Category Archives: Passive Income

I have been writing for my blogs for over 15 years now.  A lot has changed with the internet in that time, and over the years I have investigated many ways to let my websites pay for themselves.

When Adsense was first announced I jumped on it only to find that it paid almost nothing to publishers like myself.  Just pennies at a time would take years to generate enough given the traffic on my sites for Google to cut me a cheque.  In all the time I had been running ads I think I had only ever received a payment once.

The dismal returns eventually made me realize that the ads were more detrimental to my readers than they were worth.

However, recently I have been on a mission to cut my budget for servers and part of that effort is to get my websites to pay their own way or else risk getting shut down.  I started by experimenting with adding Adsense back to one of my blogs and found, to my surprise, that it earns enough to pay for its hosting costs.

I have extended ads onto this website, so that I pay less out of my own pocket to keep it running.  Hopefully keeping these sites financially sustainable will be mutually beneficial to both me and the readers.

I’m ramping up a couple of eCommerce websites as part of a strategy to create a home based business that my wife can take charge of when our daughter starts school in 9 months.  Part of building the foundation for a business like that is to get re-acquainted with the world of internet marketing… something that I was deep into several years ago but am now way out of date.

Facebook Ads seems to be an interesting platform for advertising now and is significantly different from Search advertising.  I’ve been reading and learning about various strategies for marketing on Facebook and I’m hearing about some really crazy and convoluted advertising funnels, like leveraging cheaper advertising markets for likes and engagement to help drive down costs and help improve social proof in the target market.

The interesting marketing psychology is that people are not on Facebook to look to buy products and so ads which sell things stand out as an ad and are not engaging. There really needs to be some kind of entertainment or curiosity value.  Like paid advertorials in print media the goal should be to mix in with the rest of a person’s news feed and not stand out as an advertisement.

To that end I’m going to be pumping a fair bit of money into Facebook over the coming months to test ad campaigns and find viable ways to run an eCommerce business.

 

Progress on my Auto Blogging Django Application has been going surprisingly swiftly.  I have added support for a number of different content sources and have been able to launch the application to my server, scheduled the cron jobs and it is currently running in test mode for 1 blog.  I will be quickly expanding to 100 blogs powered by this software by the end of the month.

It’s not quite ready to demo and show off to anyone – the code and UI is fairly ugly.  I’m actually surprised it works at this early stage of development.  But that is proving to be a great asset since an early release allows me to start testing the application in a production environment and ensure that everything is working.

I have developed a short business plan around this application to scale it up to 1000 blogs by spring 2011.  At which point I hope it will be polished enough to release as a service to other users.  Development will occur in 4 phases with a launch expected in Q2 2011:

  1. develop the basic system, and scale up to 100 test blogs by Nov 1st
  2. test various monetization strategies and linking strategies until the end of the year
  3. develop additional automation tools and scale the test to 1000 sites by Feb 2011
  4. bring on some beta testers in Q1 2011
  5. Launch to the public in Q2 2011

At some point when the complexity grows I may try to bring on another python/django developer to help offload some of the work required and perhaps speed up the development of this.

In the short term however, I’m going to be focused on creating new blogs and configuring them in the application.  If every blog takes 10 minutes to set up, then even at 5 per night it will take almost 3 weeks to reach my 100 blog goal.  Unfortunately it is tedious work that needs to be done.  Future versions of the software will try to make this whole process easy to outsource.

I am still extremely excited to see how well this performs in the real world.

Google Adwords LogoLast night I had one of those sleepless nights. I’m sure you have had one of these before – After hearing a great idea your mind starts spinning with the possibilities and there’s no way you’ll be able to sleep. I got excited last night about a new approach to Google Adwords that has just might have a lot of potential.

Google Adwords has never really proven to be a profitable way to drive traffic for me (though Microsoft Adcenter has). However several times a year for the past 4 years I have heard a little tip or seen someone use it successfully and have become intrigued enough to dive back in and test the waters again. Each time my testing has been plagued with failure and I have lost thousands of dollars trying to find a system that works.

Yesterday I got a tip, something new that I haven’t yet tried but that sounded promising. And so over the next few weeks I’m going to be running some tests. The problem with the approach I’m testing is that it requires creating a MASSIVE number of keyword targeted ads – a total of over 100,000 ads per niche.

It took me 2.5 hours last night to manually create 400 of the 100,000 ads I need (for the one niche I’m going to test first). There’s no feasible way to create all those ads manually and I’m not interested in spending yet more money on ebooks or software that claims to make money or magically do the work for me. So I am going to program some scripts myself to test the techniques. If it works or doesn’t work I will let you know, and share the code right here on this blog.

The testing started last night. Check back next week for the preliminary results (and maybe a hint about what I’m doing).

johnchow-photoThe other night I attended a Meetup where John Chow was speaking to a room of about 35 people.  If you’re not familiar with John Chow, he runs a blog – johnchow.com that makes $40,000+/month. This year he’s expecting to make $500,000 just from his blog.  His talk was amazingly inspirational in that it became painfully obvious that the work involved is pretty trivial.  John only works 2 hours a day on the blog.

He walked us through the back-end of his business model which is where he makes 2/3rds of his profit.  It is a system that I’ve had in place for a few of my websites but never really paid much attention to really tweaking it out.  I think that with just a bit of consistent work I could duplicate some of John’s success with my blogs.  Basically John has none of his own products so everything is affiliate and joint venture deals and, surprisingly, 70% of the income is not coming from the blog but from his email list.

His number one goal for his site is to capture the email address of the visitor so that he can keep in contact with them and build a relationship.  Then he just gives out a couple of his recommendations and he makes lots of money.  His number one recommendation for us was to focus on building the list and then then push people through a sales funnel to get some conversions.

John uses and recommended everyone that wants to make money online get an account with the best email auto responder service out there – AWeber.  The truth is that sending lots of email is a very difficult technical problem it’s much better to start with the correct service than try to move over your email list once you have it.  Both John and I agree that AWeber is by far the best email service out there.

Trying to save a couple of bucks early on by collecting emails and sending them yourself is a big mistake.  John used a different email service while he grew his list to 25000 then he discovered that only 70% were getting through the spam filters.  That’s a lot of money he’s missing out on!  So he decided to move the list over to aweber and he ended up losing 80% of his subscribers in the process…  By CANSPAM law you can’t move your email list without opting everyone into the list again.  That was a huge setback for John so he recommends that you start with the best.  It is probably the most cost effective tool you can buy to make money online.

John Chow’s business model is such a simple system but it works because John is consistently posting to his blog and is always getting fresh traffic to grow his list.  It can actually be a lot harder in practice since it’s so easy to try blogging for a week and then give up.  Consistency is key.

In my experience the inconsistency of posting to this site has almost killed it.  And if it wasn’t for a few good posts that got ranked well in Google then almost nobody would be here.  It is actually surprising that you never really know what posts will get good traction so it’s important to keep writing good stuff and keep things keyword targeted as much as possible.  With enough content out there eventually something will stick and you’ll continuously get traffic without much additional work.

John gave us lots of little tips – some of which I have already implemented on my sites.

His site is proof that the concept does work and it really got me stirred up again with ambitions to start writing more content and get my business model ironed out a bit more.

One thing has become clear to me in the last month or so. I simply don’t own enough of the internet!

I’m just trying to realize the scope of the problem. Until you get to the Guru status where people buy whatever it is you have to sell making money online is like finding a needle in a haystack.

Whether you’re making money on Adwords, building out niche sites, creating products or anything else. It comes down to one of two factors required to get real success:

  1. Testing massive numbers of niches to find one that works through either exhaustive market research, or just putting stuff out there.
  2. Putting something good out there and then spending lots of time or money pushing traffic to it trying to get it to work.

Both are valid approaches, but both require a lot of work. There’s no way around it. To build a solid passive income stream you need to do lots of work up front.

So I’ve started down this road of doing massive amounts of work by launching 10 new websites last night.

But that got me thinking. Just how many do you think I’ll need to get enough traction and find a site that really rakes in the money? How many websites do you maintain?

Share your thoughts.

Where is the value in the the work that you do as an entrepreneur?

I think the farther you can get from the commoditized skills the more money you’ll make.  A commoditized skill is anything that you can easily and simply abstract and have done else where.  Here are some examples of commodity skills:

  • Basic accounting
  • Website design
  • Customer support
  • Writing/Research

If it’s possible to use a service like Elance to connect you to people that will do the work cheaply and quickly, why would you want to compete in that space?

The real money is to be made in the skills that deliver the competitive advantage to your business.  At the highest level that is the strategy.

Being a good business strategist and knowing how to execute the strategy is like having a license to print money.  It’s a skill that I’m beginning to learn and will continue to try and master for the rest of my life.

Currently I’m doing a lot of the grunt work in my business.  I’m writing the reports, doing the research, designing the websites, and doing the promotion.  It’s a lot of work and it reveals a lot of inefficiencies.  The things that I like to do get done quicker while other parts get delayed and hold up the progress.

As the business grows more and more of that work will be taken off my plate and I’ll get to spend more time doing the higher value things like structuring offers, inventing product ideas, and networking with partners.  Those are the things that will really accelerate your income.  They are also skills that are hard to learn from a book or course.  You really need to spend some time in the trenches, make mistakes and continue on the path to mastery.

endeavour.jpgIn my last post I mentioned that I was thinking about the difference in investing in stocks vs investing in assets you can sell online. That thinking has evolved over the last week into deciding what is the best way to bootstrap a new online business.

You see the internet business that I started last year has been languishing since the beginning of the year without making any sales. Now I’m thinking of a re-launch, but this time I want to do it right from the start. A proper start that will create not just a small number of sales, but something that will be a real business.

The problem is that I’m basically starting from scratch again. I have the website set up but it’s getting no traffic. I have no email list, no connections, and no product. I’ve found a niche that which has made me $600 and I want to explore further. My next thing to do is to plan the creation of a real business from scratch.

Different internet marketers are all selling different approaches but the one thing that is hard to find is exactly where to start. If you have an email list there are tons of good products and ideas out there that you can just drop in to quickly make a huge impact in sales. If you’re already getting good traffic to a website then there is tons of stuff out there for tips on how to increase your conversions and how to leverage that traffic into collecting emails. If you have a product then there are ways to find other people to help with selling it.

But what do you do if you don’t have any of that to start with?

There are a couple of ideas that I’ve been spinning around in my mind. I’ve been weighing the benefits of different approaches. Launching a business properly is no easy task.

I still haven’t figured out the entire approach that I’m going to use, but stay tuned to this site as I reveal my business launch plan over the next few weeks.

I’ve been thinking about investing.

With the upset in the markets over the last few months due to the credit crisis, and a looming recession in the US which has led to record low interest rates as a last ditch effort to keep the economy growing. With many stocks taking a nose dive, I’m weary about putting more money into my stock investing account until we hit the bottom.

I’ve been trying to think of good alternate places to invest. To diversify my investments to something that has the potential returns of the stock market but isn’t as susceptible to market swings.

After reading a couple of blog posts (such as Why Do So Few Bloggers Sell Their Own Products? by Yaro Starak) and doing some pondering. I’ve come to the conclusion that investing in assets which you can turn around and sell could prove far more lucrative of an investment.

One of the things that I’ve done for this website and my online business ventures is to set aside some money automatically from my bank account into a savings account. This money is to be used to get HalOtis profitable and increase the cash flow. In the past I’ve used this money to pay for Google Adwords campaigns and pay for hosting of sites.

The missing part of the picture has been lack of products and business assets that I own and can resell over and over to continue to make a profit passively.

Lets compare the potential costs and returns from an investment in product creation vs. the stock market over a one year investment period.

Case 1

$1000 could be used to outsource the creation of an ebook and marketing material that would sell for $25. If you add in about 20 hours work to do some videos for youtube, find some affiliates or jv partners, create some webpages and link to those site with the social sites. The sale of just 40 copies of the book is the break even point. Lets say you have a fairly terrible launch and over the course of the year manage to sell just 50 copies. That works out to a total income of $1250 subtract the $1000 cost gives $250 profit or 25% return on investment for the year.

Case 2

$1000 invested in the market during an average year should return about 8% if invested in a market wide ETF. Of course, you’re at the mercy of the market the only thing you have control over is when you buy and when you sell. Market timing is notoriously difficult. Still, lets assume you had an average year and you’ve made your 8%. That’s $80 minus trading costs.

What’s the biggest difference between these two scenarios? In case one, you’re in control you decide what the ebook will be about after testing the market, you build the anticipation, you control the quality of the product and can do what ever it takes to create something that people want and then convince them to buy it. In case two you’re at the whim of the market, and of macro economic trends. There’s very little if anything you can do to influence your chances of beating the market.

Furthermore, it’s possible to leverage the exposure you get with this first product in case 1 for subsequent products. There’s the chance to create an email list, build authority, make connections to other sites, get more exposure in the search engines etc which can be leveraged time after time to get a bigger and bigger return each time. Not to mention that you can sell other peoples stuff at no cost for even more income!

When looking at these two scenarios side by side it’s easy to see that investing in your own product creation is a very effective way to invest your money.

Over the past four or five years I’ve tried to run websites monetized with advertising. In all of those years my biggest pay day was probably the one day that I made almost $4 from advertising clicks. At the time I was pretty ecstatic about the $4 payday. If I could just double the traffic to the site I could be making $4 everyday and maybe have a couple of $8 or $10 days. That would start to add up and I’d be able to put the money towards a new computer or something.

That never happened.

After years and years of having various websites my total income from Google Adsense is currently just $55. All those many hours of work over the years I was effectively making just pennies per hour. I don’t want to knock the idea of writing for a passion and you just happen to make money on the side. But the only way I can see to start really making some serious money online is to actually get closer to the actual sales part.

Affiliate Marketing is really a step closer to the business. Rather than just offering some space for a business to advertise you’re actively help make that business some income. They’ll reward you for that extra effort.

If you have a website right now consider adding a real product to the site to sell. Here’s how:

  1. Open a ClickBank account and find some products that are related to your niche in the marketplace.
  2. Get the hoplink for anything that might be of interest to your readers.
  3. Do up some advertisements and display them prominently on your site, like you would with Google Ads.
  4. Test test test.

Some more advanced things you might consider is to split test different ads or different products. That’s possible with something like OpenAds or just do some click counting with my url re-direction code.

Consider that for many Clickbank products you’ll make more on one sale than you’d make in a year with Google Ads. Give it a try!

Note I realize that this I use Google Ads, but that’s just because I want to hit the payout threshold so I can finally get paid for all those clicks over the years.