You probably know that many websites create revenue but don't really know-how. In this post, I will show the most common ways of how online sites make money!
If you are new to online business or have never run a website of your own, it might seem odd that a site can make money simply by existing online, yet it's true. There are basically only two way online sites make money: By selling products and services or through advertising, including affiliate marketing. But there are several ways these can be implemented.
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I'm sure you are aware that websites make money through advertising but many sites online don't seem to have any ads. And you've probably heard that ads only pay cents. But rest assured, most sites online are making money one way or another, like you can see in this video from income school:
It's easy to understand that popular websites with millions of monthly visitors can make significant money through ads and sponsors.
The thing that might surprise you is that there are millions of relatively unknown sites and blogs that are producing full-time income and in some cases fortunes to their owners.
It is this potential I want you to grasp as we move forward because this offers a huge opportunity to anyone willing to learn these skills.
Creating and owning your websites isn't only for tech-savvy nerds in 2020. The tools have become really simple and accessible, so almost anyone can learn how to use them.
Consumers are moving only at an increasing rate and this offers incredible opportunities, so don't treat this information lightly. Even having a general idea of how this work will be valuable in today's job market, so you can thank me later.
Before we look at the ways online sites make money, we need to understand a bit more about traffic.
Money Depends On Traffic
For a website to make money, it needs traffic. Traffic means the visitors of your website. They are real people looking for entertainment, information or products to buy.
Why it's important to understand traffic is because making money with a website is a numbers game. The more traffic you have, the more sales you can expect to make.
But all traffic is not created equal. The more targeted traffic you have, the easier it is to convert it into income. The income potential will also depend on the niche (topic) of the site.
So in some cases, a website with 1 million visitors/month can make less money than a website with 10 000 visitors/month.
There are essentially four ways to generate traffic to a website:
- Organic: Search engine traffic that is generally free
- Paid: Traffic from ads in Google, social media and YouTube for example
- Direct traffic: People who come to your site by typing the URL directly into their browser.
- Referral traffic: Visitors that come through links on other sites
- Social Traffic: Referral traffic that comes from social media sites
Many sites have a huge advertising budget but there are websites that get all their traffic through organic search engine results. This kind of traffic is free, so it's much easier to turn in a profit with it.
The key thing about traffic is to understand that websites can have thousands or even tens of millions of visitors every month. When you understand this volume, it becomes easier to understand how sites make money even if you never click ads or buy anything on a site. Some people always do.
For example, if you have 10 million visitors every month on a website and market a digital product worth $100. Even if only 0.001 percent of your visitors end up buying the product, you will still make $100 000/month.
Of course, most sites don't have 10 million monthly visitors but then again a conversion rate of 0.001 is very low as well. I'm just trying to prove you the point that not many people have to buy if the traffic volume is high enough.
Now that we understand how websites get traffic, let's look at the most common ways online sites make money.
PPC stands for paid-per-click. The most common and well-known PPC advertising platform is Google AdSense. This is what most people think all sites use to make money.
AdSense displays small clickable ads to your visitors based on their previous behavior. This means that the ads will be customized and targeted for each visitor.
The visitors of the site will see these ads displaying offers they might be interested in and if they click them, the site owner will typically earn a few cents to a dollar, depending on the ad.
I'm sure you've seen these ads all around the web, there might even be ads like this on my site currently. So if you are wondering how on earth the website owners know that you were just looking for that new fitness tracker or whatever, the answer is that they don't. Google does, and displays customized ads for you.
There are other ad networks that pay better than AdSense and AdSense used to offer a reasonable way to monetize your site but generally speaking PPC ads only offer a nice extra and you will need a lot of traffic to make a meaningful income.
Affiliate marketing is by far my favorite way to make money online because it has some awesome advantages over many of the other methods to monetize your site. I use affiliate marketing as the main strategy to monetize my sites currently.
Affiliate marketing is a form of revenue sharing. Vendors pay affiliates a share of the profit for referring customers. It's very lucrative for the vendors because well compensated affiliate marketers will refer tons of targeted buyers.
It works like this: The website links to relevant products or services they for example review or recommend.
The link takes the visitor to an online vendors site and if the visitors end up buying something, the website owner earns a commission.
How this works technically is that the link includes an affiliate id or a cookie that tells the vendors online store who referred the customer.
Probably the most well-known affiliate marketing platform is Amazon. They get a ton of traffic and sales from affiliates, but they just recently cut down their affiliate commissions, so I can't really recommend them for affiliate marketers.
What makes affiliate marketing so special is the fact that it's effortless on the website owners' part, all you need is a link. No need to handle all the work involved selling your own products, you just refer customers and earn the commissions.
So it's effectively as easy to implement as PPC ads but the commissions are generally much higher. Physical products typically pay between 1% to 15% while digital products can pay from 20% up to 90%.
This is possible because digital products generally have huge profit margins and the vendors can get so many sales through affiliate marketing their products that they are willing to give up most of their revenue.
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Sponsored ads, or manual ads or selling ad space. Whatever you want to call it. The idea is to offer advertising space to sponsors that are relevant to your site.
This can go further and the website can feature sponsored content in the form of product reviews and recommendations for example. These days you generally need to state that the content is sponsored.
The key difference between Sponsored ads and affiliate marketing or PPC ads is that the sponsor generally pays directly to the website for the ad space and not based on clicks and sales commissions.
Selling Own Products Or Services
One of the most obvious ways to make money on an online site is by selling your own products or services. A company with website with huge amounts of traffic will have no trouble selling it's products.
One thing you might not be aware of is how much digital products there are being sold. Digital products offer a great way to monetize a site because there are no side expenses besides creating the product. Membership sites that sell services like training are a great example of this.
Selling physical products through an online store is very effective but involves a lot of work as there still has to systems in place for storage, shipping, handling services, and returns, etc.
There's also the obvious problem with this method that you need a product or a service to sell. That's why people have also created so-called eCommerce sites, where they sell physical products they acquire elsewhere for cheaper.
Dropshipping has been a popular way to make money with a website in recent years. Dropshipping is very similar to running an eCommerce website with the big difference that the site owner doesn't actually own and handle the merchandise.
Instead, when a visitor buys something on a dropshipping site, the site automatically sends the order to a dropshipping supplier that handles the actual shipping of the physical products.
So in a way, it's a mix between an eCommerce store and affiliate marketing. The downside compared to affiliate marketing is that you have fewer options on the products and you are considered legally a vendor. This means that your website has to comply with more regulations. The margins and thus income potential is also smaller than in affiliate marketing in general.
One not so obvious way online sites make money is by generating leads for other companies. Lead generation is a big business and that essentially why companies advertise.
If you can get your ad on a website that ranks on the first page of Google for your service in your area for example, you will get a lot of customers. This is why companies are willing to pay good money for services like this.
So there are for example lead generation sites that rank in Google for the term "Best Plumber In L.A." that earn money by displaying contact information of a local plumber. In a way this is very similar to sponsored ads.
Many websites and services rely on donations. This is especially true for non-profits but there are websites that actually make a significant profit with donations.
If you offer a lot of value to people in the form of information or entertainment, many of them are willing to donate to you so you can keep offering your service.
Site flipping is the business of creating sites to a certain point and then selling them for a profit. This is especially lucrative if you can catch a valuable dropped domain.
Some domains can be very valuable on their own but especially if you create a site with some content on them so they start ranking for keywords on Google.
This will increase the value of the site. There are auction sites that specialize in website and domain flipping. One of the most well-known ones is Flippa.com.
There you have, the most common ways online sites make money. I hope I managed to educate you and you found the answer to your questions.
If you have any additional questions, feel free to leave them in the comments section below and I promise to get back to you asap.
There are many ways to monetize a website and different strategies work for different types of sites. But the key message here is that there are tons of potential in the online world.
Just a couple of years ago I didn't make a cent online and now I own two websites that make me money online. I had no prior experience but I managed to pull this off by following a proven plan and training.
I'm telling you this because I want you to know that this is possible for you as well. If you want to learn how to create a website that produces income 24/7 on automation, check out my free 7-day course below:
This is not a get-rich-quick scheme, this is a serious business model that involves a lot of work in the form of content creation. But if you stick with it, you can create financial freedom for yourself in the long run.
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