Making Money on the Internet

It’s been almost a year and a half since I started making enough money with Glowfoto to allow myself to work on it full time. In that time, the question I’m most often asked is how can I do it too? So I guess it’s time to talk a little bit about how to take that website of yours and bring more in than you are putting out.

Reality Check

First of all, let’s not delude ourselves. Making money on the Internet is hard — its just as hard, if not harder, as it was back when people were happily deluding themselves into thinking that the Internet was the foundation of the American economy. It wasn’t then, and it isn’t now, but at least today that statement is a little bit closer to the truth.

Keep this in mind: Glowfoto has a solid Alexa rank. It is on the first page of Google results for the most relevant search term (free image hosting). It has a Google page rank of 5. I get serious traffic. I push a lot of bandwidth. My number one referrer is MySpace. I have everything going for me. I should be a rich man. I am not. While I make enough to not have to work for someone else, I don’t make enough to impress the ladies. Or my girlfriend, for that matter. But it’s a heavenly life, nonetheless. I make enough to afford to sit in front of the computer all day and tinker, which was the dream I’ve had since I was around 10.

The reality is that it is still hard to turn a buck off of advertising, and users are still under the impression that the $25.00 they pay to their ISP every month entitles them to the services that they use on
the ‘net. But another reality is that the opportunities for generating revenue from a website are many. Very many.

Targeted Text Ads

Yep, we’ve all heard about how great Google AdSense is. I don’t have the numbers, but from my experience, it seems AdSense really is great — for Google. The majority of the stories I hear from other site
admins is that Google brings in a pitiful amount of money. This is due to several reasons, not the least of which is the banner blindness phenomenon.

More troubling, though, is the problem of targeted ads — sounds great on paper, but not necessarily in practice. Targeted advertising is great if your site is primarily an information site (news site, specialty info site, etc). If you are a service site, like a Glowfoto, you’ll find it hard to find success with targeted ads, for two reasons.

First, for service sites, the ads likely to show up on your site are for competing sites. Why would I want to show ads for all the other image hosting sites out there immediately after I manage to get a new
user to visit mine? Is linking them out to a competitor really worth the $0.05 Google will pay me for that click? Not really. But even if you don’t mind all that, there’s the problem of getting your user to click out. After all, they’ve just found an image hosting site — why in the hell would they want to reload another one?

The second problem with targeted ads is that if your site doesn’t have a lot of text, you aren’t giving Google a lot to work with. What generally happens is you start displaying a ton of public service ads, which you don’t get paid for.

Image Ads

Image ads, then, are the better choice, although they aren ‘t that great either. Google does image ads, but it isn’t their specialty, so I’d recommend going with an ad network that does specialize in image ads. I have had surprisingly good results with ValueClick Media and Casale — both pay well and let you select the level of annoyance you want your visitors to suffer (extreme animation ads tend to pay well, but are punishing to your users’ eyes). Additionally, Casale does all CPM, so you don’t have to rely on clicks to generate revenue, instead you get paid based on how many of the ad elements you show. CPM advertising can be low, but its at least reliable. What I do is run Casale ads primarily, and I use ValueClick as a fill when Casale doesn’t have an ad to show.

The combo is quite successful. I’m mentioning these two out of literally dozens of ad networks that I’ve gone through in the past two years. Really, I’ve tried them all. Some work moderately well, most are abysmal. But you are of course free to try any network you choose. My main recommendation is to make absoultely sure you use at least two networks and set up a default campaign for each, so if one network runs out of ads, the other one will pick up the slack. For busy sites, this happens strong>all the time/strong> — make sure you are showing something, so the page view isn ‘t wasted. I swear to you, this makes a HUGE difference in revenue. Any good network will support this, so keep that in mind.

Another important note: use rectangles. I ‘m sure you’ve heard this before, but banners suck. For whatever reason, users are more likely to look at a rectangle than a banner, so use them whenever possible.

Untargeted Text Ads

Ok, back to text ads. You don ‘t have to let a network like Google or Yahoo (Overture) decide what ads to show. Instead, you can decide with advertisers which ads are best for your site. AdBrite is probably your best bet here. AdBrite lets you set a price per day/week/month to run an ad on your site. The big plus is that you can dictate what an advertiser is going to pay to advertise with you. The big minus is that they still will be unlikely to want to pay the big bucks. But at least you ‘ll be in control.

Here’s the deal with ad pricing: a lot of advertisers have one of two figures in their head at all times: .05 or .10 Google AdSense (with its bidding system) is helping to change that, and ad networks offering CPM and other alternative ad pricing schemes are doing their part too. But you should always keep in mind that .10 CPC is still fairly ingrained in the minds of advertisers. But let ’s not be negative, instead let’s see it actually working

Take a look at some of the bigger names working with AdBrite. Start with, say, friendster. Friendster is a high traffic site, for sure. But as I ‘m writing this, the cost to run an ad through AdBrite on Friendster is $317 per day. If you’ve got the kind of traffic that you can demand that with a straight face, then clearly AdBrite would be a great choice. I can’t report on my results with AdBrite so far, as I’ve done a couple of brief runs without getting any advertisers. I’m currently starting a third trial, this time a little longer, so I should have some results to post in a couple weeks. I started my price low — very low — so we ‘ll see what kind of dollar amount I can pull once it gets rolling.

UPDATE: AdBrite is a horrible waste of time. Don’t use it. I ran with AdBrite for a couple months without seeing a dime. They did run a few default ads in the space I gave them, and the eCPM on those was around .0001. Complete waste of time. Finally, an account manager called me up and said “hey, maybe we should switch to AVN (adult) ads for your site.” Ok, so their only option for me was to run porn ads. Thanks.

My advice: if you are big enough to demand good ad rates, write your own ad system and get the full 100%. You probably have some funding at that point, so make the most of it.

Popunders

Ok, I know what you’re thinking — no way am I putting popunders on my site! You probably want to avoid this for two reasons: you think they suck, and you think that your users, who also think they suck, will never come back to your site.

You are right about one thing: you think they suck. What you are wrong about is that your users will never come back. They will. They are used to stuff like popunders, and they aren’t as sensitive as we are. I hate
having to close windows, but the vast majority of users out there really don’t seem to mind it.

Here are some tips to using popunders effectively:

• Make sure you pick an ad network that doesn’t show popunders all the time!
• Both ValueClick and Casale have a 12 hour limit on showing new popunders to a user. This means that once a user gets a popunder, he/she won ‘t get another one from your site for 12 hours.
• Do not increase this or decrease this limit!
• Only put popunders on pages that justify it!
• Do you have an expensive page (one that pushes more bandwidth than others?)
• Do you have a page that is frequently abused/reloaded or even one you want to discourage users from visiting?
• Do you have a certain user base that doesn’t mind popunders, versus another user base that does? Only show popunders to the users that tolerate them.

On that last point, I can give an example. I am a regular poster on SomethingAwful. SomethingAwful users tend to fall in the die popunder die! crowd. So I never show popunders (on the pages deemed to justify them) to visitors linking in from SA. I only echo the ad code after checking the HTTP_REFERRER from apache, and making sure it isn’t from a tech-savvy site.

How much can you make from popunders? It ’s significant. CPMs tend to be around $3-$5. Again I recommend a ValueClick or Casale for this. There are a lot of popunder servers out there, but a lot of them tend to serve up pops that are shady (think spyware). These two tend to serve up clean popunders, so I’ve trusted them for about two years each.

Affiliate Programs

There are a ton of affiliate programs out there. Linkshare seems to be the big one, so you might want to start there. Amazon is also a strong choice. Personally, I have had horrible results with affiliate programs — horrible as in didn’t make a dime. Your results are going to depend on the kind of user you tend to attract — do they tend to spend a lot of money on the Internet? My users tend to be young — high school to college age. Most probably don’t have a credit card. Consequently, I’m going to have a hard time bringing in commissions on sales.

Your site might be different. It really doesn’t hurt to try.

Selling Email Lists

Don ‘t do this. I mean it. You are a horrible person if you do this. Also, your reputation will be ruined. Along with your soul. No amount of money is worth this.

Charging Your Users

Ok, here ’s where things get interesting. Can you charge for something? Usually, the answer is no. Out of 10,000 users, you might end up with somewhere around 5 actually willing to pay to use your site. If you are going to charge, you had better be the damn best site doing what you do. If not, there are probably dozens of free alternatives out there for people to turn to.

What you can do is charge for additional, bonus services. I’m actually surprised more sites don’t do this. I still wonder why MySpace doesn’t charge, say, $2 a month to let their users go over the 10 image limit.

Say $2 a month buys you 50 images. I would imagine somewhere around 5% of their users would go for it. What is $2 times 5% of everyone? A lot.

You can do the same. Keep the basic service free, and charge for extras — not extras everyone wants, extras that a fringe few really want. Those are the people who will not only pay, they’ll actually appreciate the fact that you even offered them what they want. Think about it from your point of view — you know there’s a website that you use frequently that’s pretty cool, but if they only had feature X.

Right? Wouldn’t you be willing to part with a couple bucks a month if only they’d offer it up to you? I’m thinking of five examples off the top of my head right now.

Another great test to use when deciding on what features to charge for is your cost. Is there something you’ve been wanting to implement but can’t because it would be too expensive to offer it to everyone? Ok,
then charge for it. SomethingAwful, for example, requires an upgrade to a platinum account before you can search the forum archives. The search function was killing the site from overuse — too many users
executing the database queries required to search was grinding the server to a halt. Rather than get rid of it altogether, they opted to let users pay for it if they really just had to have it. This has a
double benefit: extra revenue, and less load. Think about how you can make something like that work on your site.

General rule of thumb though, don’t charge for stuff that everyone wants or needs. Only for stuff that a few really really want or need. I know it sounds counterintuitive, but this is the Internet, the place where logic and good sense go to die.

Interstitials

Oh please don’t do this. I know they pay well, but there isn’t a more annoying form of advertising on the planet. I know you think spam is worse, but spam is easy to delete and filter. Interstitials are just
annoying no matter how you slice it.

But they pay well. So if you want to go that route, be my guest. But I’ll never, ever visit your site.

Actually, though, there are two kinds of interstitials — the ones that act as a sort of “in between” page, and the ones that float all over your screen and have very vague or obfuscated close controls. The
first kind aren’t that bad. The second kind, however, SUCK. God I hate them. They make me want to destroy everything around me. You can probably make a decent amount of money running these,
but why oh why?

Alternative Programs

Ad programs are getting more and more creative. There are more and more ways to make money popping up every day, and some of the more interesting ones have nothing to do with banner ads, text ads or
popups.

One program I’ve just started is Intermix Media’s (the guys that launched MySpace) Webgames program. I like this program a lot because it offers three ways to make money — commissions on game downloads, ads shown when a user “challenges” another user to a game, and on interstitials while the game loads. But even better is the fact that it ’s a free source of content for your site. It allows you to create a games page on your site that gives users yet another reason to return. Programs like this are the most exciting to me because they aren’t just "money money money" programs. Instead, they actually focus on enriching the user experience and making the web a more entertaining place, in the hopes that the user will pay to continue that experience offline. The revenue isn’t coming fast and furious from the Webgames program yet, but I’m going to give it a while. I’ll report back here in a few weeks on how it does.

UPDATE: The WebGames program does not generate a lot of money at all. AT ALL. A couple dollars a month. I still kept it though, because I just like the idea of having games on the site. But as a money maker… eh, not so much. Intermix does, however, have a good program called Welcome Pages which I encourage you to investigate. I have been happy with that program.

Final Words About Ad Programs

One of the toughest things about getting into these programs is convincing them that you are worthy. Just about every program I run now rejected me at first. Most of them replied with a form letter apologizing but essentially telling me to bugger off. I got into them by emailing back and making my case personally. In every case, it worked.

These networks are understandably hard to persuade — they are getting applications from every blog and specialty site on the Internet — so you ‘ll want to make sure that your site has the kind of traffic that
they’re looking for. Google tends to accept everyone (although they, too, rejected me at first) so start there if you must, but keep nagging the other programs to let you in. Usually, they will if you persist.br

Well, that about sums it up. If you ‘d like to know more, drop your questions on the discussion page, and I’ll do my best to answer.