KaChing: How to Run an Online Business that Pays and Pays (15 page)

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Authors: Joel Comm,Mark Victor Hansen

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Clearly, VideoEgg isn’t going to be something you’ll be putting on your blog as soon as you launch. It might be something you never put on your blog, either because you’re happy to stay smaller or because you prefer to stick with other kinds of ads. But it does show how far you can go with CPM income. You can start with a small network earning a few extra bucks by placing banners at the top of your page and later find yourself generating really loud KaChings with top-of-the-range video ads served by some of the world’s biggest companies.
 
Figure 3.12
VideoEgg has some of the coolest ads on the Web. But you have to be big to crack them.
 
LINKADAGE
 
An advertiser that pays to put its name on your web site is looking for just one thing: traffic. That advertiser knows that you have the kind of users it is trying to attract, so it’s going to pay you to send them in its direction. But there’s a second benefit to having a link on a web site, and that advantage isn’t the advertiser’s, but yours.
 
Links improve search engine rankings. Advertising doesn’t.
 
Despite the billions spent every year on Internet advertising, the most effective way to bring traffic to a web site isn’t ad units, CPM banners, or even affiliate links. It’s the kind of links that you put on your site as part of your content because you like what another site has done. Google built its search engine on those recommendations, and those links determine, in part, where a site appears in search engine results.
 
Win a top spot in those search results for your most important keywords, and you’ll get massive amounts of targeted traffic for free.
 
For publishers, being linked to from other web sites is a vital part of marketing. It’s also one of the toughest forms of marketing, so the links have value. Publishers rarely hand out links like these on request; they demand something in return—as you should. That might be something as simple as a return link, but as we’ve seen, it can also be an interview or even a free article. There are plenty of article banks on the Internet stuffed with free (and generally low-quality) content that publishers can put on their own sites provided they include footer information that usually includes an author bio and a link to the author’s own web site. It’s an easy and cheap way to spread links around the Web.
 
There has always been another way to get your link on another web site. You can pay the publisher. If the link isn’t being delivered through an ad unit but through an informal deal between publishers and advertisers, there’s a good chance that not only will the advertisers get traffic, but they’ll also pick up some improved search engine rankings.
 
When you’re looking to make money by selling these kinds of links on your site, there are a number of principles to bear in mind.
 
The first is that the higher your own search engine ranking, the more valuable the link will be. When a high-ranking site links to a lower-ranking site, that lower-ranking site picks up a massive boost. Sites with a page rank of 6 or 7 will always be able to charge more than those with page ranks of 2 or 3. (There are a whole bunch of tools available on the Web that will instantly tell you your page rank, but the most trustworthy is Google’s own toolbar. You can download it for free from
www.google.com/toolbar/ff/index.html
.)
 
Like much of Internet business building, the bigger your site grows, the easier it becomes to make money—and the more money you’re going to earn.
 
That sounds obvious, but it’s an important point that’s often missed. Too many people start Internet businesses expecting to be picking up five-figure checks from Google within a few months of joining AdSense. That doesn’t usually happen. It takes time to build content, collect links, improve your page rank, build an audience and create partnerships with advertisers. Link selling might well become a useful part of your revenue stream, but it’s unlikely to bring in large sums of money until you have the reputation, the traffic, and the Google love to charge giant amounts.
 
Selling those links isn’t completely straightforward, either. Receiving payments for placing a link on a web site isn’t completely black hat, nor is it entirely white hat. The link is going to have two benefits: On the one hand, it’s going to help your users reach your advertiser’s web site. That’s legitimate. Every link does that, and Google, after all, has become a multi-billion-dollar company by helping companies do this. Selling links directly simply cuts out the intermediary and lets you pocket the entire fee.
 
But the link is also supposed to help advertisers improve their own search engine rankings, and that means deceiving Google, at least a little. Google will raise the advertiser’s ranking because it believes that you’ve supplied the link after seeing something on the site you like. You approve of the site, you think it’s something your users should know about, so you’ve told them the site is worth visiting. That tells Google the site is important, so the company tells its searchers that the site is worth visiting, too.
 
If Google knew that the other site had paid you for that recommendation, it wouldn’t count it. Google does have a way of discounting some of the links that sites receive. A link can be categorized as “dofollow,” and Google will count it, or “nofollow,” and Google won’t. Links placed on Twitter, for example, are generally “nofollow.”
 
I could tell you that it’s unlikely that Google is going to suddenly declare all of your outgoing links “nofollow” and take away an asset that you can charge for. And I could suggest that when you’re dealing with another site directly, you really should only be accepting links from sites you know and trust.
 
But in practice that’s not the way things work.
 
If another publisher asks you directly for a link, then you should either supply it for free—as part of your content or, more usually, a link exchange—or you can offer to sell that publisher advertising. If you’re looking to sell space for text links to sites you’re not familiar with, then there are number of services that act as brokerage houses. Even eBay has been known to list text link space, although the results have usually been pretty poor: Advertisers have paid and received nothing in return.
 
LinkAdage (
www.linkadage.com
) is at least reputable and reliable. You can set your own rate for a link, or you can create an auction, ensuring that you receive the best price possible. Typical prices range from $70 to $275 a month for a site with a high page rank. LinkAdage will take a 50 percent fee, however.
 
COMMISSION JUNCTION
 
Text link ads used to be very helpful. These days they’ve largely been overtaken by contextual ad systems like AdSense or Chitika. When you’re just starting out, those companies will serve up relevant ads very easily. And when you’re established enough to have the sort of page rank that makes selling links worthwhile, you’ll want to think carefully about doing so. You’ll be linking to the most important sites, anyway, so any link you receive is likely to be a relatively minor site. You might find that it’s just not worth the fee.
 
That doesn’t mean you should never do it. You’ll just want to weigh the benefits of an additional couple of hundred bucks against the costs of placing links to a site that your users might find disappointing.
 
More traditional—and more useful—are cost-per-action (CPA) ads. While CPC ads pay solely for a click, and CPM ads pay only tiny amounts every time the page is loaded, CPA ads pay when the user does something the advertiser considers valuable, such as completing a form and becoming a lead or making a purchase.
 
If that sounds like affiliate advertising, then the idea is exactly the same. I’m going to talk in detail about earning affiliate income later in this book, but there is one vital difference between affiliate advertising and CPA advertising with the help of an agency.
 
Sign up with a CPA ad agency and you’ll have no idea which ads you’ll be serving. While it’s true that you’ll always have some measure of control—you should be able to block companies you don’t want, and you might be able to pick categories of products you prefer to advertise-the real benefit of using an agency is that you don’t have to do any of that stuff. Once you’ve signed up, you’re making your site available for advertisers to choose you.
 
Figure 3.13
Commission Junction is among the heavy hitters of CPA advertising.
 
The fees vary tremendously, but because CPA ads are popular with some very big companies that tend to pick large sites for their distribution, if you can deliver the traffic—and the action—they can give you a pretty nice KaChing.
 
Lots of different agencies can send CPA ads your way, but one of the most reliable is Commission Junction (
www.cj.com
) (
Figure 3.13
). The company now forms part of Value Click, which bought it for $58 million in 2003. (I always said online advertising pays.)
 
Commission Junction has some nicely detailed stats and some very big names in its advertising networks. You could find that your site is advertising Dell, Yahoo!, Expedia, or HP Those are the kinds of companies that make your site look good—and win clicks from curious users.
 
That’s a big advantage.
 
For top-earning publishers—those making more than $10,000 a month from their Commission Junction ads—the company offers a special service with a dedicated account manager. For advertisers, Commission Junction offers different levels of participation (including appearing in search results), which makes it a good place to start, as well as to build a large-scale campaign.
 
It should be clear that once you’ve created your content, there are lots of different kinds of ads that you can place around it. Contextualized CPC ad networks like AdSense, YPN, and Microsoft’s Content Match, will “read” your pages, serve ads that match the subject, and pay you fees that range from a few cents to tens of dollars for each click the ads receive. Other CPC networks, like Kontera and Chitika, offer additional ways to do the same thing, blending their ads neatly into your page and increasing the chances that you’ll win those clicks.
 
CPM ads, like those supplied by AdsDaq will pay for your traffic regardless of what your users do, while CPA networks will give you larger amounts, provided your users actually do something. You can even sell text links directly, either by yourself or through a network like LinkAdage.
 
If that sounds complicated, understand that in practice it’s very simple. Start by placing AdSense on your site. Add Kontera, and if you think it will suit your content, Chitika, too, using AdSense as the alternate. Take the time to optimize and track your AdSense results, and while you’re doing that, also build up your traffic so that when you place CPM ads, you’re making decent money.
 
Over time, you’ll find yourself discovering which ad formats deliver the most clicks. You’ll come to see which topics deliver the most value. And you’ll start to build up the kind of traffic that makes banner ads worthwhile.
 
Again, this won’t happen overnight. While you should be able to see some income right away, it might take several months before that income is enough to repay you for the time and effort you’re putting in. But if you’re persistent and determined, if you’re prepared to learn, experiment, and adapt, you’ll get there. Your web site will be generating up to a dozen different types of KaChing from content alone.

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