The Website Investor

“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.”

—Dave Ramsey

Leading ad networks include Adwords, AdBrite, Adblade, 24/7 Open, AdStream, AdCenter, Ad Magnet, BuySellAds.com, Chitika, Clickbooth, DoubleClick, ExoClick, Infolinks, Yahoo! Publisher Network (and Bing), and Zedo. There are many private ad agencies and smaller ad networks as well. Websites might do much better using a particular ad agency in their niche and market than using a generic network. Some ad networks, like Tribal Fusion, require a minimum of five-hundred-thousand page views per month.

While there are always exceptional situations, Adsense tends to outperform other ad networks, hands down. In fact, whenever I look at sites using other networks exclusively, it raises a red flag for me; I question why Adsense is not being used. Many times the reason is because Adsense has decided the site content does not meet its standards, or the Adsense account holder has done something to violate its terms and conditions. If the site owner has simply never tried it, replacing other ads with Adsense might represent a good opportunity to increase ad revenue.

Targeted Content for Advertising Monetization

Because contextual ad networks read and understand the topic and keywords of each individual web page, smart content website owners intentionally create content that will attract ads with the biggest payouts. Do keep in mind that actual per-click earnings vary widely. Here are some broad categories of content and how ads typically perform on those webpages:

Legal
Medical Procedures
Business to Business	$20 to $50 per 1,000 page views
Banking and Finance
Mobile Devices
Other Technology
Network and Computing
Jobs	$10 to $35 per 1,000 page views
Education
Automobiles
Drugs and Medicine
Science
Web hosting	$5 to $25 per 1,000 page views
Fitness
Home and Garden
Travel
Dating
General News
Sports
Music	$1 to $15 per 1,000 page views
Gaming
Fashion and Clothing

The numbers in the table above are wide ranges of what can be expected. There are niches within these broad categories that can generate far higher returns—even at the lower levels of the chart. It is important to note that advertising spend is very dynamic and seasonal. Over 60% of ad dollars are spent during the holiday season in the last few months of the year. Products regularly come in and out of fashion, and the ad dollars associated with those products vary accordingly.

Tip: Content writers should consider their articles and media from a manufacturer’s point of view. If I were a manufacturer or retailer, would I be happy if the ad for my product appeared on this web page? What products would this web page reader be interested in buying? What keywords would he be searching for that a manufacturer might also place an ad bid on?

The best content website creators start by understanding the products and advertising numbers associated with potential content and then create articles to attract the highest number of visitors and the highest revenue per click. Often articles on a topic with high paying ads like “personal injury attorneys” might not attract a great deal of search traffic, but the visitors who find the articles are more likely to click on an ad, and the ads they click on will have high per-click revenue. I have witnessed single clicks that paid as much as $40.

So what products tend to be the ones with both high traffic and high per-click revenue? That is the elusive and golden question. But consider Apple iPhones. The combination of the handset cost and a two-year contract with a telecommunication company often results in a total price of as much as $5,000 over that two years. Mobile providers are willing to pay several dollars per click for a potential sale of that size. So the per-click revenue meets the criteria, but what about traffic? Because Apple commands a 40%+ portion of market share in its space, search traffic is also excellent. Popularity + high price is the nirvana for content pages. Unfortunately, that is not a big secret, so there is extensive competition for those keywords. Many website owners experiment with pages about lesser known, but high-priced, products to write about. They test a variety of items until they locate niches that are under-exploited. We will discuss this more when we cover “low-hanging fruit” opportunities.

Direct Advertising

For websites that are very focused on a specific niche and want to monetize with advertising, approaching specific companies or specific ad agencies to negotiate paid ad space arrangements may be advantageous (compared to using the ad networks discussed above). Working directly with a distributor or manufacturer cuts out the middleman and leaves more profits for all. Manufacturers will typically pay per one-thousand impressions. So if the agreed rate is $10 per one-thousand impressions, that means the webpage with their creative (ad) would need to be shown to visitors one-thousand times in order for you to earn $10. That doesn’t necessarily mean one-thousand unique visitors, since a visitor may view more than one page in a single visit to the website. There are a wide variety of tools available for tracking visits and page views, and many of them are free.

Affiliate Marketing

The work-at-home crowd is very familiar with the popular business model of affiliate marketing. Product creators create a product like a video course, ebook, training website, or coaching program, and then they recruit affiliates to sell the product in exchange for a commission on every sale. It is typically very easy to sign up to be an affiliate for almost anything, although some affiliate programs have requirements related to how many sales you have made in the past and the methods you will use to market the product.

Once you are approved as an affiliate, you are free to advertise the affiliate product and attract customers to buy the product via your referral link. When a visitor clicks your link and purchases a product, you receive commissions for the sale.

Hundreds of thousands of websites and millions of web pages have been created exclusively for the purpose of selling affiliate products. Not surprisingly, literally hundreds of books have been written about how to do affiliate marketing. This is appealing to many people who want to start an Internet business quickly because it does not require the creation of a unique product to sell.

The savvy website buyer can sometimes find affiliate websites that already have a consistent traffic base and an affiliate product that converts well. This allows him to bypass the work of researching affiliate products, creating a website, and attracting traffic that is likely to buy the product.

Affiliate websites typically consist of landing pages that are pre-sales pages. They contain persuasive content or reviews about a particular product that warm up customers to the idea of buying. Then if the customer clicks on the “call-to-action” button, they are directed to the sales page created by the product creator, who hopes to close the sale. Affiliate programs promise to track the customers with reliability and integrity so that the affiliate is confident he will get paid for any visitor he sends to the sales page.

“One secret of success in life is for a man to be ready for his opportunity when it comes.”

—Benjamin Disraeli

The two primary goals of the affiliate marketer are to attract as many visitors to his pages as possible and to influence as many of those visitors as he can to click through to the final sales page. The first goal is about traffic creation, and we will discuss that in a later chapter, but broadly speaking, there are two categories of traffic: paid and organic. Paid traffic is visitors received from advertising sources that have been paid for. Organic traffic is free visitors that have come from search engines, social networks, and emails. It also includes direct visitors who are aware of the website and type in the URL or have it bookmarked in their browsers.

The second goal of influencing visitors to click through to the final sales page is all about salesmanship and copywriting. The affiliate marketer usually takes the tactic of informing, not selling. He presents reviews, facts, and sometimes testimonials about a product with the intent of creating a positive curiosity that leads the customer to take the next step. The hard selling, where sales copy plays on the intellect and emotions of the buyers in a more overt way, is left to the final sales page. The final sales page is on the product creator’s website. This is where prices and guarantees are revealed.

The entire sales process—or sales funnel, as it is commonly called—may include the following:

1. An ad where the Internet user is first presented with a product or topic

2. A landing page where the user is informed about the topic and encouraged to proceed further

3. A sales page offering more information where the user is “sold” on the product

4. A download page granting access to the purchased product and additional, complimentary products called “upsells”

5. A downsell page where customers who have chosen not to purchase are given another offer, most often lower in price with fewer features

6. A squeeze page where customers are offered something free in exchange for providing their email addresses

There are thousands of variations on sales funnel structures. There may be multiple levels of upsells and downsells or none at all. Visitors and buyers will almost always be encouraged to provide an email address or contact information so that they can be placed on a “leads” email list or a “buyers” email list. Once they are on a list, they will receive frequent emails that attempt to sell additional products.

Services

A large number of websites exist by selling services. As the word service implies, the owner of these websites must welcome ongoing effort and interaction with customers.

“High-touch” websites include such services as design, programming, writing, advertising, SEO, research, translation, and thousands more. High-touch services are most often sold by the project or by the hour.

“The older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.”

—T. Boone Pickens

“Low-touch” websites offer partially automated services, like background checks, link building, business listings, and anything where programs and tools have been developed to do most, but not all, of the work involved in delivering the service. These services are often sold per transaction.

There are also many service businesses that are almost fully automated. I recently reviewed a website that was an online tool for the creation of business plans. The website led the user through a series of questions and provided guidance and resources along the way. The end result was a professional-looking, but completely self-service, business plan.

There are also websites that do well by providing multiple levels of service. The lower levels are automated and have lower price points, and the higher levels receive more human interaction and have higher prices. For many years, I have co-owned a health site that presents a client with an exhaustive survey of over nine-hundred questions about diet, lifestyle, and health concerns. The lowest cost output of the website is a seventy- to one-hundred-page health report that is completely computer generated. It is ingenious in its ability to identify hard-to-diagnose health conditions. For those who want a doctor’s input, a higher priced report is available, which includes a doctor’s review of the questionnaire results and customized notes from the doctor.

Incidentally, this health website is also a content website. It has hundreds of pages of information about treatments and conditions and attracts traffic from Google and Bing. Visitors to the website generate both ad revenue and services revenue if they choose to sign up for a health report.

A Quick Word on Outsourcing

Those looking for passive revenue should not necessarily ignore service-based websites because there are many situations where the work can easily be outsourced. Consider a logo design website. The owner of the website receives an order for a new logo. He then sends the requirements to a low-cost designer who creates the logo and sends it back to the owner. In this scenario, the owner’s only action is the handoff between the customer and the outsourced labor. Even this interaction can be minimized or eliminated with the right automated systems.

eCommerce—Selling Physical Products

Who sells $47,000 per minute online at this writing? Amazon.com, that’s who.

More money changes hands on the Internet from eCommerce websites than any other category. All eCommerce websites are concerned with selling physical (or digital) products, and money is received when a sale is processed or when the goods are shipped (or downloaded). eCommerce sites are successful under these conditions:

1. They attract visitors to their website.

2. They convince visitors to buy.

3. They provide a satisfactory product.

4. They provide satisfactory service pre- and post-sale.

Shipping

Either the website packages and ships products themselves, or the manufacturer or distributor drop ships the product to the customer on behalf of the website. Self-shipping of products may potentially increase profitability because the seller may get a better price for inventory from the wholesaler. However, self-shipping means that the website owner must do the following:

1. Buy inventory

2. Stock and measure inventory levels

3. Package product for shipment

4. Ship product

5. Manage returns

These responsibilities require effort and good systems. The fewer product types being sold, the easier it is to manage.

Drop Shipping

As eCommerce has exploded and continues to grow at double-digit rates every year, manufacturers of small items, like medicine and jewelry, and big items, like furniture and automobiles, offer drop-shipping services. For the website owner, drop shipping saves many headaches. The website becomes a pure middleman; its main function is to attract customers, take and track orders, and place those orders with the manufacturer. That doesn’t mean drop-ship eCommerce sites are necessarily easy to operate, but it does mean they can be operated without ever touching the product.

Amazon

Working with Amazon—instead of competing with Amazon—is a strategy many thousands of people have adopted over the past ten years. However you choose to engage with Amazon, they hold almost all the cards. They own and keep the customers (they don’t give you customer contact information, for example); they own customer service and make product return decisions on your behalf; they choose what to sell and what not to sell; and they influence pricing. Amazon lets you in on their game, but it is no secret that the giant is in the driver’s seat. The reason they can do this—and the reason you may still want to work with them—is that the site has a massive customer base. Working with Amazon gives you access to far greater numbers of customers than you could ever hope to attract on your own.

One way to work with Amazon is simply to buy ads. If you are selling a particular shoe, Amazon might show your ad to buyers who have opened a product page for that shoe or other items connected to what you are selling.

“My experience indicates that most people who’ve accumulated a great deal of wealth haven’t had that as their goal at all. Wealth is only a by-product, not the original motivation.”

—Michael Milken

Another way to work with Amazon is to sell on Amazon. That means you offer products that Amazon is either already selling or not selling. If they already sell the product, there is an existing sales page with images and sales copy about the product. If that doesn’t exist, you create your own product page. When a customer buys your product, Amazon informs you, and you ship the product to the customer. Amazon takes a percentage of the sale price of each item sold.

To further simplify the process, you may mail your product inventory to an Amazon distribution center. Under Amazon’s Fulfillment By Amazon (FBA) program, they will ship products to customers on your behalf. Amazon charges you for this service—in addition to the fees for selling your product on its website.

eBay

eBay is, of course, the other monster in the eCommerce space, and it is responsible for making the auction format for buying goods pervasive. eBay store websites do not pop up for sale very often, but it certainly does happen.

Leads

Selling leads can be golden. I have encountered some fascinating examples of websites that collect information and then sell that information as leads to interested parties.

One website I evaluated for purchase provided information to readers about a rare medical condition. The website had about fifteen pages of content and attracted about fifteen-hundred visitors per month. On each page of the website, there was an invitation for the reader to enter his or her name and mailing address to be sent a free information packet with more extensive information about the medical condition. The website owner sent out approximately thirty of those information packets per month. He sold those thirty leads to a medical malpractice attorney for $125 each. The attorney was happy to buy 360 leads a year for a few potential cases that could yield millions of dollars in legal fees.

Recapping from an earlier story, a magician was selling his website that showcased his talents and invited visitors to schedule him for magic shows at birthday parties and corporate events. He began to receive many more leads for shows than he could possibly perform himself. He began to sell each of those leads to an entertainment broker who paid $4 for each lead. The leads came in the form of phone calls, contact forms, and emails. He received $4—regardless of the format of the lead. The broker was happy to pay the $4 because he knew that a high percentage of those leads could result in magic show bookings of $300 to $800 each.

Subscriptions

Subscriptions or membership websites are akin to content websites in that they sell information. However, subscription websites require membership enrollment, and the content is only available to paid members. My coaching program at HeckYeah.org is an example of a subscription-based service.

Subscription websites are attractive because the income stream from a customer continues each month.

Online newspapers now sell subscriptions, just as their physical counterparts have done for years. Training websites are often subscription based. Members have access to courses, papers, videos, programs, tools, forums, and private marketplaces. Subscription websites are attractive because the income stream from a customer continues each month. Each new customer has much more potential value than if you were selling a product with a one-time fee.

Email Marketing

Email is widely used as a method to drive customers to websites where they are encouraged to buy a product or service. Websites using email as a primary traffic source may be more stable than those dependent on search-engine traffic.

Email addresses are collected by displaying a “squeeze page.” Squeeze pages are full website pages or sections of pages that offer something for free in exchange for a name and email address. Free giveaways include things like newsletters, ebooks, white papers, or videos. They are almost always digital, so there is no cost to the owner to capture the email address.

Vendors like Aweber, MailChimp, and GetResponse manage email databases and email delivery so that website owners can focus on the email message content and not the mechanics. To see the tools I use, visit HeckYeah.org/resources.

Some websites build email lists to have an incremental sales channel. Their primary product may be sold on a website, while accessories are marketed to the list. Other websites build lists and use them to remind customers of its brand. These sites consistently provide useful, free content to the list and regularly entice customers to click on links back to the main website where new products are offered for sale.

Comparison of Revenue Sources

The website investor doesn’t consider any particular business model better than another but recognizes unique advantages and risks inherent in each model. Determining which business models are more appealing in view of your skills and preferences and which are in better alignment with your goals can be a big help in narrowing the search for your next website purchase. The chart below compares characteristics of revenue sources, but it is only a general guide since every website is unique:

Revenue Source	Work Requirement per Transaction	Systems Requirement	Knowledge Requirement
Advertising – Contextual	Low	Low	Low
Advertising – Direct	Low to Medium	Low	Low
Affiliate	Medium	Low	Medium
Services – High Touch	High	Low	High
Services – Low Touch	Medium	Medium	Medium
Services – No Touch	Low	High	Medium
eCommerce – Self Shipping	Medium	High	Medium
eCommerce – Drop Shipping	Low	Medium	Low
eCommerce – Partner with Amazon or eBay	Low to High	Low to Medium	Medium
Leads	Low	Medium	Low
Subscriptions	Low	High	Medium

Case Study: Me, a Media Mogul

I sat fascinated, listening to a webinar hosted by successful Internet marketer, and now friend, Eric Holmlund. His guest was a guy who was extolling the virtues of Google News sites. Having your website recognized by Google News as an official news source gives your articles the opportunity to have first-page-search-engine rankings within five minutes after they are published, he said. He showed a live example on the webinar where he published an article with a valuable keyword phrase: “college scholarships.” True to his word, it was picked up and available, high in the search results, about ten minutes later while we were still watching. He was selling a course for $500 that would reveal how to get into the news business and start raking in the dough.

Having cut my teeth in the corporate world, I am conditioned to ask the buy/build question in most project scenarios: Would it be better to buy the course, build my own website, request approval from Google, and if accepted, work to earn money from it? Or should I try to buy a site that is already approved by Google and making money?

If there had been nothing available to buy, I probably would have attempted to go it on my own. But I did find a site or two that had been newly accepted by Google News and had already started collecting traffic and revenue. So I bought in.

I paid $3,500 for the selected website, and the seller was a very savvy business guy who taught me everything he knew about running a Google News site. I began writing news articles myself and soon got into a rhythm that earned me $1,000 in the first full month. I got tired of writing articles, so I hired a freelancer to write for me. See how to outsource in the section “Getting Help” in the chapter titled “It’s Mine; Now What?” I paid him $2.50 per 250 word article, and for that price, he would write the article, post it on the website, and find a picture to go with it. In that first year, I found a number of good writers—and a few not so good ones—willing to work within those terms.

I sent emails to the writers each evening, telling them what to write about and what keywords to emphasize in their titles and articles. I became skilled at figuring out which kinds of articles attracted the most traffic and which ones had the highest payouts per click on an ad. The website paid for itself in the first three months and grew to earn about $2,500 in net profit in its better months. There were other perks too. For example, the communications director of Tesla Motors offered to let me take the company’s all-electric, $150,000 Tesla Roadster for a spin on the test track in California following articles we published about the new car.

Ten months after I purchased that first news site, Google decided that the articles we were publishing did not meet its editorial standards. They de-syndicated the website from Google News, and traffic immediately dropped by about 90%. Nevertheless, with no articles published in four years, money is still trickling in from that website every month. Google was justified in its decision, and I learned the balance between running after high-paying news content and maintaining journalistic standards.

The news story is still in progress. After the demise of the first news website, I bought others. I learned to build them from scratch and earn approval from Google. Some I sold, and others I continue to operate.

My wife homeschools our kids. As a school project, she decided to have them go through the course I created on how to get into Google News. I watched proudly as they created the website, outsourced the design, and recruited writers. Ultimately, the site was submitted to Google for syndication and accepted. It continues to contribute to the family’s income to this day.

I now have excellent, experienced writers who pick their own topics and publish their own articles on my websites every day. This income is very passive, and the websites are solid performers in my portfolio.