Three years ago, Duncan Jennings was studying management at Leeds University and building websites for fun. Then he discovered that he could make money out of them relatively painlessly with affiliate marketing. Everybody knows that those “sponsored links” you see alongside Google search results mean a company has paid to be there. What is less well known is that it is not necessarily the advertiser who has paid the bill. Why would someone else pay to promote an international tour organiser, for instance? Answer: when a visitor clicks on the link and buys a holiday, whoever paid for the ad receives a payment. That person may be unconnected with the advert.
“I was really interested in the internet, and always wanted to be an entrepreneur,” says 23-year-old Jennings, today managing director of eConversions.co.uk, which has leading brand names among its clients. Starting with travel sites, he put helpful information about a city destination such as Barcelona online, then added a link to Expedia so people could book their hotel there. Having done a deal with Expedia, he received commission if shoppers completed a transaction.
“That’s affiliate marketing at its simplest,” Jennings says. “I realised, however, that there are only so many sites you can afford to set up. I might have one promoting cities, but if a travel company was selling cruises, I didn’t have the resources to set up a site discussing them.” So Jennings adopted a different strategy. Instead of bringing people to his site first, then passing them on, he began to send them straight to Expedia and Thomas Cook, for instance, by paying for certain “sponsored links” alongside Google’s search results. For every click on those links, Jennings received a bounty.
Once, the attraction of the web was that it was a big, free-for-all playground. Now the number-crunching has become serious, budding entrepreneurs and even humble bloggers have learnt to turn a hobby into a revenue stream — or, in the jargon of the business, they are monetising their sites. Affiliate marketing is one option, often combined with advertising, sponsorship, subscriptions and e-commerce. The simplest and perhaps most popular method is the advertising technique offered by AdSense, one of the many offspring of Google, the world’s best-known search engine.
So long as you meet certain criteria about operating a legal site, you can sign up free. You then cut and paste a piece of web code into your site, and Google does the rest. By crawling your site looking for keywords, it can send you ads matched to your content. Then, every time a visitor clicks on one of those ads, you are paid by the click (25p perhaps), rather than per purchase (which might be £15), as with some affiliate schemes. Such are the numbers online that if you attract sufficient traffic to your site, AdSense can prove a nice little earner.
“AdSense is the single most genius thing ever to have happened on the internet,” says Nigel Powell, the Doors agony uncle, who runs a blog called Redferret.net. “It suddenly gives a small site a way to start paying its hosting costs. Funding has always been one of the problems of setting up a website. Now people all over the world can afford to showcase their specialist interests, by generating a revenue stream as modest as £50 to £70 per month.”
Peter Cooper, a web-application developer who describes himself as a blogging evangelist, uses his site primarily as a promotional tool to find himself work. Coincidentally, he earns about £400 per month by having AdSense and other services on his pages. “For something that is very part-time, that’s not bad,” he says.
AdSense does have shortcomings, however. Run mainly by e-mail, it can be frustratingly short on the human touch and sometimes mismatches sites and ads. For instance, a travel article about “Christmas in Rome” at the online city guide Travelintelligence.net was matched with an ad for “Save the Canadian Wilderness”. James Dunford Wood, who set up the site with AA Gill, another Sunday Times columnist, reckons that AdSense’s relevancy rate is about 70%.
Like a dating service that has gone wrong, some ad-matching is downright contradictory. The website Say No to 0870 is dedicated to offering alternative telephone numbers to those with the expensive 0870 prefix. Perversely, the AdSense robots see “0870” and think they are being helpful by sending ads that promote the sale of 0870 numbers.
Among many rivals to AdSense, the marketing firm Miva offers a near-identical service, but tries to improve on some of AdSense’s perceived failings. For example, it offers telephone support, and everyone who signs up is given their own account handler. Unlike AdSense, it also discloses the revenue share.
“I like Miva’s transparency,” says Simon Burgess, managing director of the insurance broker Britishinsurance.com. “I like to know from the outset what a click is worth and how much I am going to receive for it. If someone isn’t giving the information, I ask why. I always think the client is the most important element in business, and in this situation, I consider myself the customer. Google is pretty much saying that it is more important than me.”
Once ambition bites, a website will prioritise different revenue sources. If you want to sell goods online, you’ll need an e-commerce package, and Miva’s Merchant 5 is a customisable option. For a one-time licensing fee of £540, you buy software that includes page-design templates, inventory management, payment gateway support, shipping calculation and an integrated shopping cart. Alternatively, you could go straight to a bank. Although it is working on a new package, HSBC currently offers to set up secure e-payments for £50 to existing customers, plus £20 per month and 1% commission on credit-card payments or 10p per debit card.
All revenue schemes must be handled with caution. “When we started, AdSense was a life-saver,” Dunford Wood says, “but you have to be careful. We used to put the ads on the hotel offers pages, and we found AdSense was cannibalising our bookings. Now we have restricted the links to the pages about hotel reviews and travel journalism, and we split the revenue with our writers. It keeps them loyal.”
Among other problems, fraud is the most worrying. So-called “keyword bloggers” make money by scattering valuable keywords all over their fake blogs, known as “slogs”. Cooper says: “It is easy to take information from someone’s site, put it on your own, then add AdSense. The fakers might make only $1, but when they have 1,000 sites, it can be profitable. These people work on economies of scale.”
Click fraud is rife, too. Site-owners should never click on their own ads, but some encourage friends to do so. To prevent this, Miva monitors its traffic, down to each and every click, with automated screening software. Human analysts also keep an eye out for irregularities in traffic patterns.
Alternatives to the AdSense “cost per click” model include “cost per acquisition” payment, offered by the affiliate-marketing network Commission Junction. Here, the person who displays the ad is paid only if a shopper clicks through and buys a product. On the website of the American company Text Link Ads, you choose the ads you wish to place on your site; these are priced at a flat monthly rate, say $100, which is split 50:50 with the site’s publisher.
Any smart operator tries to direct traffic to their site with good old-fashioned promotion. Nick Burrin is, with his wife, Katie, joint owner of the furniture-design company New England Lifestyle, based in West Sussex. They simply pay for their online business to appear as a sponsored link on Google. For this service, known as Adwords, you bid what you are prepared to pay for specific keywords (in the Burrins’s case, “white furniture”), and they appear as a sponsored link on Google searches. Every time a visitor clicks through to your site, you also pay an agreed sum.
“It has increased our business by 25%,” Burrin says. “You have complete control. You can change how much you want to bid or how much you want to spend per day. We were so busy last October, we lowered the amount, and it was like a tap being turned off. The phone stopped ringing until we put it back up. It’s fantastic. In a way, I don’t want anyone else to know about it.” Burrin spends £50-£70 per day on Adwords, which is certainly cheaper than placing a £3,000 full-page advertisement in Homes & Gardens magazine. “We still advertise there because it gives us respectability, but our contract comes to an end next year.”
The beauty of these monetising wheezes is that anyone can use them, yet none represents an easy route to riches. They all require somebody with a talent for spotting the internet’s unique potential. Duncan Jennings says: “Offline, the only comparable model to ours is an Avon seller going door to door and earning a commission on sales. Online, rather than having to go out and sell, we reach people who are looking anyway. That’s the key. There is no risk to the advertisers and they know exactly where their sales come from. Every advertiser in the world would advertise like this if they could.”
Experts’ 10 golden rules for maximising revenue
Never click on your own AdSense ad. Google checks and it will fire you — Nigel Powell, web publisher and Doors contributor
Don’t be too greedy too early: it was three or four years before Google took its first ad — Kulveer Taggar, co-founder of Boso, a student marketplace online
Change the ad design to blend with your content: make the background, border colour, links and text the same colour as your blog — Darren Rowe, of Problogger.net
Work out what you want from your site, and what your visitors want — Commission Junction
AdSense looks at your page title when determining which ads to show. On blogs, creating a fresh page for each post ensures the title of your post become the title of your page. So choose good keywords — Darren Rowe, Problogger.net
Keep your content focused — Peter Cooper, blogger
Google has hot spots for ads, but we have found they don’t quite tally with ours. We get better results when we put them on the right-hand side — Chris Price, Shiny Media
Update your site regularly. You need a good profile on Google, and Google doesn’t like sites that just sit there — Nigel Powell
The best way to maximise your revenue is to try as many systems as possible — Patrick Gavin, Text Link Ads president
Don’t have too many ads. It can put people off — Kulveer Taggar
