Over the past few days the news headlines have been focused on
Wall Street and the downward spiral of all of the major stock
indexes. As usual when one of these shake-outs occurs, the popular
media tries to reduce the issues to easy to understand, bite-size
morsels. A favorite strategy is to profile a "typical" small
investor who had all his eggs in one basket when the market
crashed and now his entire life savings are nothing more than
red ink on his personal balance sheet.
Had our typical small investor diversified his portfolio, investing
some of his capital in blue chip stocks, some in tech stocks, some
in property, some in bonds, chances are he would still be in the
black. The same can be said for anyone running an online business.
The online environment is so dynamic and volatile, and so many
so-called "hot" opportunities come and go (and don't do much in
between), that devoting your entire enterprise to just one product
or service offering is nothing short of dangerous, if not outright
The answer, then, is to place a few eggs in several baskets, so if
the bottom falls out of one, you can still make an omelet with
what's left. In other words, diversify your product and service
offerings to generate multiple streams of income.
SOURCES OF INCOME
Here's five ideas to get you started:
We'll look at each of these individually in a moment, but first, one
important caveat. The concept of multiple streams of income does NOT
mean you should rush out and add new products and services to your
- Affiliate programs
- Own products and services
- Website advertising
- Ezine advertising
- Content access via subscription
Whatever you choose to offer must be closely related to the subject
matter of your site. If your site is about pet care, don't try and
sell saucepans. To do so is not only a waste of valuable time and
other resources but you compromise the integrity of your site's
purpose, not to mention your credibility as an expert in your
But even more importantly than that, all traffic is not created
equal. Sure, if you create a separate page on your pet care website
just for your new saucepan line you may attract one or two site
visitors you may not have attracted otherwise. But those visitors
were interested in saucepans, not pet care. Once they reach your
site they'll assume you've lost the plot and click away faster than
you can say "where'd he go?".
Far, far better to have fewer site visitors who are all highly
interested and motivated by the subject matter of your site
(highly targeted traffic) than relatively more visitors who are
only somewhat interested and motivated (untargeted traffic).
The return on your investment will always be MUCH higher from
targeted traffic in the form of repeat visits, referrals,
recommendations and, of course, all-important sales. OK, let's
turn now to the five sources of income.
The first and most obvious source of income is affiliate programs.
I'm sure most of you are already well-familiar with the concept but,
if not, you can get a quick primer by reading the article at
To be effective as an income-generator, the affiliate programs you
choose should be closely related to the subject matter of your site
in the sense that a visitor interested in your website content will
also be interested in the subject matter of the affiliate program
you are promoting.
To start your search for appropriate affiliate programs, visit
http://www.associatesearch.com and/or http://www.refer-it.com.
* See our "Top 10 Affiliate Review"
While affiliate programs are a good place to start, you are working
on commission. For significant, long-term, sustainable income you
need to develop your own line of products and services. This does
not necessarily mean you must personally create the product or
service; it just means you get to keep the profits on any sale.
You could, for example, sell products you purchase from a wholesaler.
Under this type of arrangement, you buy the product for a certain
price and sell it for a higher price. The difference is your profit.
The profit under this type of arrangement will, 99% of the time,
be significantly higher than the commission income you generate
with affiliate programs. If you don't want to bother with the hassle
of storing inventory and shipping orders, make arrangements for the
wholesaler to drop-ship orders to your customers instead.
Of course, you can always create your own products as well. A good
option for an online business is a digital product such as an e-book
since production and distribution costs are extremely low. Your
customer simply downloads the product from your server to her hard
disk. But you don't have to restrict yourself to digital products.
You might choose to write a book and have it professionally bound
and printed. Or you may choose to make your book available in both
digital and traditional format with different price points to reflect
the different production and shipping costs.
Once you have generated consistently high, targeted traffic to your
website, you can begin to think about charging for third party
advertising on some of your website real estate. The price you
can charge for banner advertising depends on your traffic whether
your advertiser pays you to simply host his banner or whether she
pays you per click-through. Particularly if your revenue depends
on click-through it is very important (both for you and your
advertiser in terms of repeat business) that your advertiser's
product or service is relevant to the overall subject matter of
Your pricing would generally be set at a CPM rate, for example $20
per thousand page views. So, if your site receives 5,000 page views
a week, that's $100 a week in advertising revenue. The more
targeted your traffic, the more you can charge as your CPM.
You have, I'm sure, heard it said many times that a great way to
generate traffic to your website is to publish an ezine (electronic
magazine or newsletter). That's certainly true. Ezines are a terrific
traffic generator. But they can also be a source of revenue in their
Once you hit 1,000 subscribers (as a general rule) you can start
charging for advertising in your ezine. Again, CPM is a good pricing
model to start with. I price my advertising at $5 CPM. This means
if I have 8,000 subscribers, a classified ad costs $40; if I have
9,000 subscribers, a classified ad costs $45, and so on.
Again, the more targeted your subscriber database, the higher your
CPM. Some very highly targeted, specialized ezines can charge as
much as $40 CPM or more. Others that are very general and untargeted
may only be able to generate $2 CPM. Again, the time and effort you
expend in targeting your market audience, the higher your potential
The number one commodity people are looking for online is information.
Consider making your website content available on a members-only
basis, charging a membership fee for access. Your content has to
be of genuine value to your website visitors, however. Don't try
this if all you're offering is a collection of other people's
The type of content that lends itself well to this type of arrangement
includes things like apartments for rent listings
(eg http://www.westsiderentals.com ), home-based job openings, that sort of thing.
Members-only sites that consist of a collection of freely available
products and tools can also work well if, by joining, the member
saves him or herself many hours of independent searching and
collating the relevant materials.
Apart from information, entertainment-type content also lends itself
well to a pay-for-access type of arrangement. The obvious example
is the highly lucrative internet pornography industry. Say what
you will about it, it is a business model that most online
entrepreneurs would love to be able to replicate in their
own industry, if only they could generate the same level of
interest. It's that targeted traffic principle yet again!
As I said, these are just a few ideas to get you started. Once you
start implementing these, others will suggest themselves to you.
It really doesn't matter what you do so long as it works for you.
By all means, if something works well, don't stop what you're doing.
But don't rest on your laurels either. Make sure you always have
other wells to drill if today's runs dry.
About the author:
Elena Fawkner is editor of A Home-Based Business Online ... practical
home business ideas, resources and strategies for the work-from-home
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