For entrepreneurs venturing into the online business world for the first time, it can seem like a very confusing place.
There is so much jargon and information it is hard to narrow down what is really important, what is useful and what is a waste of time.
In this article I’m going to focus on simplifying what you need to know about making money online and then run through a case study of a website that does all these things really well.
The Five Revenue Streams
There are essentially five ways that you can make money from your content on the internet.
I’ll now go through each of these revenue streams in more detail.
Advertising is the simplest way to generate revenues from online content.
In the early days of internet business website owners had to sell the advertising space on their sites directly to the advertisers or to an advertising agency. This meant only sites with high levels of traffic were viable, and the whole process of sourcing ads was expensive and time consuming.
Now adding ads to your website is easy.
The most common advertisement and easiest to implement on your website are text ads which automatically change depending on the content on a page. For example if a content page is about taking a vacation on the Caribbean island of Anguilla, the text ads that are displayed should also be about Anguilla, as in this example:
The biggest text ad network in the world is Google Adsense (www.google.com/adsense). This is the service new publishers should start with. Other growing networks include:
Yahoo Publisher Network
Before text ads the most important format was banner advertisements which usually appeared in the masthead of a page. Website owners have now become much more creative in the ad sizes that they offer. The two most common formats are banner ads and 125 x 125 button ads.
Other Ad Formats
As advertising becomes more competitive so publishers and ad networks are responding by creating more exciting ad formats which include:
Content link ads – when the mouse pointer passes over a link with two lines under it, an ad appears in a pop-up box
Pop-up ads – appear on top of a web page. Very unpopular with users
Pop-under ads – appear under a website when the browser is closed. Not as annoying as pop-up ads, but still irritate web users
Other Ways of Making Money from Advertising
Advertising can also include:
Sponsorship – get part or all of your website sponsored
Classified ads – Create a classified ads section and charge people for posting an ad
Jobs Board – Add a jobs board to your site and charge companies for posting jobs
A list of over 101 ad networks. Not very useful, because it does not provide any information about each company, but it does give an indication of the size of the market - http://hubpages.com/hub/101-Google-Adsense-Alternatives
Affiliate marketing is halfway between advertising and ecommerce.
You place links or ads on your website. If one of your site visitors clicks on the link, goes through to a third party merchant site AND makes a purchase, you get paid a commission on the sale. Commissions vary depending on the value and quantity of products sold. For example an affiliate program for holidays may pay 2%, whereas a program for selling a downloadable ebook may pay 50%.
The biggest affiliate program in the world is run by Amazon http://affiliate-program.amazon.com/gp/associates/join . Anyone can sign up and promote Amazon products in exchange for a commission on sales of between 4% and 10%.
There are also many affiliate networks which aggregate hundreds or thousands merchants. The biggest affiliate networks are:
Commission Junction – www.cj.com
TradeDoubler – www.tradedoubler.com
Linkshare – www.linkshare.com
ClickBank – www.clickbank.com
Performics – www.performics.com
There are many entrepreneurs on the internet making six figure incomes from running affiliate marketing websites.
You can sell physical and digital products from your site.
Most content sites have the potential to make good revenue from selling ebooks, reports, white papers, research, podcasts and other downloadable products.
Many also sell physical goods which they both stock and ship themselves, or just take the orders for a third party merchant to fulfil.
To enable ecommerce you need to have a shopping cart and secure payment processing integrated into your content site.
The shopping cart enables buyers to select one or more items to buy and then takes them through the checkout process.
The payment processing can be done via a Payment Service Provider (PSP) which handles the whole transaction. The biggest PSP is PayPal. You could also consider using Google Checkout.
The alternative to a PSP is getting a merchant service account from your bank. The charges are often cheaper and the customer service much better. However you will need three services to make it work - a shopping cart, a gateway … which checks the shopper’s card is not stolen… and your merchant account.
Charging access to premium content is one of the most profitable ways you can build a sustainable online business.
It is the equivalent of the traditional print newsletter or specialist magazine, with all the advantages that the web has to offer including audio and video content, forums, reader feedback, real-time updates and simple administration.
To create a successful subscription website you need to be able separate public and member content, capture and manage member’s personal data, issue passwords and process recurring payments. These capabilities should be fully automated so you don’t spend your life dealing with customer service issues.
Subscription is usually charged for access to premium content, but also can be for an online service.
Participation refers to activities where your website visitor becomes actively involved with you or your company.
These activities include webinars, tele-seminars, seminars, conferences, consultancy and mentoring. It could also include licensing products, franchising your services, or other creative ways of leveraging your audience.
Trust and Authority Equals More Money
The order that I have listed these revenue streams in is important.
As you move from advertising to participation the amount of money you can make increases. However the amount of money your website visitors will be willing to spend will depend on how much they trust you and the value they believe you can deliver.
Advertising requires the least commitment from visitors. You earn a small amount of revenue from each page they visit.
Affiliate marketing requires a little more trust as visitors will be buying based on your recommendations.
Ecommerce requires visitors to give you their personal details and trust you to deliver whatever they are buying.
For people to pay for a subscription they must not only trust you with their personal details and credit card information, but they must also believe you will deliver value for the term of the membership.
And participation means they are buying into you and your business. Courses, workshops and mentoring often mean they have to invest time, effort and money in working with you.
There are five ways to make money from a content website.
The most profitable websites have multiple revenue streams.
When you set up your online business you should explore all the possible money making opportunities and ensure that the website you build at the outset has the capability to continually add new ways of making money.
Your long-term, sustainable online success is dependant on you building a strong relationship with your audience and moving them from one revenue stream to the next.