Tuesday, October 6, 2009

Wil Schroter: How to Monetize a Web Site: A Real World Tutorial

Wil Schroter: How to Monetize a Web Site: A Real World Tutorial

Let me begin by saying how ridiculous it is that I even have to write this post.

In any other segment of business, making money wouldn't be considered an afterthought or a special insight. The Web has originated as a free model (thank you, Netscape) that has set the tone for many startup companies thereafter.

Unfortunately, it's created an ecosystem where people foolishly point to a few companies that made money without a business model and later went on to kill it.

Yes, that happens.

No, it's not a business model. It's a dream.

That's like saying going to Hollywood to become an actor is a business model. Yes, you might go on to become Tom Cruise. But it's not likely. You need a better plan.

Try all of these

I’m not suggesting you try just one of these. I’m suggesting your try all of them.

It just doesn’t make any sense that you would stick to just one business model if you can monetize (hate that word) multiple aspects of your business.

Most companies are superstars because they get even one of these right. Be sweet and get two or three.

The Five Ways to Monetize a Web Site

Actually, there are probably 50. But I’m going to point out the five that I know best and that you should, at the very least, try to incorporate into your business model.

So here’s the list, in order of my personal preferences:


Any time you can charge someone a recurring fee for your product, life is good.

Notice I suggest "recurring". I'm a big fan of the recurring model assuming you can continue to deliver value month over month. It helps you stabilize your income streams and gives you a great incentive to continually improve the product.

Applying the subscription model is easier than you think, even if subscriptions have never existed in your business before.

Simply ask yourself: what will have value next month, even after the initial sale?

Dating sites work because people rarely find a real mate on-line and will constantly need the service. News sites work because there is always a need for new news. Porn sites work because… you get the point.

Most products could simply live in a single purchase environment. If I purchase Microsoft Word, and Microsoft never allows me to subscribe to new updates, templates, and other goodies, then shame on them for not making that available.

On the other hand, if they offer a monthly subscription product that continually offers value, like Xbox Live, they will own a share of my paycheck for the foreseeable future.

Developing a subscription offer is simply about creating a common purchase pattern and need that you can service. You need to be a little creative, but the product is certainly there.

Bonus Tips
- Don't ever charge annually. People's credit card info changes too often. You're recurring rates will suck.
- Test the hell out of your pricing. If you are charging $19 per month, try charging $59. Don't ever let your "gut feeling" test the market. It's an enormous problem if you're wrong.
- If your product has value, people will pay for it. If they don’t you have to ask yourself what you’re in business for.


I like to think of classified ads as "micro sponsorships". I use that term because it helps me broaden people's perception of how to apply the classified ad model.

For example, if you're running a forums-based site and you're getting tons of posts, presumably there are some people who would pay a premium to have certain types of posts in certain sections. Say, a service provider that caters to your audience.

It should take you less than 3.51 seconds to realize that's exactly what Google did. They created a simple way for people to put up tiny classifieds ads, or micro sponsorships, next to keyword searches that were highly relevant to an advertiser's audience.

Think about all of the content that's on your site. Is there a specific area where customers could post their own classified ads in front of prospective viewers? I'd be surprised if there wasn't. If so, you're a candidate for the classified ad model.

Classifieds are great because anyone can create them, the call-to-action is obvious (i.e. "People like me are reading this, so they probably want what I have") and you can charge small amounts without creating a lot of commitment from people. They are the basis companies like Craigslist (which does charge for certain ads) and eBay, which do awfully well. They are also the basis for successful sites I've built like Swapalease.com and Go BIG Network which cater to a smaller, but more targeted audience.

Bonus Tips
- Recurring classified ad models are always better. At the very least, offer the option to recur.
- The easier it is to post a classified, the more you’ll get. That’s why Craigslist does so well, because it’s dead simple.

E-commerce & Affiliate Marketing

I’m lumping two overall categories together here. I’m going to say that in general, whether you sell something directly or sell it as an affiliate, you’re still basically in the e-commerce business.

This one makes me laugh. I listen to guys who have content sites and they say something like this “I have this great content site with all this traffic, yet I can’t make enough money on ads.”

So I immediately ask “What are you selling on the site?” to which they obviously answer “Nothing, just ads.”

OK, so some guy is posting ads to sell T-shirts on your site and presumably making money (that’s why he can buy ads). You’re attracting the very same customer that is buying the T-shirt, but you can’t make money. See the problem here?

Sell T-shirts.

At Go BIG, we watched companies kill it on our site advertising business planning services. Did we sit around bitching that their CPM’s weren’t high enough? No, we said “we’re the ones with all the customers, why are we selling them for ?”

So we created BizPlan.com to allow our customers to write their own business plans on-line. Not hard, people.

Maybe you’re less ambitious. Maybe you don’t care about building out another site to generate more cash. Fine, but at least sell something. Sell it through affiliate channels if you have to. It doesn’t matter. The point is that if you don’t make a premium off your site traffic, someone else will.

Bonus Tip
- The value of offering nothing for sale on your site is actually less than zero. You prevent your site from growing because you are keeping cash out of your bank account.

Lead Gen(eration)

Lead Gen really throws me off because it’s a huge business that so few people, particularly on the Web publisher side, understand at all. 9 times out of 10 when I’m explaining lead gen to a Web site owner their eyes light up like I’ve just shown them the Ark.

Lead Gen is the business of asking your customers to opt-into something that someone will pay you for.

Your first thought is probably this - “Oh you mean those shitty ‘subscribe me’ buttons at the bottom of login pages that spam me?” Well, not entirely, although those fit in somewhere.

Typically lead gen has a lot to do with asking your users to sign-up for someone else’s services. You see these all over the place, whether you realize it or not. If you ever see an offer asking you to sign up for a mortgage quote, auto quote, or on-line college, you’ve gone down the path of lead gen.

Usually the Web site operator works with a lead gen provider (there are many, Google it and see) to build a campaign. Each type of user has different requirements. You can get very fancy with these, and you should, because how you implement them completely changes the face of your campaign.

At Swapalease.com, we had put up an ad on the site telling people to register for a new car quote. It performed horribly because it wasn’t tied to any kind of deliberate behavior. It just felt like an ad.

So we realized that when buyers inquired about someone else's car, they were in a buying mode. So why not ask them at that time if they would also like a free car quote from a dealer on the same car? Brilliant. It printed money.

At GotCast we ask people if they are interested in schools that can help them become betters actors. Makes sense, does great.

The goal in every case is to align 3rd party sign-ups with some sort of action that is already taking place on your site. The better integrated, the better the performance.

Bonus Tip
- The collection rate of capturing your lead upon registration is 100x (made up number) what it would be if you just put some random link on your site to a sign-up or do an email blast.


I think of site advertising as a last resort, not a primary business model. Don’t get me wrong, I’m very familiar with the fact that lots of sites have figured out a way to make advertising work. Yours probably won’t.

Not because your site isn’t great, it probably is. But if it was growing like PlentyofFish.com you wouldn't be reading this article, you’d be too busy spending all of your money.

The fact is that most of us don’t have 10 million uniques a month that we just can’t figure out what to do with. We have to make real money on much smaller amounts of traffic. That’s why the higher revenue items I mentioned earlier come first on my preference list.

The standard issue response is “throw Adsense on there and hope it performs.” It won’t. You’ll get ridiculously small checks and you’ll think you’re the only person that isn’t making money.

Across all of our companies, Swapalease (we don’t run this anymore), Go BIG, GotCast, Bizplan and now Affordit.com, advertising has always been an afterthought. The only time it was profitable to run ads was when we sold a sponsor directly and were able to set a better than market rate.

Bonus Tip
- Think of Google Adsense checks like beer money. It’s fun when you get it, but no one lives on it.

Amazingly Well-Put Summary

If you’ve actually employed all of these models and your site still isn’t making money, I have great news for you. You can close up shop and go get a regular job knowing full well that you tried and it didn’t work (it happens).

On the other hand, if you’ve let any or all of these opportunities go by the wayside and are still bitching about not making money, I think you know what the next steps are.

Either way, your direction should be very clear.

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