| eMarketing In-a-Box: How to Attract, Retain and Monetize Your Website Customers Copyright 2007 All Rights Reserved emarketinginabox.com All Rights Reserved paul@emarketinginabox.com I matthew@emarketinginabox.com |
Chapter 3
Following a Viable
E-Business Model
In our opinion, the main reason for the Internet crash in the year 2000 was that most online businesses
didn’t think through their business model. They didn’t know what business they were actually in.
Simply put, they didn’t know how they were going to make money through their Web sites in the long
run.
Savvy marketers knew how to attract visitors – also known as “traffic” or “eyeballs” – but they didn’t
know how to monetize those visitors to their Web sites – that is, maximize the money they made per
visitor.
They simply equated eyeballs with dollars. And investors measured success in a similar fashion. The
more traffic your site attracted, the more it was worth – or so the theory went for a while. (Interestingly,
we see the same thing happening again, but admittedly on a smaller scale, since savvy investors who
survived the first Internet wave aren’t going to be burned a second time.)
Two Simple Steps to Web Success
As you will see, there are basically two steps to an online business: (1) driving traffic to your site; and
(2) converting those visitors into cash. That’s it. But as with everything, the devil is in the details.
That’s why we suggest that you start with planning. Almost all successful entrepreneurs, regardless of
the type of business they’re in, started off with drafting comprehensive business plan.
Of course, you can do it on the back of a napkin like so many famous entrepreneurs claim to have
done. But we’ll bet you that the far majority of those “plans” end up with all of the other paper napkins –
in the trash where they belong.
With that said, we recommend you spend some time on planning before you start anything else, and
the best way to keep your thoughts organized is to use a business plan software. For our
recommendation, visit our suggestions page at www.WhatWeSuggest.com or just click here.
So make the investment, which will, in turn, force you to plan out a clear strategy instead of just
starting to do things that will waste your valuable time, energy, and money.
The Five Basic Models of Online Businesses
Just as the Greeks said, “Know Thyself!” we recommend: “Know Thy Business!” And there are only five
main business models that we think you should focus on for making money online.
1) The Brochure Model
2) The Subscription Model
3) The Advertising Model
4) The E-Commerce Model
5) The Affiliate Model
THE BROCHURE MODEL
By far the most prevalent business model on the Internet is using a Web site simply to promote an
offline business. You might be a graphic designer showing your portfolio of work online; an attorney
trying to generate leads by putting up a new type of shingle in the form of your Web site; or any other
kind of service provider that is simply maintaining a site to make it easier for prospects to find out
about your services and contact you.
We don’t mean to belittle this strategy. It is the simplest model, but it might be the most effective for
your business. We are in a service economy, and so for many of you, the Brochure Model might be
the way to go.
As the World Wide Web has become a major source of information, many small and mid-sized
businesses just simply cannot afford losing all those customers who are looking online for the service
they provide. Nowadays, having a presence on the Web and being found on search engines, such as
Google or Yahoo!, is just another core component of every business strategy.
The keys to such a site are:
(1) easy navigation so that visitors don’t get confused and click away; and,
(2) clear and concise copywriting (the words on your site) so that visitors quickly understand who you
are, how you can help them, and how to find out more.
The ultimate goal is to “monetize,” or convert, the casual browser on your site to a paying customer. If
you don’t sell online, you should assign another non-cash objective to your Web site, such as getting
someone to sign up for a newsletter subscription or information inquiry about your product or service.
This will allow you to measure your Internet marketing success, which you should always try to
quantify. So think through your Web site objective first before you decide to embark on a full-scale
online marketing blitz.
In order to accomplish your Web site goals you need to get visitors to your site, and you also need
effective copy so that you keep the visitors reading your site, and then taking some action to move
them closer to buying from you. Web browsers are typically impatient. They have the “power” to click
on the “back button” in your browser. So make sure your content is interesting, and clearly lays out
benefits that your product or service can provide to your prospective customer.
The Brochure Model is all about clarity and credibility. Your enemy, when pursuing this model, is the
clutter of the Internet. Everyone tries to position themselves as the best attorney in their field, or the
most creative graphic designer. But rather think of it this way, you’re looking for people in pain – people
with problems – that you can solve. If you want to find out more about how to position yourself more
effectively, check out our book, FEAR Selling by clicking here or check out Books and Other
Publications we recommend.
The problem is that most people focus on themselves and their own business, and how great they are
rather than what they can do for those who might need their service. In a nutshell, what you want to do
is: focus people’s attention by showing that you understand their problem; and then build credibility
through your bio(s) and customer testimonials as well as by showing them how you’ve solved the
problems of others like them.
How do you do this? By creating a special section on your site were you provide case studies about
the work you’ve done to solve your clients’ problems.
As you present your portfolio of case studies, keep in mind that they aren’t about flexing your muscles
but rather subtly showing that you can help your prospects by proving that you’ve solved problems for
people just like them.
As you present your bio(s) and case studies, think of the P.A.R acronym. Lay out:
• P - what your previous customer’s Problem was;
• A - describe the Action you took on your customer’s behalf or recommended them to take; and
• R – the Results that your actions achieved, being as specific and numerical as possible so as
to be credible.
Best Web Site Development Solutions for a Brochure Site
Even though we cover Web design and development later, we’ll quickly discuss it here in case you
want to get going right away on your site. For a Brochure Site, the most important thing is not the
graphical design (although it should look professional), but rather the text on the page. And so, you
might simply want to set up a blog, which is short for “web log.”
A blog is just a fancy name for an online journal, which is usually used by someone who is writing
successive entries on a particular subject. Nowadays, however, many people use a blog to put up
simple yet effective Web sites. You can find the Blog Solution we recommend if you just click here or
by visiting www.WhatWeSuggest.com.
Based on your product/service, you may want to develop a site with more functionality that you can
start using as your business grows. We’ll cover this in more depth in the section on Automating Your
Site, but if you want to develop a site that is more robust than a simple blog, click here or check out
our top recommendation for a Web Site Development Solution at www.WhatWeSuggest.com.
THE E-COMMERCE MODEL
The E-Commerce Model is arguably the model which is the easiest to understand. Visitors to your e-
commerce site buy your products simply by indicating their desired purchase in an online shopping
cart and then pay you, usually via credit card.
You can sell digital products such as e-books or physical products such as clothing. All you need is a
Web site with shopping cart functionality. In effect, E-Bay, the online auction site is one big e-
commerce site which helps buyers and sellers find each other. Just as in any business, if you want to
accept credit cards, you must open a merchant account. Click here for our latest recommendation
regarding merchant accounts and/or click here for our recommended Shopping Cart Solution. For the
same information, check out the Merchant Account Solution and/or Shopping Cart Solution on www.
WhatWeSuggest.com.
THE SUBSCRIPTION MODEL
The best example of the Subscription Model we can give is our client, The Wall Street Journal Online,
which is the number one subscription site on the Web. This is basically the electronic version of the
venerable print paper by the same name. Basically, you subscribe to this online version much as you
would the print subscription, but instead of the physical paper showing up on your doorstep in the
morning, you simply access the Wall Street Journal site with your log-in and password in order to read
the business news every day.
Digital products like The Wall Street Journal Online, electronic books (aka e-books), and electronic
newsletters that are for sale have proven to be very profitable businesses. Instead of incurring the high
costs of printing and distributing a paper product, you simply make it accessible online. The profit
margins can be huge. The only real costs of producing a digital product are the writing.
With simple software such as Adobe Acrobat and a simple email solution, the cost of digitization and
distribution of electronic products is next to nothing. If you are in the e-book business or delivering
some other form of digital product, click here for our Shopping Cart Solution or check out our
recommendation at www.WhatWeSuggest.com. Our Shopping Cart Solution enables you to sell
physical or electronic products securely online.
Subscribing to a Service
When you think of the Subscription Model, don’t think narrowly – you can sell subscriptions to more
than just publications. Many of the software packages that we recommend in this book are actually
subscription services, including our Blog Solution, Shopping Cart Solution, and Autoresponder Solution
– all of which you can find at www.WhatWeSuggest.com.
Instead of paying monthly for information in digital form as you do with a digital product such as an e-
book, when you subscribe to an online service, you have access to that service as long as you keep
paying for your subscription. In this way, you may keep your costs down by paying for the service only
when you need it, instead of buying the service and then not using it.
You may hear the term ASP more and more in the coming years. ASP stands for Application Service
Provider, which essentially means a vendor that provides an online service on a subscription basis.
Think of it this way. You may have bought a piece of software from Microsoft. You paid them a one-
time fee to purchase the software, and they sent you a CD, which you used to install the software on
your computer. Instead of buying software outright, you may wish to pay to “rent” the software. In other
words, you buy a subscription to it instead and pay for it on a monthly basis. In this case, the software
company is providing you with a software application or service, hence the name Application Service
Provider (ASP).
THE ADVERTISING MODEL
Buying Traffic
We consulted to The Wall Street Journal by helping them “buy traffic.” Let’s explain this concept to
you as it is key to all online models.
Building a Web site is only the first step. It’s like putting up a lemonade stand in a desert. Unless you
point people to that lemonade stand, no one is going to buy from you. So you want to put up signs on
the roads, directing traffic to that stand. You want to put those signs in heavily trafficked areas so as to
maximize the number of people who see it.
Now, since you are in the desert, there might not be any heavily trafficked areas nearby for you to stick
a sign in the ground and get a significant amount of traffic to your lemonade business. But on the Web,
people are just a click away from any piece of online real estate – that is, they are only a click away
from your Web site.
So you want to put your advertising signs up where there is traffic that is “qualified” to buy your
product. In this case, “qualified” means people that have the problem that your product/service solves,
and ideally, you want them to be able to afford its purchase. Recent studies show that about 30% of all
people who use the Web to search for a product or service actually intend to purchase that product or
service in the near future.
When you buy advertising online, you are basically trying to buy traffic. You are paying someone to put
a sign on their Web site to redirect people to your Web site.
In the old days of the Internet, advertisers could only buy banners, which are just those big square or
rectangular signs on Web sites at the top, bottom, right side, left side, or anywhere else that a Web
site is willing to sell their space to advertisers.
As an advertiser, you buy banner space on a “per-thousand” basis. The term which you will hear if you
buy banner space is CPM – which stands for Cost Per Thousand (M is the Roman numeral for the
number 1000).
If, as an advertiser, it costs you a $5 CPM for a banner space on a site, that means that for every 1000
people that see your ad, you are paying $5 to the business that is allowing your ad to be displayed on
their site. So you, as the advertiser, are buying traffic, and the Web site that is displaying your ad is
selling their traffic to you.
The Evolution to Performance-Based Marketing
Now, as you might realize, even though 1000 people might see your ad for every $5 you pay, you most
likely aren’t going to get 1000 people to click through that ad and come to your site. Rather, you’ll
probably get some small percentage that click through, also known as the click-through-rate or CTR.
Even though, banner advertising is still big business on the Web, many advertisers are shifting their
online advertising budgets to what is known as pay-per-click (PPC) advertising or “sponsored links”.
With PPC, advertisers only pay the Web site where their ad appears when someone actually clicks on
the ad. So instead of paying advertising dollars for eyeballs that may see but never click through your
banner ads, you are only paying for visitors who actually are interested enough to click on your
sponsored-link PPC ads. You only pay on “performance,” that is, when someone takes an action – in
this case, clicking on your ad.
Size-wise, whereas banner advertising is the online equivalent of buying relatively large space ads in a
newspaper or magazine, pay-per-click ads are like tiny classified ads. There are usually no graphics
associated with sponsored links – they are simply lines of text, promoting an offer or describing a
product.
Since a picture is worth a thousand words, to see what sponsored links look like simply go to www.
Google.com, search for any term, and you’ll almost certainly see sponsored links listed along the right
column of the Google search listings. These ads will be somewhat related to the keywords you typed
into the Google search bar.
Pay-per-click ads might show up in Google’s or Yahoo!’s search results or on Websites that display
the ads intermingled with other related content, which is a marketing tactic also known as site-
targeting or contextual advertising. For example, if you sell digital cameras online, you would probably
consider placing your ad on a Web site or blog that offers consumer electronic product reviews, and
you would also want your ad to be displayed on Google when the keyword “buy digital camera” is
typed into the search bar. The first option is often referred to as “contextual web marketing” since your
ad shows up next to contextually relevant articles, and the second is known as “search engine
marketing”.
The ability to get your customized message in front of interested buyers when they are searching for
your product/service makes search engine marketing (SEM) a very cost-effective and targeted way to
advertise. Again, keep in mind, studies show that around 30% of online searchers intend to make an
online purchase – in other words, they are not just browsing around.
We’ll talk more about PPC advertising in the section on Reaching Out To Your Prospects. But if you’re
in a rush to get started, check out the special deals on buying pay-per-click advertising through
Google, Yahoo! and others by visiting the Pay-Per-Click Advertising Solutions on www.
WhatWeSuggest.com.
Back to the Advertising Model
So now that you understand the basics of buying and selling traffic, we can explain the Advertising
Model. Simply put, businesses that are pursuing the Advertising Model are selling traffic. They are
allowing a certain amount of the space on their Web site to be sold to advertisers that they allow to put
up banners or sponsored links on their site.
It’s very simple. If I have a site visited by people that you think are good prospects for your product or
service, simply pay me, and I’ll allow you to put up ads on my site that redirect visitors to your site.
Examples of those who are banking on The Advertising Model – at least in part – are news sites and
other information sites as they can generate huge traffic from people constantly visiting them to find out
what’s going on in the world. If you go to www.msn.com or www.yahoo.com, you may see banner ads
or sponsored links that they sell to interested advertisers.
If you want to pursue the Advertising Model, realize that you need a significant amount of traffic coming
to your site. Now you might have limited traffic, yet very targeted visitors within a very specific
demographic segment. In this case, relevant advertisers might be willing to pay you for your traffic
because your visitors have a high likelihood for buying their products/services. But for the most part,
you need a lot of traffic to generate revenue by selling ads on your site.
More likely, as a small business, you’ll be buying traffic to get people to come to your site rather than
selling traffic and trying to make money by sending people to others’ sites. Whether you are buying or
selling traffic, however, it is essential that you understand the Advertising Model.
THE AFFILIATE MODEL
Pay-per-click advertising is just like it sounds. As an advertiser, you only pay if someone clicks on
your ad. The Affiliate Model is very similar except instead of advertisers paying for clicks, they only pay
when someone buys their product. You will hear the term CPA, which stands for Cost-Per-Action. In
the Advertising Model, the action is simply a click. In the Affiliate Model, the action is an actual
purchase.
In the Advertising Model, advertisers who want people to come to their sites buy traffic, and Web site
publishers who want to make money from advertisers sell traffic – they sell their ad space (also known
as ad inventory). In the Affiliate Model, you have advertisers (called merchants) paying Web sites
(called affiliates) to actually promote their products.
Think of affiliates as a commission-only salesforce. You may be pursuing the E-Commerce Model by
selling digital or physical products on your site yourself. But wouldn’t it be nice to get others to sell
your products from their Web sites and only pay them if they actually sell your products? Well, this is
the heart and soul of the Affiliate Model.
As an advertiser-merchant, you want to increase the exposure of your product by enticing other sites
to advertise your products and send you traffic. Instead of offering Web sites pennies or dollars per
click, you might be selling a high-priced, high-profit-margin product that enables you to pay a relatively
large commission.
For example, we have consulted to e-book publishers who are willing to pay sites up to 50% per sale if
those sites will promote their products via links or banner ads.
In the Affiliate Model, you as an advertiser don’t pay if someone sends you a visitor. You only pay if
someone sends you a visitor who then actually purchases your product. Sounds like a good deal,
right? Well, it is.
If you have products that are in demand, and you are willing to share in your profits, you will probably
be able to get many affiliates promoting your products on a commission-only basis. Alternatively, if you
have great marketing skills but you don’t have a product to sell, you could promote someone else’s
product online and be their affiliate and make money through affiliate commission program.
One concrete example of a company that has been very successful with the Affiliate Model is the
Sharper Image Corporation, which sells interesting gadgets. One of its most successful products is
called the Ionic Breeze. This product is basically a fancy electronic air purifier. Just say you run a site
about clean air. You can join the Ionic Breeze affiliate program for free, put up links on your clean-air
site to direct people to the Ionic Breeze site, and make money for each person who clicks through to
their site and buys one of their air purifiers.
You might be asking how you as an affiliate, promoting other people’s products on your Web site, are
guaranteed to receive the proper credit for selling products that are fulfilled through the merchant’s (i.e.,
advertiser’s) site. Well, there are companies that manage affiliate networks to ensure that the
merchants pay the affiliates. These affiliate networks like LinkShare, Commission Junction, and
Performics, are paid a small piece of every transaction in exchange for tracking and reporting affiliate
activity.
Combining Models
Please don’t think that you have to follow only one of these Models. Many sites use a portfolio
approach. They might be selling products or services by following the Subscription or E-Commerce
Models as well as monetizing traffic by selling some of their traffic through the Advertising and/or
Affiliate Models.
As with anything in life and business, you want to find the right balance between focus and
diversification. As your business evolves, you might move from one model to the other, but the most
important thing is to start by knowing what business model(s) you think you want to follow.
Go to the next chapter.
Chapter 4 - Checking out your Competition
Advertising
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