Folklore would have us believe the right online strategy can make you a fast fortune from the comfort of your armchair. Jonathan Crossfield tests the promise of effortless internet millions.
The illusion of effortless wealth has always been attractive. A flutter on the gee-gees, a scratch of a ticket – we are all susceptible to the dream of quick cash without having to work hard to get it. But whereas many of us have built a healthy cynicism offline, the internet has developed a reputation as being the digital equivalent of money growing on trees.
We’ve all seen the claims: websites, seminars, or mailouts promising online riches and offering – for a fee – the answer.
“Do you want 30 million new customers that have money?”
“You can get your ad in front of 20 million people on the World Wide Web.”
“Remember, there are 30 million visitors cruising by all the time.”
The internet created a new playground for those chasing quick cash and automated wealth. With no shop to rent or furnish, no staff to pay, and 24-hour traffic, the internet has lower overheads and greater potential than many traditional business models.
Thousands of online stores are launched each year, but shopping cart software is certainly not the only way to generate money through the web. Bloggers and webmasters continually look for easier and more effective ways to monetize their sites through advertising and affiliate programs and paid subscription models.
But is it all true? Can I launch a website tomorrow and start to see money flowing into my account while I do more important things like catching up on my telly? Is the internet really a shortcut to the world of luxury cars and beach-front mansions?
Building your net worth
First, the bad news. Claims that there are 30 million potential online customers are completely wrong. These statements are based on misunderstandings of how the internet works.
Even if the numbers are correct, and there’s no evidence to suggest they are, it is not reasonable to expect 20 or 30 million people to automatically arrive on your website, no matter how exciting it may sound. With 20 million people in Australia, you have the same chance of becoming rich by standing in your doorway and asking everyone who walks by for a dollar. The vast majority of your target market will never even walk down your street.
The internet is no different.
Some of these online schemes rely on selling novice webmasters a simple, mass-produced website and encouraging them to on-sell the same program to other keen online money-makers. In other words, pyramid marketing.
This results in thousands of virtually identical websites shouting the same offer with the same copy and same design – each one slowly fading away as the dream of easy money evaporates under the reality of web hosting bills. Except for the person who dreamed up the scheme; he’s sitting at the top of search engine results with thousands of purchased sites pointing back to him and their money in his pocket.
Now the good news. There are many who have become insanely rich on the internet. Then there are others who, although they may not have the mansions and private jets, are certainly earning enough to have a very comfortable income.
These are the online business people who understand how the internet works and are willing to accept that any level of success requires effort.
It is certainly possible to get rich online. But something must separate the internet millionaires from the thousands of wasted websites, sorry stores, and bust blogs.
Stores for cash
There is no doubt opening an online store can potentially reach more customers and achieve more sales than a bricks-and-mortar shop. You can sell online exclusively or use the web to develop a second revenue stream for your existing business. However, failure can be very costly.
“The same principles of traditional business applications,” says online entrepreneur Franco Lagudi. “It takes a lot of hard work using the right people and accessing the right experts with their input.”
Lagudi has spent the past few months building his online venture, The SOC Exchange.
“I don’t think having a great online business idea is enough,” he says. “You’ve got to provide a service. You’ve got to provide quality. That takes planning and that takes time.”
Lagudi’s business idea – offering a fair alternative to eBay that charges a simple flat-rate instead of large commissions and fees – has garnered him a large amount of publicity in the United States.
“I have a philosophy of how I felt it should work. I wanted to offer a flat rate so people knew what they were up for.”
The business grows every day as more people discover the benefits of selling through The SOC Exchange, but Lagudi isn’t retiring to the Bahamas just yet. Having a service that customers want is not enough; they need to find you.
“The audience is out there, but trying to engage that audience is a hard job,” he says. “It requires continuous marketing and public relations. Success could take any length of time but I’m prepared for that.”
Lagudi is supremely confident in his business model but understands that a significant ramp-up period was needed.
No instant riches
Every business starts at the pointy end of the graph and works hard to climb slowly. Offline entrepreneurs have always known this and frequently plan the first months of the business around little or no profit. Yet many new online businesspeople, excited by the promises of internet millions, buy too much-advanced stock under the assumption of immediate, massive sales.
Sam Shetty, sales manager for Netregistry, helps hundreds of small businesses launch online every year.
“A lot of people get carried away with their idea,” he says. “The problem with websites is that if you don’t market them, no one’s going to buy from them. There are thousands of websites launched every day trying to make a dollar, but if you don’t have strong marketing strategies, you don’t get any exposure.”
Online marketing techniques such as search engine optimization (SEO) and search engine advertising can, over many months, gradually build up the flow of traffic necessary to turn a profit.
“I talk to customers every day who have invested heavily in a website and stock but don’t want to spend that little extra on the marketing,” Shetty says. “These things have to be part of your online plan. For most sites to achieve traffic, they need to plan for at least six months of SEO, as well as other marketing and PR activities, before traffic flow converts into enough customers to make a profit.”
Blogs for dosh
Not interested in selling merchandise online? Think packing up and posting each purchase is too much effort? Why not take up blogging for a living? The internet is now overflowing with get-rich-quick blogs attempting to automate an income through advertising and affiliate marketing. Is there truth to the hype?
“There’s definitely a lot of hype out there,” says professional blogger Darren Rowse. “I personally have found that making money online is anything but a passive income stream – it takes a lot of work over the long haul to be successful.”
Rowse started blogging in 2002 as a hobby. After a while, he realized it would be possible to earn a second income from the traffic he had built over time. Monetizing his blogs with advertising and affiliate programs became so successful that, when he found himself between jobs, he could become a full-time blogger. Rowse now works from home – or a nearby coffee shop – and makes a six-figure income. His ProBlogger website has over 48,000 subscribers. The Digital Photography School adds another 53,000.
“Statistically, if you were to consider all bloggers and how much they make, I am the exception and not the rule,” he says. “But more and more bloggers are definitely making at least a part-time income online and a small group full time.”
To outsiders, it can appear that this income is effortless. After all, how difficult can blogging be?
“It is possible to make a lot of money fast online – but it is not most people’s experience,” Rowse explains. “A year or so back I surveyed the top 100 blogs and found that they had all been in existence for an average of three years. It definitely takes time to get a blog established.”
Starting a blog is insanely easy. With free software such as MovableType or WordPress, a web hosting account, and a domain name, anyone can launch a full-featured and dynamic blog. Hundreds of blogs are launched daily, many with the open intention of making money.
Rowse didn’t set out looking for internet riches. It was two years of blogging for fun before the quality of his content became a serious moneymaker.
“Too often, people pick niches that they have no interest or passion in,” he says. “As a result, they can’t sustain writing quality content for the long haul.”
Long-term success relies on producing a relationship with a wide audience, and this is only possible with sustained, quality content that people want to keep reading.
“Many hear about internet riches and start out with dollar signs in their eyes only to find a few months later that they had unrealistic expectations,” he says.
“Having said that, many bloggers give up too quickly and are simply not patient enough. A blog needs at least 12 months to start hitting its potential. If you give up before then, you could miss out on the reward for hard work.”
Rowse started blogging in 2002, thinking he was coming to the trend too late to be effective. He has proven that the blogging phenomenon is far from over.
“The blogosphere is definitely getting more crowded but new opportunities continue to open up as more and more of the world gets online and as new tools emerge,” he explains.
It won’t be quick, it won’t be easy and it certainly won’t be millions, but if you have a passion for a topic that appeals to a wide audience and are prepared to work hard at the keyboard, blogging can certainly turn into a hobby into a second income.
The keys to online riches
So here they are the real secrets to online success as suggested by those in the know.
1 Think long, think hard and think again
This is Franco Lagudi’s catchphrase. It is too easy to become excited over a business idea without considering the details. How is online consumer behavior different from offline? How will I track success? Is the internet the right market?
There is no substitute for planning and analyzing an idea from every angle. Your opinion of the idea doesn’t matter, it is the reaction of your target audience that will determine success or failure.
Ask other people to provide feedback on your idea. Conduct research if possible. Investigate whether any similar services have already achieved success. Study online behavior and develop an understanding of how the internet works.
Giles Donovan, sales director of Netregistry, has a simple philosophy: “The best ideas are not new, untested ones. They are old ideas thought out better.”
2 Grow traffic
“Traffic is hugely important,” says Rowse. “You can have the best strategies in place but unless anyone sees your ads, you’ll never get conversions.”
Many online businesses launch without ever considering how customers will find them. Every site, whether an online store or monetized blog, needs to have a high enough rate of traffic to guarantee enough conversions to sales or ad clicks.
Not every visitor will buy a product or click an ad, so understanding the ratio of conversions to traffic can help to determine how many visitors you need each day to achieve success.
“A lot of people assume that they can put up a website and make money out of AdSense,” explains Shetty. “If you can get people to your website, assuming you can make 10 cents off someone clicking on an ad, you are going to need a large amount of traffic every day to make it worthwhile. A huge amount.”
The key to traffic remains to provide quality content and strong search engine optimization. Therefore, whether you are selling a product or relying on AdSense, your goal should always be to provide the best experience for the visitor.
3 Build trust
“You need to build a relationship with your audience,” explains Rowse. “Trust is important with affiliate programs, particularly.”
Trust comes with time and also with quality information.
“First impressions count,” he says. “People make snap judgments about websites within seconds of arriving. If you don’t quickly communicate what your site is about, show off your best content and hook people into subscribing, they’ll be gone very quickly never to return.”
Trust is even more important with online stores. Before deciding to make an online payment, many customers look for signs to determine trustworthiness. Testimonials, customer feedback, security certificates, and money-back guarantees all help reduce customer fears and encourage a positive transaction.
4 Define your own success
Lagudi believes that people should be less concerned with chasing online millions and more concerned about understanding what level of income meets their needs.
“One guy might think success is sitting on the beach pulling in four or five hundred bucks a week while living on his own,” he says. “That might be successful for him at that period in time. But it ain’t going to be successful for me with a wife and kids and a mortgage and a car and school fees.
“Different people have different levels of success and it doesn’t mean anyone is better than the other. The point is that success is a pretty loose term and you need to understand what defines success for you before you launch your business.”
Financial goals should be considered within the wider considerations of your desired lifestyle. After all, getting rich doesn’t necessarily mean being happy.
By understanding the level of return you need to achieve the specific lifestyle you want, you can build a more realistic business model with fewer risks and a higher likelihood of achievement.
This means thinking more clearly about whether you really want the Ferrari and holiday mansion or whether you would be happier with more time for the family and a nice house or whether your dream is a simple one of afternoons on the beach.
“What is success?” Lagudi asks. “The way one person might interpret success can be completely different to another. A lot of it comes down to perception. You’ve got to be happy in what you’re doing and your business should help you to achieve your goals of happiness.”
I couldn’t put it better myself.
AdSense: Google’s popular advertising tool, which automatically places ads in a webpage based on keywords in the text
Affiliate marketing: A technique where website owners run links or advertisements on their sites and earn a commission on any sales generated when readers click through.
Blog: A regularly updated weblog. Originally online diaries, they have now become ongoing editorial forums.
Keyword or phrase: The word or phrase used to trigger a search engine request.
Search engine: The online application that allows you to enter a word or phrase and returns a (long) list of the most relevant websites that contain your request. The most popular search engines include Google, MSN, and Yahoo.
Search engine optimization (SEO): The activity of adjusting web pages to increase the chances of appearing prominently in the most relevant search engine results for your product.