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How to make millions online (part one)

You know you are behind in your financial achievements when Entrepreneur magazine starts running articles on how to make your first billion.

Or when you see a property exhibition for apartments in Brooklyn, Pretoria, that cost up to R24-million. Each.

Or when you read that there are more than 5 000 South Africans who became new dollar millionaires last year, bringing our total up to about 50 000 or so.

The good news is that if you want to make more money than you have right now, the web is a good place to do it. To balance out the karma, though, the web is also a good place to lose a lot of the money that you already have, so treading carefully is vital.

If you are eager to go down the road of online entrepreneurship, remember this: like it or not, at the end of the day it all comes back to one thing: advertising.

The web is a medium whose strength lies in its ability to bring the seller and the buyer together. You’ve heard it before, probably many times, so now you consider it a bit of a cliché. But do yourself a favour and think about it for a minute. Almost every website that is financially successful is so because it has a plan on how to sell the right thing to the right customer.

I recently went to a media event hosted by Google South Africa. There, country manager Stafford Massie said that when he interviews people for a position at Google, he asks them to identify Google’s business model. If they say it is advertising, he shows them the door. I think this is arrogant and deceptive. Oh, sure, Google might be all about platform and content, but I challenge Stafford to explain, succinctly and accurately, Google’s business model without using the word advertising or its synonyms. And, by the way, advertising is not a dirty word. (Although Bill Hicks seems to think it is.)

So, how do you make millions on the web? Although there are many variations of the theme, it ultimately boils down to two methods:

  • 1. Create a platform, with content generated by yourself, your users or even your advertisers, and use this content to create a cohesive audience favourable to advertisers,
  • 2. Become your own advertiser, and use the platforms to sell your product — online or off.

In other words, there are two parts to online success:

  • create the platform, and then
  • monetise it.

(There is at least a third way, which is to offer a service or a solution, often solely web-based, that solves a problem that your audience has. You then generate money by directly selling access to this service. I am not going to spend much time on this since it requires exceptional technical expertise to be successful, and is geared for a thin segment of the market. It is worth noting, though, that many of these monetised services still offer a pared-down plan that is free, and that is subsidised by third-party advertising.)

So how do you use this knowledge to earn your millions?

  • First, identify a viable, niche target market.
    By viable, I mean that a considerable portion of the market’s members must have access to the internet. For instance, you would be smart to target a segment of the 24- to 35-year-olds market, but should be weary of targeting the senior market (although it is very lucrative in the US). The market should also have some appeal to advertisers. Bonus points if the market has appeal, and is currently difficult to reach offline.

    The more niched the market, the easier your job will be in attracting both the users and the advertisers. The wider the market, the more money you will probably need to spend to attract and keep the users.

  • Secondly, decide if you want your venture to be content based or “feature” based.
    If you choose content, then you must determine what kind of content, and who will generate it. You have three options: generate it yourself (blog), ask your users to generate it (YouTube) or have it generated by the advertisers (Yellowpages.com).

    A features-based website is one that often hosts content and then allows some interaction with it. Think Facebook, or Hellopeter. If you choose this route, know that it will most likely cost a considerable amount of money in development costs, and that you are going to have tight competition. In addition, a feature-rich website requires far more commitment from its audience, which can make your marketing of it harder. On the other hand, the financial rewards can be quite lucrative.

  • Thirdly, apply best practice to market the website to your new audience, and keep its interest.
    Once you have a dedicated audience, whether based on membership or simple site visits, you can start monetising the site.
  • There is a huge amount of planning that needs to go into the above three steps, and there are countless variations, options and ideas that need to be considered to make the right decision.

    In my follow-up posts, I am going to continue this article series by addressing each of the steps individually, and by offering examples of real-life international and local case studies of those who have done it right, and those who have not. Expect to see information on ventures such as social networks, affiliate marketing, blog monetisation, content sales and even e-shops. I will also offer ideas on how to finance your new venture, and share with you the successes — and failures — of some of my own ventures.

    Author

    • Eve Dmochowska spends her day playing on and with the Internet, and thinks it is a rather fun way to make money. She is the founder of Crowdfund, a crowd sourced fund to help local online startups get off the ground, and of the Geekspace, Joburgs first hot desking space for geeks. She is also the co-founder of The Broadband Bible which helps SAfricans find the perfect ADSL plan and the Airtime Bible, which compares the costs of cellphone contracts.

    12 Comments

    1. Albert Bredenhann Albert Bredenhann 14 March 2008

      nice one eve … i liked the article … and I agree … Google is all about creating a platform for advertising ..

    2. Bruce Miller Bruce Miller 14 March 2008

      Quite an interesting article, I cannot wait for the next instalment.

      Regards

      Bruce

    3. ct ct 14 March 2008

      Just a little correction… “one should be wary (not weary!) of targeting the senior market…

      Interesting! More please.

    4. Eve Dmochowska Eve Dmochowska Post author | 14 March 2008

      @ct Ouch! You are so right… (I have been SO tempted to write a blog post about the horrific spelling and grammar one sees all the time. You know, the “you’re” instead of “your” and “who’s” instead of “whose”. I resist though, because I know I will be torn apart by readers who will then scrutinize MY posts.:-) )

      I console myself with the fact that the typo even made it past my editor, who by his own admission has an incredible eye for detail. ;-)

    5. Heidi Heidi 14 March 2008

      Cant wait for your (sorry, you’re) next installment. ;-)

      I have started a blog and it is going well. I am planning to give it about a year to grow and then start monetising. By then, reading your posts would’ve been a great help. In fact, my site is growing nicely already, so maybe it will be sooner.

      I dont ask my readers to join. They just visit the site. I have been wondering if this is a good idea. I only chose to go that route, because I dont like having to first join a site to enjoy its content. So why should my readers.

      I think advertising is the way forward and hope that I will find interested advertisers.

      Thank you for your info!

    6. Leigh-Anne Leigh-Anne 14 March 2008

      very interesting – more please.

    7. Eve Dmochowska Eve Dmochowska Post author | 14 March 2008

      @heidi Thanks for the comments! Rule of thumb, if you wish to follow it, is that you never require membership for a blog. There are exceptions though, but only for content that has real monetary value (such as stock analysis, for instance).

    8. Gareth Ochse Gareth Ochse 14 March 2008

      Hello Eve (and welcome back!).

      I think your article hits most of the points spot on, for those who are aiming to make millions.

      The problem is though, that most people, even with great blogs, are going to make nearly nothing. $50 a year from AdSense is not bad, $100 is pretty good. If you’re doing over $1000 a year from a blog, you’re probably in the top 5%. If you are making more than $1M a year from blogging (all revenue sources going flat out), then you are in the top 10. Making more than $50K puts you in the top 50. So the curve is pretty steep. Your competition: 112 Million blogs..

      So what’s more realistic? We’ll you can expect AdSense to give you revenue of roughly $1-2 CPM. so if you get 1000 visits, you get $1, maybe $2. Want to make $50K per year? How are you going to get the 25 to 50 Million impressions you’ll need? The only really viable was is to sharply increase the focus of your blog – then at least the advertising rates will rise to about $5 CPM. If you get big enough, then you can sell direct and maybe get $10 CPM, but that’s a full time person you’d have to pay for. Hmmm.

      Anyway, as you know, we (Buzzfuse.com) have an alternative, based on quality of each item and the degree to which it touches people. Last month the Top Earner on Buzzfuse (Rico, a cartoonist) made $1100. The top blog post (a deeply personal note on divorce) made $500. As someone said, more than milk money. For the bloggers, photographers, and musicians out there, here’s a first step.

      (Enough of the shameless self-promotion – I was actually trying to point out how incredibly hard it is to make money from Advertising).

      Look forward to the next installments.

      garethochse at gmail dot com

    9. Eve Dmochowska Eve Dmochowska 14 March 2008

      @Gareth Hi there! All what you say is true, and I shall address it in future posts.

      But know this: I am citing you and your team as a case study for potential online millionaires based on Buzzfuse. Watch this space ;-)

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