WWW FAQs: How do I make a profit from my website?

2007-02-09: If you are selling goods and services and simply need to know how to accept payments from users on your site, see how do I charge money on my website?

If you are giving away useful information or entertainment, the three easiest and most profitable business models are:

1. Selling advertising space on your site. For most sites offering practical information, such as this site, advertising sales are the big winner. And it's a lot easier than you think. Read on for information about advertising brokers who can bring in much more revenue for you than you could ever find on your own.

2. Merchandise sales. An excellent fit for entertainment sites, like Home Star Runner for instance. Merchandising involves selling T-shirts, mugs, and the like that bear your logo or characters. This is easier than you think, thanks to sites like CafePress that do all the work for you (and take the lion's share of the money, too). Read on for details.

3. The "tip jar" approach: visitors to your site voluntarily give you money, purely out of the goodness of their hearts. You might think that this doesn't pay very well, and you're probably right. But all the same, it is very easy to set up, and perhaps your website visitors will decide to show their appreciation for your hard work. And if your site is a poor fit for advertising or merchandise sales, then it may be the only choice.

Now that I've shown you the possibilities, I'll discuss each of the options in more detail.

This article assumes that you've created a website that offers something people enjoy or find useful - a catalog of how-to articles about your favorite hobby, an entertaining blog, a collection of recipes, tips on winning your favorite game... something good! If you haven't done that - if you have created a website with no particular purpose other than a vague wish to make money -- you need to go back to the drawing board, decide what your site is about, and start meeting a need. As with any type of business, wishful thinking doesn't cut it. If you don't have a popular site already, you're not ready to start earning money from it.

See also Philip Greenspun's "So You Want To Join the World's Grubbiest Club: Internet Entrepreneurs" for a rather successful attempt to answer the more general question, "what should my site be about in order to make money?"

The Online Advertising Business

Unfortunately, negotiating individual advertising deals is difficult for small sites. Fortunately, there are companies that serve as advertising brokers, placing ads on your site automatically in exchange for a significant share of revenue. Steer clear of sites that place "popup," "popunder" and other types of obnoxious advertising: these ads send negative messages about your site and are often filtered out anyway by newer web browsers. Due to such negative experiences, today's web users are much more likely to click on plain-text ads than on any type of advertising. While graphical "banner ads" that do not pop up separate windows are still respectable, most advertisers are not interested in purchasing them due to the fact that users ignore them and browsers automatically filter them.

Ad Broker Services

At the time of this writing, the best of the text link advertising brokers is clearly Google AdSense. (Disclaimer: I am a satisfied user and affiliate.)

The ads are typically tasteful, as relevant as Google's search engine results, and very straightforward to install on your pages without any special server-side scripting. The appearance and layout of the ads can be adjusted to meet your needs. While advertising space providers like myself are not permitted to discuss AdSense revenue, I have been a satisfied client for a long time, from which you may draw your own conclusions.

A different type of on-page advertising is offered by Kontera. (Disclaimer: i'm a satisfied customer, and an affiliate of theirs as well.) Kontera's adlink service creates advertising links from relevant words and phrases in the text of your page. These links appear in a different color from regular links, which makes them easy to distinguish, and a clear message pops up explaining the nature of the link when the mouse moves over it. Of course, adlinks never interfere with your own links. I do find it's best to disable adlinks on very, very long web pages, such as technical manuals, to avoid a long delay as JavaScript code renders the adlinks. The adlink service works great on shorter pages, and extremely long pages are usually better broken up into multiple pages anyway.

Another ad broker option is the adbrite service.

Direct deals with advertisers

If your site is popular enough, you may begin to receive offers from advertisers wishing to directly purchase advertising links. Be careful! Some advertisers are seeking to confuse search engines by purchasing irrelevant links on popular sites that can be easily confused with real content, which can have negative consequences for your site's search engine rankings when the search engine companies notice -- and of course it hurts everyone when they try to search for something useful. Other advertisers are offering relevant services of interest to your users, but will make their interest in your search engine rank very clear when negotiating with you. I try to follow these golden rules, in descending order of importance, and I recommend that you do the same:

1. Maintain the positive user experience that made your site popular in the first place.

2. Check out the content the link leads to. Would your customers find it interesting? Does the site actually have content or is it obviously a useless "placeholder" site that the owner hopes to sell based only on its search engine rank? Check back occasionally to make sure a "bait and switch" has not been pulled.

3. Take care to distinguish advertising from the true content of your site.

4. Avoid companies that ask for a long list of generic one-word links with common words like "food," "sports" and "travel" unless those subjects are actually relevant to your content. Even then, see rule #2.

5. If the service being offered is genuinely interesting and relevant for your users, the advertiser's motive for buying the ad is not as relevant to your decision.

6. If an ad is "almost" relevant, work with the advertiser to help them get the wording right. That ad for speed dating may be perfectly appropriate for an audience of techies if you find the right way to make it appealing!

7. An ad that relates to your subject matter is best. An ad that relates to other interests you know your visitors share can also be appropriate. For instance, my visitors travel frequently to technical conferences. Hotel ads are a good fit for my site, but cruise line ads would not be.

8. If you are also selling space to an advertising broker like Google AdSense, be sure to follow their terms and conditions carefully and avoid damaging a more important relationship for a one-time direct advertising deal.

9. Insist on payment in advance by wire transfer, or wait for their check to clear before running an ad. If the offer sounds too good to be true, it probably is.

The Merchandising Business

You want to sell shirts, mugs, underwear and other fun stuff with your website's logo or characters on them. But you think it's going to be a lot of work. Fortunately, you're mistaken. It takes almost no work at all and doesn't involve any significant risk on your part.

What's the catch? The profit margins are low. So if you want to put things out at prices people will pay, you will only earn about a dollar or two per item. But if you find your sales are good enough to justify it, you can always switch to ordering your own custom-printed items in bulk later. I'll talk about that in a moment. But first, let's look at the easy way.

Working with CafePress

CafePress offers a wide array of products that can be customized with any logo you like. They allow you to upload your own artwork in most common graphics formats, and they do the rest, including billing and shipping. Which makes things about as painless as possible.

There is no signup fee, although they do offer plans where you pay a small monthly or yearly fee and receive better service.

Check out CafePress here (disclaimer: I am a satisfied CafePress vendor and affiliate).

Creating Your Own Merchandise

You can find local T-shirt-screen printing shops in most areas that can turn around an order for several hundred shirts at a great price. So the profit margins will be much higher... but you're taking on the risk of unsold goods. And you're responsible for shipping. And returns. And inventory. And billing, though PayPal makes that part fairly easy.

Still, if you find that your CafePress shop is selling hundreds of items per year, it may be worth the effort to do it yourself and keep the profits... or set lower prices to stimulate sales.

Sites like Custom Ink can give you online price quotes for custom shirts. You'll notice that prices drop quickly when you order hundreds of items. But for the best pricing, you may have better luck with a local company... after checking out their references, of course.

The "Tip Jar" Donation Strategy

Like the tip jar in a coffee shop, an online "tip jar" allows visitors to voluntarily give you direct financial support. Paste a bit of code into your web page, and a donation button becomes available to your visitors. Since the donation is optional, there is no need for a complicated "shopping cart" system.

Although amazon.com was the first company to successfully promote itself as a means of accepting "tips" to support your website, they are not the only option. Both Amazon and PayPal make it easy to add a donation button to your site. And both are relying on the same idea: most of your readers already have accounts with either Amazon or PayPal. So it's very easy for your users to make a donation that way. And since your website never sees the customer's credit card number, the customer feels safe.

For complete information about accepting donations via PayPal, see PayPal Donations.

For details on accepting donations via Amazon, check out the Amazon Honor System.

But Does It Pay?

Does the "tip jar" approach pay? Well... not in amazing amounts, no. But perhaps well enough to justify giving it a try. Check out Roger Williams' account of what happened when he released his novel on the Internet, supported entirely by optional "tip jar" donations.

Williams estimates that as many as 10,000 people most likely read most or all of his full-length novel... and he earned a total of $760 in tips.

Does that qualify as success or failure? It depends on how you look at it. But it's clear that the "tip jar" will never replace your day job!

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