until you fix other unique selling propositions like support or quality, or gain a competitive edge that no one else can replicate. Being cheaper is the copycat, me-too mentality; if you try visualizing the long term - the only conclusion you can come up with is cutting prices so low, that you eventually are no longer profitable or out of business.

      • Excellent support or customer service. Yes, you can have a shitty product, not the cheapest, and in the land of a thousand copycats, but if you provide excellent support or customer service above the rest, that's your unique selling point. Eventually you'll want to improve your product/service. Customers will stay loyal if they feel you care. People want to feel like their past decisions were right. Look at Hostgator at the moment, so many people were recommending their service, and for them it literally hurts to tell people to stay away. Several have continued putting up with their shit simply because of nostalgia of the good days, and can't really believe it's gone. - That's the power of past excellent support, even now, there after-burn still keeps them afloat.

      • Monopoly. You are the only competition in your niche - Monopoly or an oligopoly (telephone companies). Well, if you can pull this off, you own the niche. This can be in the form of approaching the vertical in a completely different way, which people would rather not compete or fight with you over. They will literally consider you a force which cannot be defeated, and they'll just continue taking losses. Innovation, new ideas, and being able to convey your message is what's going to set you apart. How do you innovate? Think about what your niche lacks, what is the norm, and where is a void which you can discover, tell people about, then bring the solution for them. If you can execute it with great customer support, you'll dominate. (Side note: Being first can give you a great advantage, but you can't count on that once a competitor or two steps in, that's why you need to continue innovating).

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Bringing it all together, examples of implementation:

  1. Lead Generation.
    • A webmaster creates a "Seattle Local Plumber" review website, which aggregates the local plumbers, puts reviews on them, and allows user generated content so visitors can make their own reviews. The main purpose here is to get the website ranked in search engines and do offline advertisement like billboards, bus stops, church bulletins to generate more traffic to the website, and get people to fill out leads which you can then sell to local plumbers looking for more business. Primary revenue source is lead sales. You can have a secondary source of revenue which includes an advertisement model with display ads, ads in emails to the user base, ads on thank you pages for direct plumbing services or "Home Depot" for the DIYers. You can take it a step further and allow local plumbing companies to place ads on your website using a CPC or CPM model. If you trust them, try the CPA as well, you never know, but never deviate from the main purpose.


    • Life Insurance microsite ranking for "Cambridge Life Insurance", which you then turn around and sell to a group of agents or do an exclusive deal with a local agent you trust. The site doesn't have all the fancy user generated content, but pure reviews and information which people will see as an authority and feel comfortable enough in order to give out their information to.

  2. eCommerce.
    • Mom and Pop selling "Bike Seats" nationwide. Their customers want a specific type and feel for their behinds when sitting down. They can sponsor local, regional, and national bike marathons or bicycle events. Their main revenue source is direct sales of their products - whether it's their own brand or a big manufacturer's brand. A secondary revenue source can be up-selling additional bike accessories, or actual bikes - CPA model, but doing direct advertisement on their main site is not recommended since it can deter from their main money maker, selling bike seats.


    • Apple Computers. Their purpose is to sell physical computers, smart phones, and accessories. Their secondary revenue source is their digital products (software). Their third revenue source, and probably the most lucrative, is their marketplace models for iTunes, and the APP store. Apple.com's primary purpose is to sell their products/services. They rarely will even cross promote with another brand unless that brand is not indirect conflict with their main objective. They don't sell their 'leads' to other companies, they utilize that data to capture visitors into their funnel process to up-sell more product/services to them. They rarely waste time not selling, 90% of the time directly, 10% indirectly down the pipeline. They've turn their customers into a cult but also provide the level of customer service not seen by any of their competitors. They've got a strong brand, but their main purpose of their website is and will always be to sell their product/service.


    • Fiverr. A Marketplaces eCommerce website. The main purpose of this website is to facilitate "micro-jobs" which have a $5 value and up. The website makes money off of the transactions taking $1 out of the $5, and I also assume part of the up-sells if there are any - I'm not completely familiar with the processes on the seller side. They also have 'advertisement' opportunities for their sellers for increased exposure. Some knock-offs have entered the marketplace, but the only ones which have survived are specialized for a particular vertical like SeoClerks. Specializing allows the competitors to increase their price points - which is a perfect solution to taking on Fiverr while increasing profitability, yet not being a real direct threat to Fiverr's core business enough for them to answer back.

      Knockoffs come and go, but if you can be a knockoff/copycat but then specialized, you'll be able to carve out your own niche with your specialized angle.


  3. Brand.
    • Coca-Cola. The purpose of their website is purely for online presence. Their site is not to 'increase revenue', but rather to 'minimize decline'. They can create an eCommerce store on their website where they'll sell or give away t-shirts, but the main purpose of their website and presence is purely to maintain their brand so people will continue buying through their sales channels. There is no need for their customers to go to their website, unless it's to complain. They can capture data, to stay in communication as a brand with their customer base and get a better understanding, but overall if there were no complaints, they could exist with their website being a simple flash splash page with simply a Coca-Cola logo. You can make the argument they give product information, but realistically less than 1% of their audience will ever visit their website in a given year.


    • Berkshire Hathaway Inc. Warren Buffet's site. You guys know Warren... have you guys actually been to his main company's site? Take a moment to take a look at it, link http://www.berkshirehathaway.com/. Take a look at the first link "A Message From Warren E. Buffet". It's not that they give no fucks, it's they know their audience, and their audience are their shareholders. Their online presence is to inform shareholders of their activities - that's it. Their subsidiary, Geico's website would be an eCommerce website, selling insurance.


  4. Informative.
    • Facebook. Their main purpose is to connect people, experiences, and the aggregated user generated content of their user's base. Their main revenue source can be derived from their user base by selling advertisements to advertisers who would like to reach them. They can employ CPC, CPM, CPA models, and also sell data of their users to data mining companies in an effort to market to the user base. Their customers/clients are the advertisers and businesses which give Facebook money. Their product are the users and the demographic details of the users which makes it so unique, therefore lucrative - for their customers/clients - the advertisers. Like with Apple.com if they have no more products to sell (computers in Apple's case, and in Facebook's case users), they will have no revenue from their buyers, Advertisers in Facebook's case. Only by keeping people coming back to their website can they generate revenue from their advertising customers.


    • Wikipedia. Their main purpose is to aggregate "Authoritative" content in an encyclopedia like format on people, places, and things. Their main objective is to keep people informed. To generate revenue, they have chosen to go with a 'donation' model of asking for dollars to keep them going. Can they do an advertisement model, YES. But there will be consequences since it will deteriorate their 'authority' allure in the visitor's mind, therefore reduce trust amongst their user base. They are seen as such an authority, their revenue generating capabilities are greatly diminished to a couple of channels.


    • eHow. Like Wikipedia, but the main revenue channel is advertising. Doing an on-site design and usability comparison of eHow and Wikipedia, you can see the clear difference of what the "Authoritative"/trust aspect versus 'revenue' first is. As you need to generate more revenue, the level of authority/trust diminishes as you take on questionable advertisers. It's not necessarily a bad thing - Since Demand Media is a for-profit organization while the Wikipedia is a non-profit. What's important is understanding the gray area/line which is created based on HOW you monetize your websites.


    • WebMD. More wikipedia than eHow, but has the advertising aspect which is needed to keep them cash-flow positive. There are opportunities for them to create lead generating models like with local dentists, or doctors due to their specialization. They also bring the 'professional' aspect that eHow does not have, so there is more trust to the end visitors. Can this factor in and help their advertising customers, hell yeah. That also means they can charge a premium for their advertisement opportunities. They can also leverage their brand in offline activities and even do partnerships with local doctors which again they can get creative and generate dollars from patience... obviously in whatever legal manner that is available to them. WebMD's model is the model that MFA site should strive to reach.





Most people starting out online will start with an Informative site (MFA), then move to Lead Generation / eCommerce and hopefully one day be a "Brand"... :wink: Remember, Apple.com is not even a Brand site and they are doing quite well, so don't sweat it.


Circling back to goals, one thing you need to seriously consider is the future and viability of whatever you are in or planning on getting in. Example are MFA sites or blackhat churn and burn campaigns being ran. How long do you plan on continuing down a route that's only going to continue getting eroded or more difficult. Start side projects if you have to which will turn into long term projects which you can then jump ship to in the future. Everything easy erodes.

And to the individuals reading 7 year old blogposts trying to start out with a MFA website with a 2012 wordpress install like we're in 2007 (WAT), think about the long term game plan. I know you read your 4 hour work week or some blogpost that tells you this internet monies is easy as pie, but it's still work. Going from an employee doing the 9 to 5 then to an entrepreneur working 18 hour days until things get off the ground, and then 24 hour days once they are off the ground isn't for everyone. You might get really lucky and bang some easy traffic sources which will let you cruise for several months or years, but if you are cruising, you probably aren't watching the curve coming up ahead, and with the faster and more accurate technologies coming out, almost no niche is safe from a 800 lb marketing gorilla once they get get a whiff of your traffic source. If you jump in this, do it right and don't half ass it.

Regarding website monetization the key is understanding what type of site you are creating, and then what monetization models are available to you with that type of website. Do that and you are golden.. Or you can keep putting Google Adsense on your eCommerce store and continue being dumbfounded as to why you can't make money online...

If you have any questions or want me to critic websites and their monetization opportunities they are losing just drop a post in here.

- CCarter ( @MercenaryCarter)
 

Ryuzaki

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What's your opinion on cannibalization in segmented areas of a big site? Let me explain:

Let's say there's a site that has three main areas...
  1. Entertainment Blog - High Traffic, Low Intent - CPM Ads
  2. Information Content - Medium Traffic, Medium Intent - CPC Ads & Aff Links
  3. eCommerce Shop - Low Traffic, High Intent - Drop Shipping White Labeled Products
Is this viable without the various areas eating each other's monetization up? With organic traffic I'd assume it's fine, but what about brand traffic, social traffic, etc?
 

CCarter

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Just like in life, you can spread yourself out thin and master nothing, or become hyper-focused. There are no mega-brands known within the consumer's minds as being a Jack of All trades. So if your project is also spread thin, you'll get nowhere fast.

A site can only and should only have 1 main area, otherwise it's not really a "main" area. A site should be considered as one brand with one focus. Ancillary services aren't a focus and should be under a complete separate brand whenever possible. The car industry is a great example. The have brands dedicated toward different segment (Volkswagen) and when they target higher end crowds have completely different brands (Bentley). Multiple main focuses creates no focus. Think of any major brand, they are known for one thing by the masses. Google = search, Coca-cola = soft drink, Nike = shoes.

The real problem is when the entertainment side starts stumbling you think "I'll go work on the other two sides until this gets back on it's feet". The problem is WHO is going to get it back on it's feet? When eCommerce starts failing the focus doesn't double down on the current problem at hand but switches again. But when you have one focus and hyper-focus on obstacles you can clear them out quickly, ride the rollercoaster and know what not to do in the future so it doesn't happen again.

Even when major companies get into industries or focuses they don't fully understand you'll notice several years later they'll divest or sell off that business cause it was not their focus.

A website having 3 main focuses is a business with no main focus, and those get pecked alive by competitors who are hyper focused on the 3 sides which they are lukewarm in.
 

Vert

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I have a list of products I would like to promote, but in Spain there are two large stores that sell it and I am an affiliate on both. Is it better to include both options on the list or only one of them?

Both have excelent reputation and a similar affiliate commissions.
 

CCarter

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I have a list of products I would like to promote, but in Spain there are two large stores that sell it and I am an affiliate on both. Is it better to include both options on the list or only one of them?

Both have excelent reputation and a similar affiliate commissions.
In the review content you can do a comparison of the two product and link to both so you make money no matter what the audience picks.