Analyzing Key Online Monetization Methods

There are many ways to make money on the Internet. In fact, the only limit really is your imagination. However, to give you a systematic and methodical breakdown of the most common approaches to making money online, I’ve outlined key monetization methods that you should pay attention to.

This list is by no means an exhaustive list. This is not the end-all and be-all list of the ways you make money online. However, by having a clear idea as to how these general monetization frameworks work; you can go a long way in customizing your own monetization methods so it can yield the most results possible in your particular situation and set of circumstances.

You have to remember that when somebody says to you that there is a “best solution” for your problem, chances are they’re just basically blowing smoke your way. The reality is that what’s best for somebody else might not necessarily be best for another person. In many cases, a solution that is often touted as the “best” might turn out to be quite horrible.

To help you get all the information you need so you can make a truly informed decision regarding the monetization method you should focus on as you try to make money online, I’ve outlined in broad terms the most popular methods below.

Advertising

Advertising is the most common online moneymaking method. Basically, you have traffic and you sell a space on your website, your email updates, or your other online properties to people looking to get their marketing materials in front of the eyeballs of the people that make up your traffic volume. It really is that simple.

It’s all about buying and selling exposure. You have traffic volume, and you’re selling ad exposure to people interested in that traffic volume. Pretty straightforward.

The advantages of advertising

The advantage of advertising is that it’s a pretty straightforward business model. As long as you are clear as to the demographic profile of the people that are visiting your online property as well as the technology for rotating ads, advertising is actually a pretty simple way to make money online.

In fact, there are many advertising platforms that will just give you a line of code, you just need to paste this line of code on your website, and they will manage your advertising tracking for you. More importantly, they would manage the recruitment of potential advertisers on your website.

Since, advertising is one of the oldest forms of making money online, there’re so many advertising platforms out there that you’re really not going to run out of potential advertisers looking for your particular ad inventory.

Disadvantages

The big disadvantage with advertising is you have to have traffic in the first place. The way the system is set-up is that most advertising platforms are looking for websites that have a high volume of traffic. Since not everybody has high traffic and high-volume websites, this can be a serious problem.

Also, this over-emphasis on traffic volume often overlooks the fact that in many cases, advertisers would pay more money for lower volumes of traffic as long as that low volume of traffic is highly specialized and has a higher likelihood of actually converting into buyers of products or services.

It’s very easy to get stuck with an advertising platform that pays you much less than the value of your traffic. This is the price you pay for basically outsourcing the task of recruiting advertisers for your website.

Affiliate sales

Affiliate sales is one of the most powerful ways of monetizing your website. Basically, you join an affiliate program and pick a product or service that you think your traffic would be interested in. You sign up for the program, and you get an affiliate link. You publish the affiliate link with your content or you place it on the ad rotation system of your website. When your website’s visitors click on the ad and they buy, you get a commission. Alternatively, if they click on the affiliate link, and they leave their email address on an email-collection form, you make a commission.

Affiliate marketing is really a more focused version of advertising because instead of you joining an advertising network and running random ads, you are actually deliberately seeking out affiliate offers that are more tightly related to the focus and the subject matter of your website.

The big advantage of affiliate sales

The big advantage of affiliate marketing is that you have a lot more choice as to the products or services that you’re going to advertise to your website’s visitors. Compare this with a typical advertising network that can involve a random collection of ads. Sure, these ads might be targeted to the general category of your website but to really make money online; you need a higher level of targeting. This is precisely what affiliate sales brings to the table. You can get a hold of products and services that you have a high level of confidence in selling to your website users.

Another key advantage of affiliate sales is that it operates on a take it or leave it basis. It’s completely self-served. So you only need to go to an affiliate platform, pick out the offer you’re interested in, plug it into your website, run some tests. If you make some money with certain offers, you stick with that offer. If it doesn’t pan out, you can then swap that out with another code. There’s a lot of flexibility in this type of system.

The disadvantages of affiliate sales

Just like with anything else in life, there is no such thing as a solution that only has advantages. Everything has a disadvantage and affiliate sales is not immune to this fact.

The big disadvantage of affiliate sales is that you’re essentially splitting the value of the product that you’re selling. Even if the producer of the affiliate product is willing to give you 90%, you’re still letting go of the 10% you could be making.

While many people would be more than happy with this kind of split, this actually works to your disadvantage in light of the fact that you assume of all the risk. You have to remember that in an affiliate sales marketing model, the affiliate assumes all the risk. You only get paid when you convert your traffic. You only get paid when you generate a sale. You put up with all the risk.

You pay all the costs, and the specific split that the affiliate program might be giving you might not be big enough to be worth all that risk. This is why it’s always a good idea to constantly shop for bigger and better affiliate offers that can convert your traffic well.

Lead generation

Typically, when people talk about affiliate marketing, they think about publishing a link that leads to a sales page. When a user buys something from that sales page, the affiliate makes a commission. Pretty straightforward.

Lead generation is slightly different. Instead of you earning a commission based on every sale, you earn a commission when your traffic goes to a page and enters their email address. You make money for every lead collected.

Of course, it’s not as simple as this. While there are certain lead generation offers that only ask for one or two pieces of information, the higher-paying lead generation offers actually ask for quite a long list of information. Keep this in mind when thinking of using lead generation as a way to monetize your website.

Advantages

The big advantage of lead generation as a way of making money with your website traffic is that you don’t have to sell anything. People don’t need to whip out their credit cards for you to make a commission. They only need to fill out a form with their information and if that information is confirmed, you get paid a bounty.

Don’t sneeze at this model because certain lead generation programs pay upwards of $50 per completed form. This is not chicken feed.

Disadvantages

The big disadvantage of lead generation as a monetization model is that the more lucrative lead generation programs ask for a lot of information. It doesn’t take a genius to figure out that the more fields a particular form has, the more barriers to conversion there are.

Put yourself in the shoes of people visiting your website. When they land a lead sign up page or a squeeze page, chances are they might be intimidated by all the information that you’re asking for. While you probably wouldn’t have a problem getting somebody’s email and name, you probably will run to a lot more resistance if you ask for credit information, credit card information, educational history, so and so forth. The general rule of lead generation is that the more information you ask for, the lower the conversion.

There’s a reason why certain lead generation programs pay a lot of money. It’s because they’re not stupid. They’re not in the business of giving away money. They know how hard it is to generate leads with forms that ask for many pieces of information.

Sell a digital product

Another way you can make money off your existing traffic is to sell digital products. I really like this model because it actually gives you a lot of control. Unlike a physical product which is usually manufactured by somebody else or an affiliate product which is produced by a person or company outside of your control, when you sell digital products, you actually have a lot of control over the final product that you are pushing.

Let’s face it. If you want to make money online, you have to develop a solid online brand. Building a solid online brand that people can trust and is highly credible takes a lot of work. It takes a lot of sacrifice. It takes a lot of patience. You don’t want to flush all that down the toilet by basically products that erode trust, right?

Unfortunately, that is the risk you take when you’re selling affiliate products because it only takes a few complaints for people to associate your online brand with bad affiliate products. It only takes a few bad experiences for people to think that you are abusing them by advertising shoddy, substandard, or low quality products on your website.

Advantages

The biggest advantage of selling your own digital products is you can retain a high level of control over your online brand by ensuring that the quality of the digital products that you’re selling reflects your brand values. Control is crucial when you are trying to preserve your online brand, and this is the biggest advantage of selling digital products on your website.

Another key advantage is you keep all of the profit. Unlike selling an affiliate product or service where you basically have to be content with a percentage of the proceeds, when you sell your own digital product, you get 100% of the revenue.

Disadvantages

The big disadvantage of selling your own digital product is that you really have to take the time, effort, and energy to truly know what your website visitors are looking for. This can take quite a bit of time. This definitely takes patience.

If you make the wrong guesses, whatever product you sell probably won’t sell at that well. You probably will end up wasting your time. In many cases, it takes several bites at the apple for you to finally get things right. This is the key disadvantage of selling your own digital product because you have to pay for the learning curve.

Another key disadvantage is that you have to pay the costs of developing that product. Unless you’re an excellent writer, you have to hire a writer to produce your digital product. Your cost skyrockets if the product that you are pushing is a software product.

Regardless, in my opinion, the disadvantages of selling your own digital product are greatly outweighed by the advantages selling a digital product brings to the table.

Sell a physical product

One powerful way of making money online is to sell a physical product on your website. This is pretty straightforward. You show a link to a particular physical product. Your website visitor likes the picture, clicks on the link, likes what he or she sees, and buys. The moment they buy, you get a percentage, or you get the full value of the product if you are selling the product directly.

The advantages of selling a physical product

The big advantage of selling a physical product is like selling a digital product. You get the full value of the product. This is the only advantage. Seriously. If you’ve done your homework, and you offer the physical product that your visitors are clamoring for, this is the key advantage that you get.

Disadvantages

The big disadvantage with selling a physical product is that it can easily become a headache. Sure, nine times out of ten, sales for physical products on your website will go through without a glitch. The problem is that 10%. That can cause all sorts of problems. Not only you have to pay for shipping costs; you have to pay for labor costs to handle the claims’ resolution. Also, your brand might get damaged if people feel that you ripped them off. All sorts of unnecessary drama come into play when you sell a physical product.

This is why I suggest highly that you sell only digital products. Not only are digital products easier to scale, there are less headaches and hassles associated with them.

Content subscription

If you already get a lot of traffic to your website, you might want to step things up to a notch by offering premium content to your website visitors. If your website traffic pattern involves a lot of highly loyal visitors, it’s a good idea to consider a membership or subscription-based business model. Basically, you set up a certain section of your website with special content that your visitors will pay a monthly subscription to access.

Advantages

The big advantage of a subscription monetization model for your traffic is that you get recurring income. In many cases, you get passive income. Once people subscribe, you make money month after month from those subscribers. You only need to publish that content once and then every single month; you make money through automatic subscriptions paid by people who want to view that specialized content. This is pretty straightforward.

Another key advantage is that this is completely passive income. You only write the content once and set up the payment wall and you basically make money month after month without lifting a finger because people sign up for a subscription area to your website, and the money comes automatically. As long as the subscription is alive, you make money off content that you worked on once in the past. How amazing is that?

Not only did you work once and make money times over selling that content to different people but every single month they pay you again and again just for the right to access that content. It doesn’t get any better than that.

Disadvantages

The big disadvantage of a subscription monetization model is that you have to have content that is worth subscribing to. This is easier said than done.

You have to remember that the long-standing category of content that people would willingly subscribe month after month for to access is of course pornography. Other than that, it’s really anybody’s guess, whether people would sign up for your content. Moreover, when they do subscribe, chances are they would unsubscribe after only a couple of months or a few months. It’s really important to focus on offering high-quality content that people would want to sign up for.

The problem with this is that this necessarily explodes your content generation cost. As you probably already know, if you produce content cheaply that your visitors can find anywhere on the internet, chances are they wouldn’t pay for that kind of content. They’re more likely to pay for content that is relatively rare. Unfortunately, relatively rare content also tends to be expensive content.

Donation or Pay What you Want

Have you ever gone to a subway and there’s a great singer there with a guitar? Maybe the singer sings such great songs that you just can’t help but dip into your pocket, whip out a few dollars, and put it in a basket or guitar case.

Well, you can use the same business model for your website. Maybe your content is so great that people wouldn’t mind donating a few bucks here and there.

Don’t sneeze at the donation monetization model because those few extra dollars here and there actually can add up to quite heavy volume of cash. In fact, a lot of the best content websites on the Internet are funded primarily through donations and guess what? The people behind those websites are not exactly starving. In fact, many of them are quite well-off.

Advantages

The advantage of a donation monetization model is that there is no fixed price for what people have to pay. When people are given the option to pay you only based on how well they appreciate your content, you would be surprised to how liberal people would be when it comes to giving you money for your time and effort.

One of the biggest problems content websites run into is when they price their content in such a way that it turns off a large chunk of their viewer ship that these websites end up suffering. By charging for your content but setting the price on a voluntary donation basis, you can actually go a long way in driving revenues. Give people the option to donate on their own terms and on their own schedule. You’d be surprised to how much money you can raise.

Disadvantages

Since the payment for your content is to be done on a purely voluntary basis, you can well imagine that there’s a tremendous amount of pressure put on you in terms of content quality. You can’t just publish crappy content and expect people to donate. It’s not just going to happen that way. People are usually only pushed to donate if they feel that they got their socks knocked off by the amazing quality of your content.

Unfortunately, quality content doesn’t grow on trees. You have to either pay a top dollar for such great content, or you have to spend a lot of time and personal energy coming up with that content. The bottom line is high-quality content that is worth donating money for can cost a pretty penny.

Commission sales

One of the most lucrative ways to make money online with your traffic is to buy and sell websites or digital properties. You make your money through commissions. Just like with real estate sales, any deal that involves a lot of dollars would obviously involve a heavy commission.

The only limit to the things that you can make a commission off of is really your imagination. You buy and sell websites in your niche. You can buy and sell social media accounts. There is really no limit as to the kind of product or service that you can sell for a commission.

Advantages

The big advantage of a commission-based monetization model is flexibility. You basically have a free hand as to the kinds of things you can sell, the way you sell them, the way you position them, so on and so forth. In most cases, when you work on a commission basis, you get a lot more freedom than when you are trying to sell stuff as an affiliate.

Disadvantages

The big disadvantage of commissions is that you really have to know your traffic well. You might have a great deal as to the kind of product that you want to sell on a commission basis but if your relationship with your website members hasn’t reached a point where they would actually trust you to buy whole websites or whole products from you on a commission basis, it might be hard to pull this off.

The workaround to this is to sell lower value stuff first by joining affiliate program or selling your own digital products. Once you establish a high enough level of trust, then maybe you can scale things up to pricier items.

Coaching

The main reason why people use the Internet is because they have questions that they need answered. They have problems that they need solved. They have needs that they need filled. People are always looking for solutions.

A coaching monetization model focuses on the fact that you may have specialized information that people would want to know. They might want to do what you are doing. They are looking for mentors. They are looking for teachers. You get paid when you teach these people to do what you’re doing to make money online.

Advantages

The big advantage of coaching is that it usually works on a subscription basis. When somebody signs up to be coached by you, they usually pay you several hundred dollars every single month.

So as long as the coaching relationship exists, you can collect the subscription fee month after month. If you are coaching several people, this can translate to several thousand dollars on a monthly recurring basis. In other words, even if they don’t talk to you, or even if they don’t show up for your coaching sessions, as long as you show up, the money continues to roll in. In many cases, coaching can become a passive income stream depending on the work habits of the people that you are coaching.

Another key advantage of coaching as a monetization model for your website is that you’re not really doing anything new. You are basically just teaching people what you already know. As long as your communication skills are relatively good, you can make quite a bit of money with coaching because you’re not researching new stuff. You’re not retraining. You’re not using specialized equipment. You’re basically just telling people what you know because they want to do what you are doing.

Disadvantages

The big disadvantage of coaching is that people have to view you as credible and authoritative enough to be a coach. In other words, they must look at you as an expert. And it takes a while to become an expert. It takes a while to be regarded as an expert. It doesn’t happen overnight.

The workaround to this is that you can generate high-quality content that you can share with your website visitors and really walk them through the process of buying professional coaching services from you by offering free samples. By coaching people for free in the beginning, the word might spread that you’re this amazing online marketing guru who eventually people would line up to pay you premium dollars for one-on-one coaching.

Freemium

One of the most popular ways to make money off website content is the freemium model. You basically lay out content that your website visitors find useful. They keep viewing this content, and they build a lot of trust around that content. Finally, they reach a point where they can’t get enough of the content you’re offering that they’re actually willing to pay for a premium version of your content. In other words, you’re going to be spilling secret information or value added information, and they’re willing to pay you on a monthly basis a premium fee to access such material.

If this sounds like the membership content model described above, you are absolutely right. However, freemium goes beyond content. You can actually offer software as a service and leave out certain features as a freemium feature.

For example, if you are offering an online grammar checking service, people can use most of the features of that software for free. But if they want certain features like duplicate checking or engagement level analysis, they have to pay extra. That’s where the freemium model kicks in. You don’t charge anything for most of the features, but these features should develop enough interest that it pushes people to pay for additional features. That’s how the freemium model works.

Advantages

The big advantage of a freemium monetization model is you basically demonstrate the value of your product or content to your target users before they spend a red cent. This is tremendous because there are too many software services available online where people are expected to pay upfront. That turns off people. That turns off potential buyers.

By giving people a free taste test, you increase the likelihood that they need the freemium service and most importantly; the freemium service is worthy paying extra for.

Another advantage of the freemium model is that it’s scalable. You basically use the positive experience of people using the free features to spread the word about your content or your service software website through social media like Facebook, Twitter, and Pinterest. This saves you a lot of money on marketing costs. Instead of you having to master SEO or pay a pretty penny for Facebook advertising, people who are happy with the free features of your website would gladly spread the word about your website.

This is why many websites that use a freemium business monetization model actually have hundreds of thousands of users. Make no mistake about it, a certain percentage of those free users convert to free members. In fact, if you structure your monthly subscription rates properly, you don’t need to convert a high percentage to generate a huge amount of income from your software-driven website or content membership website.

Disadvantages

The big disadvantage with a freemium monetization model is that it takes a long time to develop a critical mass where you can convert the huge base of free users into monthly recurring subscribers. In many cases, you have to wait several years for you to get that critical mass.

CPM

CPM advertising monetization model is called cost per mill or cost per thousand. This monetization model pays you money every time a banner ad or some sort of advertising placed on your website shows up 1,000 times. It’s a volume-driven monetization model.

You get a code. You paste it on your website’s HTML code. When an ad shows up enough times, you get the agreed-upon amount.

This used to be the primary way businesses advertise online. Not anymore.

Advantages

The big advantage of CPM is that it’s a lazy man’s way of making money online. Seriously. You just get a piece of code, plug it into your website, and it would show an ad. Every time the ad shows up 1,000 times, you get paid the CPM designated amount.

While most CPM rates are quite low – we’re talking about less than $10 per 1,000 views – there are highly lucrative CPM deals for specialty niche markets like debt consolidation, financial services, and stock rating accounts. In such cases, the CPM rate might be $50 or higher.

The best part of this all is that it’s a completely lazy business model. You just kick back and wait for the traffic to load up all these ad viewings and you make your money.

Disadvantages

The big disadvantage of the CPM model is that you have to have traffic in the first place. If you have a website that has a low traffic volume, you’re not going to make money off CPM.

Also, another serious disadvantage to CPM model is that most CPM niches pay really little. We’re talking about $1 to $5 per 1,000 views. This is because niches these ads target might not be good fit with your niche. You’re basically hoping to sell your junk traffic to somebody that’s willing to pay a small amount of money for it.

Finally, another serious disadvantage to CPM is that you are at the mercy of ad networks. Most ad networks won’t pay a high amount per 1,000 views.

Worst of all, they would cap the amount of money they pay you by counting the advertising view a certain way. In an ideal world, you get paid the CPM rate if the ad shows up a thousand times. This can involve one person just loading the page 1,000 times. However, many advertising platforms no longer allow that so in many cases, they require 1,000 unique views. In other words, 1,000 unique people loading the ads. This is a death sentence for websites that have very low traffic volumes.

PPC

Pay-per-click is one of the most popular ways to monetize websites. The biggest example of this is of course Google AdSense.

A pay-per-click ad is pretty straightforward. You have content on your website and the text ad would try to determine the context of your content and show relevant ads. This increases the likelihood that somebody would click on the ad. When the website visitor clicks on the ad, you make money. Similarly, the PPC network might show certain picture ads with your content depending on the categorization of your content. Again, when a site visitor clicks on the ad, you make money.

Advantages

The big advantage with PPC is that it’s basically a lazy way of making money online. You only need to put up a snippet of code, and the ad software would do everything else. It would find the advertisers. It would find the context. It would find the category. You just need to sit back, relax, and collect our money.

Sounds awesome, right? Well, read the disadvantage section below.

Disadvantages

The big disadvantage with PPC is that it’s all niche-driven. Not all clicks pay the same amount of money. If your niche is not very lucrative, for example, the pay-per-click rate in your niche is a few cents, that’s how much money you will be making off your traffic. That’s pathetic.

The sad reality is that for an ad to get a click, you have to show the ad many times to get that click. And to show an ad many times, it means you have to have a large amount of traffic.

It’s very easy to waste a lot of time, effort, and energy with PPC ads because you spend all these resources pumping up your traffic but at the end of the day, only a few clicks and those clicks are worth a few pennies each. Talk about a waste of time.

You have to be focused on the right niches for PPC ads to be worth the bother.

CPA

CPA is shorthand for cost per action. A CPA model is basically a catch-all model for all sorts of affiliate systems that pay you for a wide range of actions that your traffic performs.

The most common CPA action that advertisers will pay for is a sale. So if you show an ad and somebody visits your website, clicks on the ad, and buys whatever it is the sales page is selling, you make a commission.

There are other CPA models out there. They can enter an email into a form, or they can enter a zip code or they can download a software. Whenever the person visiting your web page performs an action, you get paid.

Advantages

The big advantage of a CPA model is that you get a lot of freedom regarding picking out offers that you think would work best with your particular traffic. For example, if you own a website that focuses on baby shoes, you can find CPA offers that focus on promoting baby shoe products. Since there’s a tight correlation between the topic your website or blog specializes in and the CPA product that you are pushing, chances are high that people would click the CPA ad, and you can make money.

Also, CPA ads can be swapped out at any time so you have a lot of freedom. You have a lot of flexibility.

Disadvantages

The disadvantage with CPA is that in many cases, you might be in a niche that is not an exact match for a particular CPA advertiser. This can be a problem because in many cases, you can only really convert your traffic if it is tightly related to the CPA offer. If it is only partially related or somewhat tangentially related, that might not be enough. As a result, you might end up wasting a lot of time, effort, and energy driving all that traffic but at the end of the day, have very little dollars to show for all your effort.

Group buy

One powerful monetization model you can employ is a group buying method. You can partner with Groupon and other group discount buying platforms and you can gain a commission by recruiting people to engage in group buying activities.

This is pretty straightforward. Basically, you show an ad and when people click on the ad, they see the details on how the group buying system works. The more people sign up, the more money you make.

Advantages

The big advantage with group buying systems is that they work best with niche websites that teach people about certain niche products. When people interested in these niche products want to save money, they would be more likely to join a group buying network.

Disadvantages

There’s really one major disadvantage with group buying and in most cases, it’s a deal killer. The big disadvantage is that there might not be an advertiser for the particular range of products and services that the visitors to your website are looking for. In other words, there’s really nothing to buy on a group buying platform because your website is too niche-specific.

Keep this in mind. There are certain niches that are so specialized that the group buying platform doesn’t really work.traffic behaviour, of course, depends on the specific paid traffic platform that you use. I’ve outlined the treatment of these traffic sources in terms of how they work, their pros, and their cons.

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