Supernatural Agency: Online business tales

Even though we put some Adsense units on this site we never had any expectations for them beyond a few clicks here and there. That’s because readers don’t come to this site with a purchase or product research in mind. The subject matter (Internet marketing and business) isn’t closely associated with buying.

Gawker Media, the big blog network, announced that it was selling off a few assets including Wonkette, a very popular inside Washington political blog that had over 5 million pageviews last month. With that kind of traffic you’d think they’d be crazy to dump an otherwise successful site. My guess is, that with a downturn  economy, a site like Wonkette which never had a strong advertising model- readers go there for opinions and gossip, not shopping, was probably seeing a big drop in ad revenues. I’m guessing their CPMs were in the toilet despite the high traffic.

To make money with a site you have to choose your subject matter carefully. Is the information you’re providing something people seek during a buying process? Are the types of purchases associated with the site Internet e-commerce friendly? Things like books, jewelry, gadgets, courses and other high value, easily shipped, high margin products work best. Things that are heavy, cheap and have low margins like pet supplies, large appliances and groceries don’t cut it.

Is the subject matter information-intensive? If the buying decision is easy you can’t add enough value via a web site or blog. Look at the ads on general news, opinion and lifestyle blogs/sites- they are often big brand ads for cars, insurance and other generic subjects that are neutral in relevance to the content. These kinds of ads generate almost nothing in CPMs (measured in cents per thousand impressions) and contribute to banner blindness.

Getting a formula that delivers higher revenues requires something a lot of Internet media entrepreneurs don’t want to do: hard work. I’m in the process of inserting relevant affiliate text links into the hundreds of articles on one of our kitchen design sites. We have display affiliate ads but they draw very poorly. The text links are carefully chosen for very high relevance but it’s a lot of work:

• Determine what the reader of the article is most likely to be interested in at that moment. I have an article that recommends getting material samples when planning a new kitchen. The reader wants to know where they can get these.
• I go through the various affiliate programs and find a vendor that not only offers samples but pays out for sample requests, in this case $15 for a sample order (because they know that if you have a flooring sample you like you’re likely to order that specific flooring- resulting in a big sale). This takes a lot of time to research.
• I build a text link with the affiliate code that includes the appropriate anchor text. Free Flooring Samples from XYZ, for example
• I choose the appropriate place the article and insert the link text inline with the content. I don’t hide that it is a link (different color) nor do I hide the brand because I want it clear to the search police that I’m offering legitimate relevant content even if it is commercial. And I want the reader to know that I considered their interest, time and needs when selecting this revenue model.

This is a lot of picky busy work but when I’m done I’ll have an information site that is optimized for revenue-generation in a way that the consumer appreciates. And it is sustainable because once the work is done the site is self-sufficient. On to the next one…

It is increasingly apparent to me that we curently have two distinct business models on the web. Online applications including search, e-commerce, productivity and information management are replacing the antiquidated desktop proprietary software model. The challenges with this model are monetization and scale.

The other model is content delivery or media property development. Here we create sites that either deliver news or vertical-interest information including social components. Monetization is naturalized due to the relevancy algorithms used by ad networks and search advertising. The challenge is the creation of highly relevant and profitable content combined with developing traffic.

Semantic search is going to combine these two models in ways that will make them indistinguishable to the user. A query involving a potential shopping decision already combines search, reviews, specifications, pricing and transaction-capability, vis a vis Amazon. Hundreds or even thousands of web resources are utilized in these semantic searches and combined to create an idealized response, one that completes the search in one destination. Understanding and building these semantic destinations will be the new Internet business model.

If you have content on your domains and don’t offer an RSS feed you’re missing a huge opportunity. RSS feeds are rapidly replacing email lists which have been a  powerful marketing tool, especially if you do affiliate marketing. To take advantage of RSS you have to develop sites that have their content updated frequently, i.e. blogs.

This is, in essence, the opposite of parking. Parking is a totally no maintenance way to monetize but the trade-off is extremely low revenues. It is the classic ‘throw it at the wall and see what sticks’ marketing, aka shotgun marketing. User-generated content sites like blogs are the opposite- they require regular content upgrades, preferably daily. However they also have the potential to generate significant revenue if you chose the right subject (and BTW, domaining and SEO/SEM are not the right subjects- this blog doesn’t make money from those AdSense units down there).

The problem with the blog network model is time- it takes a lot of it. The answer is to invite guest bloggers and or paid writers to write for your blog. You find them on Craigslist by running a free ad. You pay them peanuts because writers are notorious for undervaluing their services. $5 a post? Why not? You only want them to post once a day and not on weekends (total waste- traffic dies on weekends. I guess we read blogs at work…), so $25 week to keep a steady stream of content.

Consider this cost as arbitrage. You pay $xx dollars to get traffic which you convert to $xx+ via ads and affiliate programs. And you’re building traffic and reputation which increases the value of the domain.

Back to RSS. Prominently display the RSS feed subscription offer and include a link to this video which does a fantastic job of explaining why regular folks should use RSS to change the way they surf. The reason you’re pushing this hard is that once you’re in their feed reader they will return over and over and return business is the lifeblood of any business. Remember, getting traffic is expensive so you really want to keep the traffic you get. When you go into your site Analytics (and if you are not using Google Analytics shame on you- it is free and a fantastically useful tool) look at the New Visitors number. If your traffic is steady but you have a high number of new visitors it means they’re not returning. Aggressive use of RSS can help change that.

I like to tell people that we run a business with no employees and no customers. You can watch the wheels turn as they chew on that one. If they are business owners themselves they almost always have a wistful response that includes a ‘I hope that works for you’ look.  ;-|

The fact is there are very successful businesses that are profitable without employees or customers- they’re called investment or trading firms. In many cases they may be an individual or partners that only trade on their own account (they don’t manage money). Taking some capital and growing it via investing or speculation is an age-old business that is not reliant on customers or dependent on employees.

The domain world is simply the latest incarnation of this business model. Of course you can hire employees but you don’t necessarily have to. And you could provide domain services like development to customers but why would you make money for them that you could be making for yourselves? Domaining can liberate you from these responsibilities if you don’t want to deal with them. It might take longer to grow but the upside potential is still huge- after all how many businesses can you start with an $8 name and a hosting account?