The 5 Main Ways To Make Money Online

The 5 Main Ways To Make Money Online

When I got started in digital marketing I had no idea that there were so many ways to make money online. For those that may not be familiar with who I am, I got started in digital marketing because I was trying to figure out ways to improve the revenue for the business that I was in. I had no idea the road these thoughts would take me down, but it has been life changing for me and my family.

It’s likely that you’re here looking for ways to change your income and I am going to share those options with you in-depth.

During my 25 year journey of online marketing, I have learned that there are 5 main ways, or buckets, to make money online. It does not matter if you’re looking to make some extra money on the side, or looking to grow an existing business into a revenue beast. You’ll find that your money making options will fall into these 5 buckets.

Once you understand each bucket, it will help you understand your earning potential depending on the bucket you choose. There are many websites that dive into multiple buckets, which you can do too, but it’s best to pick one to start with.

Those that are successful have learned that you need to focus all your energy and efforts in one area when you’re getting started. In the beginning, your resources are limited to your personal time that you can put in, so make sure to stay focused on the bucket you pick until it gets rolling.

The 5 Buckets:

Creating Your Own Product

This one is pretty self-explanatory but there are things that need to be talked about within this bucket.

Creating your own product can be a really cool thing. However, it does come with many pros and cons that the beginner may not think about. Existing businesses may not realize the massive potential behind what they have as well.

When you create your own product, everything is on you. You’re support, returns, damage shipment claims, legal, creator, fixing issues within the product, etc. This list goes on and on. These few examples of responsibilities can be overwhelming at times but there is no doubt, your own product will make you more money than anything else.

When you create a product, you can control what you want to do with it. You can pick the price based on competition and you choose who can re-sell it for you. You may choose to only sell it direct, meaning a customer has to buy it from you directly. The power is in your hands as to what you want to do with it.

If you create a product that appeals to the masses, and your product is extremely desired, you can make a ton of money. Just think of the iPhone. There is competition within the mobile phone market, but as of today, Apple is doing 378 billion dollars in annual revenue. As a side note, that’s enough money to buy a small country. Their products are sticky, which means people will keep paying for them. When you create a sticky product that everyone needs or wants, you’ll make a lot of money.

Of course, this is an example of one of the largest Corporation in North America as of today. Looking at something smaller can offer the same opportunity as Apple had in the beginning. The question is, how many people will want what you have created?

Getting your product going can be hard, but every person that wants what you create, has to send money your way.

So far, we have only talked about physical products. There are other type of products like digital downloads, subscriptions, services, software as a service (SAAS), and many more that fit in this bucket if you create it.

This list of different products can go on for a long time, but this article is not about product ideas, it’s about ways to make money online which is a much higher level question.

Hopefully within this bucket you can see that the sky is the limit because you can choose how you want your revenue multiplier to work. Most companies that start within one of the other four buckets, eventually get in this bucket when they realize they want to 10 or 20X their revenue. They want the full profit margin and not just a small cut of what they’re selling for someone else.

If you're looking for product ideas, be sure to read our blog post on different product ideas for business to create and sell.

Co-Branded Products

Co-Branded Products have many similarities as what you will find in creating your own product. Co-Brand means someone else has invented, and is producing, the product that you’re putting your name on.

Where the similarities come into play is that you’re representing the product as yours, which brings all the responsibly like as if you had created it.

I have heard horror stories of people importing products from other countries that ended up being knock offs of another companies’ product. They ended up getting sued through the nose because they sold millions of dollars of these knock off products, that they had no idea was a knock off. The company that created the product sued them for all the profit that they had made selling the knock offs. This is not a situation anyone wants to find out they are in the hard way.

Why am I telling you this? If you Co-Brand products, be careful and 100% sure that you know who owns the rights to the manufactured product. Many manufactures in other countries will tell you that they created the product. Be careful what you believe and make sure for yourself. Make sure to do your research, forward and backwards, on who owns the rights to what you’re putting your name on.

Once research is done and you’re sure everything is good, you can make a lot of money in this area just as if you had invented the product. Hopefully now you can see why there are so many similarities between your own product and co-branded products. They’re basically the same thing, it just comes down to who invented the product. Was it you, or someone else who is giving you the rights to put your name on it?

The manufacturer that you’re co-branding with will often not give you an exclusive to the product. They want as many re-sellers as they can get, so you will eventually have competition when other re-sellers find your source. This often ends up making co-branding a cheapest price game once others are putting their name on the same product that you’re selling. It just comes down to who will work for the smallest margin.

This is one of the downfalls to co-branding. If you cannot get an exclusive with the manufacture of the product you’re selling, you’ll eventually have to find another products to keep the margins you’re wanting to make.

When you invent the product, this is never an issue. Your issue will be fighting all the knock off manufactures selling your patented product. That poor sole that is co-branding your product as a knock off will likely have no idea what is coming their way.

Co-branding can be awesome, but be sure you know what you’re co-branding and that you have the rights to put your name on it.

Drop Shipping Products

Drop Shipping is a hot topic. Many companies are doing it because you don’t have to carry a lot of inventory that can require a lot of capital. So what is drop shipping?

Suppose there was a person that had a way to get a lot of products but was not wanting to deal with the end customer. This person can start a business to where they can stock all the inventory and ship it when someone else sells it.

They’re basically the middle man between the seller and the buyer. Over the past 10 years quite a few companies have started drop shipping products for sellers.

Often times, when someone is talking about drop shipping they are not referring to being the company that is holding all the inventory. They’re referring to being the seller and working with a company that has inventory to fulfill the product order for them.

The buyer usually has no idea that this drop shipping company shipped the product for the seller that they bought it from. If there are any issues the buyer calls the seller to let them know. The seller then has to deal with the drop shipper to figure out what they are going to do to help the buyer. In some situations there can be a lot of back and forth communication depending on what the product is.

Drop shipping is very popular because you can start up a boot strap business or one that cost very little to get going.

There can be a lot of variations to how drop shipping is set up between two companies but the concept works the same way. Someone holds the inventory and a seller sells it to a buyer.

When you dropship products from companies that have specifically set themselves up as a drop shipping company it can sometimes be difficult to make a decent profit margin. This is because the drop shipper had to buy the product from the manufacturer. Then they had to add a profit margin on the cost so they can stay in business. Then you the seller comes along and has to add margin to the cost again so you can stay in business. Basically there are too many price increases for you to be competitive when you try and sell it.

If you try to import products from another countries, this will add a large cost to the product because of shipping. Importing products from other countries often will only work when you can ship full containers of product. Trying to ship a small amount of product over seas will often double the cost of the product.

One of the most popular places for sellers to buy from that represents this is AliExpress. If you look at the prices that you will pay for products on AliExpress, then search for that product on Amazon, you will see that there is often no money to be made. As an example, you will pay $65.00 for an item on AliExpress but sellers on Amazon will be selling that same item for $75.00. That’s only a 13% margin. Most businesses need to make at least a 25% to 30% margin for it to make sense. In cases when the product prices are high, let’s say $1,000, you may still be willing to do it. But for low-cost products it often won’t make sense.

I have told you where drop shipping does not always work, but what about where it does work?

Drop shipping works best when you can get deals directly with the inventor or manufacturer. Suppose there was a manufacturer that was creating designer lamps. They sell them to you at a 60% discount off of retail price that they have set. In this case you would only have to increase the price one time for your margin based on the cost they are offering you. There is no middle man creating a second margin increase like these drop shipping companies do.

Dealing with the direct company that is producing the product, and keeping it in-stock, will more likely result in you being able to get a 30% margin when you sell the item at a completive price.

As you sell more products your discounts off the retail price can get better which will make it harder for competing companies to compete against you. This usually happens when your relationship becomes more valuable to the company that you are drop shipping for. Meaning, you are driving a lot of revenue their way.

If your bucket is drop shipping, do everything you can to get a deal with the direct manufacturer or brand of the product. Dealing with middle guys often makes it not work out like you would hope.

Affiliate Promotions

Affiliate marketing is the bucket to be in if you want 100% hands off. This is the bucket that makes it extremely easy to monetize a website that has good content and targeted traffic. The content and traffic is usually super targeted to specific niches or topics. So what exactly is affiliate marketing?

Every company that has created a product is looking for a way to get more buyers for their invented or created product. Affiliate marketing is one of the buckets that they will use to get those buyers. They will offer you a sales commission for you sending your website traffic to them when they buy.

I use “buy from” them loosely because there are more ways that affiliate programs work than just purchasing a product. Let’s talk about a few of the more popular ones.

Affiliate text links or image ads

Most affiliate programs fall under affiliate links or images. Suppose you have a site or web page that talks about some of the best home office desks. More often than not, they will create a list within this page of content and list out all the home office desks ranking from best to worst. Within this content they will embed links to the product that they are talking about. The link is not a normal link. The link will have parameters in it to tell the affiliate company who referred that traffic.

Here’s an example of what the link will look like.

https://www.robcuppett.com/product-name.html?affiliate-id=55214

Side note… sometimes affiliate website owners will mask the links so you cannot see the ending URL destination. They will do this so anyone who knows what an affiliate links looks like will still click on it so they can hopefully get a commission if you buy.

If you look at the end of this URL you will see where it says “affiliate-id=55214”.

The 55214 tells the affiliate company who sent this visitor to them. If the visitor buys the product they know to give credit to affiliate account 55214.

The company fulfills the order and you get paid a commission.

Let’s talk about cookies for a minute. Most companies that offer affiliate programs will set a cookie on the computer of the visitor that you sent over to their site. These cookies will usually last between 1 and 9 weeks. Most affiliate companies advertise that you will get your commission if the buyer purchases within the cookie timeframe they set. Based on all the programs that I have looked at, that would be thousands of them, 30 days seem to be about the average.

Let’s talk about affiliate program networks for a minute. There are a lot of affiliate networks that try to get a cut of everything you do. These affiliate networks work similar to the drop shipper. However, they are a middle man creating a way for a company to have an affiliate program to begin with. Not all websites have the software to run an affiliate program so they will use one of these networks.

Affiliate program networks have pros and cons. The biggest pro is that the company is able to offer the affiliate program through the network. You also know that there is a third party involved to insure you will get paid for all of your sales. It makes it more difficult for the company to cheat you out of commissions.

I have personally experienced this too many times. For one of my sites I was focusing on debt negotiation. A company was paying me out monthly and they owed me for about 40 customers that I sent their way that signed up for their services. They were paying me $150.00 per customer I brought them and they stiffed me the full $6,000.

I could have spent a lot of time trying to get that money but I had so many other pots on the stove that my time was better spent somewhere else that would make me more money. The point is that these networks can help insure this does not happen.

There are a lot of pros going direct though. You can often negotiate a better payout as the middle man is not involved. Over the years I have learned to just ask to be paid more frequently when I am noticing that the balance owed to me is a decent amount.

Overall, affiliate text links or images are the most popular type of affiliate programs you will run into.

Cost Per Lead (CPL)

I love cost per lead because I don’t have to get a website visitor to give me a credit card to get paid a commission. This is where you put a form on your site for a user to request more information or a quote on some product, service, etc. If your website visitors fill out the form you get paid a commission. These commissions will back into an acquisition cost so you cannot send them junk leads. Sending them junk leads will just get you banned from their affiliate program.

The better your leads convert into sales the more they will pay you per lead. Quality leads are worth a lot of money to every company. Some companies will require that the form be filled out on their site. This is to help with junk leads not being posted into their leads database. They can control the validation of what is posted much better. As you prove yourself, some companies will allow you to start doing host and post. Host and post is where you host the form on your site and post the lead data to them.

Pay Per Call

This one is straight forward. The affiliate company will give you a phone number that is only yours that calls into their call center. For every valid call you send them you get paid. A valid call can vary depending on what the call is supposed to be for. They can have great payouts because your website visitor is calling and that usually means pretty high intent or desire to know more about the product, service, etc.

Pay Per Click

Pay per click can referrer to two different things. When you buy ads to get traffic to your site this is called Pay Pre Click. However, you can also be paid for every click or visitor you send to an advertiser. The Pay per click I'm talking about is where you list companies on your site and you get paid for each referral you send them. Just like everything else, if you click the listings or try to have your friends click the listing you will get kicked out of the program. They are watching for bad clicks and when none of your clicks turn into a customer, they can kind of figure it out.

Lastly, while this is the hands off / easy money to make, it’s typically the hardest to get traffic for. Your traffic intent has to be super high to where you rank in search engines for buying search terms. It’s much easier to rank for informational terms where someone would not be looking to buy versus terms that have commercial intent to buy.

While this might sound like the right bucket for you, make sure you understand what it takes to rank in search engines organically by using SEO tactics for the topic you pick.

Ads

Ads, ads, ads. We see them all over the internet on so many websites. When we think about ads, just like most of the topics in these 5 buckets, they can go in different directions.

Google is currently the second largest revenue generating company in the world. Just slightly behind Apple as of this writing. Google’s revenue is predominantly ad revenue. When you do a search on their site, they list different types of ads. Text ads, shopping ads, image ads, etc. Companies are paying Google to be listed in these ads so they are visible when people search for things.

Google ads cost more than anyone else’s because their ads convert into customers better than anyone else’s traffic. The intent behind their traffic is the best you can get. They also have the largest amount of traffic that gets pushed into these kinds of search ads, which makes it more desirable.

Let’s think about this for a minute and compare a few ad platforms.

Google – a user has to search for what they want, they see companies that offer what they searched for, and they visit your site to learn more.

Facebook – Facebook shows ads within content that you’re reading, they click the ad to see what is on the other side.

These are two of the largest ad platforms, so we will stop here. What traffic would you want coming to your site? Would you want the visitors who knew what they wanted and searched for it or would you want the person that saw an ad and clicked it while reading some content.

There is no doubt that the user that is searching for something has a much higher chance of buying what you’re offering then someone who was reading an article and got distracted by an ad. There is a reason that you can still bid for some competitive keywords on Facebook for $1.00 and that same keyword on Google might be $12.00 per click.

In this ads bucket we first talked about companies that sell ads but most website owners earn money from ad companies. Let’s talk about how you can make money with ads from products like Google AdSense.

Larger websites, with lots of traffic, will usually run ads on content that have poor intent. This means that the content on these pages are often informational pages and have no commercial intent. Informational pages can be hard to monetize because there is nothing to be sold.

These are often pages of content where it might be news, general information like definitions, etc. There is no intent of someone looking to buy. Sometimes intent can be somewhat okay but there are no affiliate programs currently available to monetize the page. This is when ads kick in to try and make a little more money than nothing.

The last thing I’m going to talk about in the ads bucket is Ad Exchanges. Ad exchanges are very popular for sites that start to get more than 100,000 visitors a month. Why 100,000 visitors?

Prior to 100,000 visitors coming to your site a month, an ad exchange will not benefit much. Ad exchanges make advertisers bid on your site for ad spots. When advertisers see that your traffic is low they often won’t waste their time to be on your site. They typically look for at least 1,000 CPM’s (will talk more about CPM’s below) for it to be worth their time. Once you get to that number you can increase your CPM payouts from 2 to 3 dollars to upward of 15 to 20 dollars depending on the intent of your traffic to a page or category.

What Are CPM's and Why They Are Important?

CPM stands for Cost Per Mille. Mille means 1,000. So if we put it all together it means that for every 1,000 impressions of ads, affiliate links, etc., we’re are going to be paid X amount. With that explanation, CPM’s are the core matrix of how much money you can make with any site or page of content.

Every penny earned on a site is calculated by CPM’s when you are trying to make as much as you can. This is true no matter the bucket you’re in, it will tell you if you’re maximizing the revenue of that content or if there is something better you could be doing with it.

Keep in mind, while you're calculating CPM's as a site owner, most companies are calculating an acquisition cost. Meaning, they are watching how much they have to pay you for each sales. If their profit is not hitting a minimum they're looking for, they'll lower your payout. If they are making more than their minimum, you will want to negotiate a higher payout from them. You understanding the intent or quality of your traffic will help you know when to ask for a larger commission.

Calculating How Much You Can Make

We have talked about a lot of things within this post. It’s a very high level overview of how to make money online. Now we are going to talk about how to calculate what that would mean to you based on what bucket you choose.

Once you understand this formula you can calculate any topic and what you think it could payout if you went after it.

Here’s the formula:

((Traffic * Click Through Rate) *Conversion Rate) * Payout

Let’s suppose these are our numbers:

Traffic = 1,000 visitors a month. This would be 1 CPM.

Click Through Rate (CTR) = 40% - This is the number of clicks we think will interact with our affiliate deal once a user is on our site.

Conversion Rate = 5% - This is the number of visitors that have interacted with the affiliate offer. A conversion rate can vary a lot. As an example, an average conversion rate for ecommerce site (someone buying a product) is about 2 to 3% for a non popular branded site. If it’s a lead form it can be much higher because no credit card is required to request more information. This number can change a lot depending on what the offer is and what the customer has to do to convert.

Payout = $20.00 - This is how much you will be paid if the user does what it takes for you to get paid.

Let’s put the numbers in their real places within the formula.

((1000 * 40%) * 5%) * $20.00 = $400

Using these numbers, we are saying that this deal would make a $400 CPM. We used the traffic amount of 1,000 which is 1 CPM for $400. If our site was getting 2000 visitors that would mean we have 2 CPM’s and now our income potential is 2 CPM’s X $400 = $800 a month. As your site traffic grows, your earning potential grows with it. If you start to rank for more informational search terms it could make your CPM’s go down because searcher intent to buy is lessening within the amount of traffic your site is getting. If your searcher intent gets better, your CPM payout will increase.

To put this into perspective, most text ads will pay a CPM of about 2 to 3 dollars. You have to have a lot of traffic coming to your site to make any kind of real money off of text ads. Keep in mind, this 2 to 3 dollar CPM can get better if you start to get enough traffic for any Ad Exchanges to start bidding on your traffic.

This CPM of $400 would be more for a product sale with a high conversion rate of 5%. Popular brands can bring higher conversion rates when buyers are familiar with who they are buying from. Sometimes if a more popular brand offers you close to the same payout as a smaller brand, you would go with the more popular brand hoping to have a higher conversion rate.

If you don’t already have a site and are trying to figure out what to do, you should do these numbers for products around topics you know and can really write about? Visitors can sniff out poor content really easily and figure out if you really know what you’re talking about.

Look at yourself as an example, if you have made it this far in reading this, you can tell I know what I’m talking about. All the extra details and statistics within this content not only prove knowledge but also experience. Someone who is not a savvy digital marketer would not be able to give all of these details and examples. It just won’t happen. We have all read these types of posts to where there was no substance. We can tell it was not written by someone who really knows the topic from doing.

If you have to study the topic because you know nothing about it, it can be sniffed out. Pick a topic that you know. Understand the bucket you’re in. Study the topic CPM to know if it makes sense. Study the difficulty of the keywords using software tools like ahrefs to see if the topic is currently out of your league because you will have to compete with giant companies.

Wrapping This Up

You may not be an expert in the topic you pick today. But if you can become an expert or know more than the average person on the topic, you can go after it. Just make sure the numbers make sense and you can write about it with without getting frustrated and you will have a winning online business on your hands.

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