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Monetization 101: Introduction To Monetizing Websites

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I had an idea, based on the success of the Marketing 101 sticky thread, that we could collectively create a primer of founding concepts and principles for newcomers to this forum on Monetizing Your Website.



Monetization 101: An introduction to Monetizing Websites


In this thread, I hope we can introduce all the core concepts involved, and really provide an excellent foundation for people looking to add (or improve) a revenue stream to their website.


In this first post, I wanted to briefly introduce the four major types of revenue stream, and also to briefly touch on the other method of monetizing a website – virtual property development, where you build the site up for a sale.


I have written an article before on the four basic revenue streams, which are the easiest method for labelling and defining where monetization for a website can come from. Here I want to target that stuff a little more at sites that may not currently be as 'eCommerce' oriented.



Income from Advertising

This is one of the simplest methods to add a potential income source to any website, and is therefore also one of the most over-used. The basic concept is that if you develop an audience, then other companies are willing to advertise to that audience for the right fee.


Programs such as Google’s AdSense have made this process incredibly simple to begin, but to really make it work you will still need to actually work hard at it. The key to monetizing through advertising is all in building the right audience. In addition to Google's program, there is the Yahoo Publisher Network and many other alternatives.


The ‘right’ audience is one you can appeal to, that is desirable to a sector of commerce which has the willingness and budget available for ad spending. Financial markets, such as loans, mortgages, insurance and such are one obvious vertical market with plenty of deep-pocketed advertisers available, so if you had the knowledge to appeal to the kind of audience those advertisers want then that could be a good choice.


Thinking laterally can help here, so if you have a blog all about fluffy kittens, offering ad space to good companies that provide pet insurance could let you jump into a more lucrative ad market than cat food manufacturers might provide. It could be as simple as just making a couple of blog posts about pet insurance, and how useful it can be, to make Google AdSense trial those kinds of ads on your blog.


The best thing about advertising income is that it is the simplest, and places all the ‘risk’ on the advertiser. The worst thing about advertising is that it places all the risk on the advertiser, and so they pay a lot less in recognition of this.



Income from Commissions

This income source is only one step removed from advertising, and thus is still very easy to add to any website. Here you get to leverage more of your own knowledge and connection with your audience, and take a more active part in promoting products and services in a middleman role.


There are many affiliate programs that make this simple, such as Commission Junction, and Tradedoubler, etc. However, the highest payments usually come from personally negotiated deals that cut out the fees of CJ or its equivalents as 'intermediaries to intermediaries'.


Using commission-based income can be absolutely huge. One only has to look at the king of commission based business models, eBay to see that. Shopping search websites, and Price comparison sites, are further examples of commission-based models. There can be far more to commission-based income than just adding a couple of Amazon links to your website.



Income from Sales

Selling products or services is certainly one of the most direct sources of income you can build. It also tends to give you, the publisher, the most possible control over what you are adding, and how it is presented to your audience.


Many people miss the possibility of a sales-based income on sites that are not directly eCommerce websites. However, merchandise sales have long been a tradition for many purely infotainment type operations.


Café Press have made this another easy addition to any website, enabling any webmaster to add custom merchandise such as T-shirts, cups, mouse-mats, and many more diverse products for sale. Okay, now technically Café Press are a commission-based option in many respects, but they are a cross-over that allows you to sell your own designs, to your own audience, your own way.


Selling eBooks and advice are other well-proven products suitable for adding a direct selling income to an otherwise informational website.



Income from Subscriptions

Subscription-based income is one of the most stable and desirable. Once people have decided upon a subscription, they generally keep paying it almost unquestioningly for a considerable time. Subscription also allows a high ticket price to be made affordable by being spread over time.


The most common products for subscription-based business are either services or licenses, and usually focus around access to a service or resource. Anything that customers may continue to use for a considerable time may be a suitable product for a subscription-based pricing.



Income from Selling Websites

This is virtual property development. It is generally speculative, and of all the forms of income, this is the one with the highest risk of failure when one builds specifically to sell. I think that is because one has more love for a site one intends to keep, and that love helps you keep going where a cold-hearted decision would be to walk away.


To successfully sell pre-developed websites repeatedly, one needs to have mastered all of the basics of at least one other income stream, since you need to be selling these as proven income generators – working business investments – in order to get the best prices.


This is the chosen field for those who love the early challenges, and hate the later management. For people who get bored of running a successful site, and would rather move on and build the next once the first is stable and well-founded.


This can be one of the most lucrative of all income sources, since it is often faster to launch something to a value of three times your investment, than it could ever be to grow an established venture to three times the investment.


I recommend reading the "Selling Your Website” discussion for some further insights on how to get a good sale price by further development of your website.



Over to the Community

Now, with that first post of the basic income types, I’ll make room for others at our 'cre8tive community' to add their own insights and tips. Also, feel free to tell us what revenue systems you’d not previously considered that you might now try. Remember, mixing and matching several different income types is often the most robust and profitable over the long term.

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Income from Sales

If you are going to sell physical products there are 3 options to choose from.


  1. Sell the product and A.N.Other company handles the entire transaction
  2. You handle the transaction but A.N.Other company picks/packs and ships
  3. You handle the transaction, storage, picking, packing and shipping yourself


Option 1 is the easiest as it passes over all the invoicing and shipping issues to another company, but it can also have the lowest margins.


Option 2 can be a great balance if you can find an order fulfillment company whose charges are within your margins. It will work best with products that are non-perishable and simple in what they are, and they do, e.g. a T.V. If you have perishable items, or items that require first hand knowledge of how to use, you can have problems. You may not always know the sell by dates and the fulfillment company may not always send out the oldest stock first. If it is complicated to use, and the customer calls for advice, you are not going to have one at hand help explain things.


Option 3 can give the greatest margins if you have the volume of orders and the right storage, packing and shipping solutions. It gives you the greatest control over your stock, allows you to easily bundle packages together to shift 'old' stock and gives you direct access should a customer require extra information.

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