Long Term vs. Short Term Online Business

Posted on September 11, 2008 by mattias

I work in an industry where a lot of people try to chase after the big money with small efforts invested, looking for quick cash. Seldom their expectations are met. What brings the cash in is long term dedication towards strict economical, and other measurable, goals. This holds for true with online businesses as well, a lot of people is looking for the big cash-in, either through advertising, affiliation or selling one of its properties. Instead of buying useless “Universal Solutions” for making you a millionaire over night, try to set the correct goals for being a millionaire within 5-10 years instead. Otherwise you will only feel frustrated every single day, when you miss out on your short term goal to become an online millionaire. Of course there will be a YouTube sold to Google every year or so, but I wouldnt put to high expectations on it happening to me. In this article I will think out loud about starting up your own small online business.

It is not all or nothing

Whenever you end up in a discussion whether or not a solution would fit as an online business and make you money, a lot of people end up saying “That has already been done”, yes of course, but that is not a relly good argument, look at the shelves at your convenient store, there are more than one brand of cereals, right? The good thing with online businesses is that you can choose to target any market you like, even ultra competitive markets can be targeted. With the right online marketing techniques, long term dedication, geographical location and niche you should be able to monetize both short term and long term, but with the possibility to expand geographical location and niche as a long term goal.

Set up close to realistic goals

Without goals you do not know if your business is running good or bad. You have to have detailed goals; economical, traffic growth, service evolution, budget for online marketing etc etc. It is crucial that you know your market, your future customers and you competitors. By analyzing the competition and competitors offers, you will get better information on how to set up your long term goals. Tools and techniques you can use for evaluation of these things can be:

Web services such as Alexa.com and Compete.com
Set up comparative analysis tables for 3-5 competitors to see if there is a niche not yet covered/focused on by competitors.
Keyword analysis, to find bargain keywords to focus your SEO and PPC efforts on.
Check with Commission Junction, TradeDoubler and other Affiliate Networks if you can find affiliate programs that easily can be monetized on your online business.
Try to buy adspace on competitors to get an idea of what they are charging for advertising space.

When you have identified the competitors and economic possibilities, try to set a short term goal and a long term goal. The short term goal must in no way compete with the long term goal. My suggestion is to set up goals that are realistic + 20%, that way you are pushing your self. A typical short term goal could be to say “In three months my business must have 5000 Unique Visitors per month” and a long term goal could be to say “Within 3 years my business should generate enough income for me to pay for my car, phone and apartment”.

Measure and evaluate

Set up different measure points, that will tell you wether or not you are going in the right direction towards your long term goals. These measure points is often called KPI (Key Performance Indicator) and is used to get a health score on your business. What you need to do is to identify things that can be measured and set a value on those kind of things. A typical example could be:

A user signup is worth $10
A new unique visitor is worth $0.05
Conversion rate vistors-to-users, users-to-buyers, buyers-to-returning-buyers etc.

The value of these different actions is of course an equation based on how you convert your users to paying customers, and by tuning conversion rates, values of different actions may increase in value. Of course you can measure “soft values” as well (design, first impression, brand recognition) but for that you need some kind of interaction with the user through interviews or surveys on a regular basis.

Baby steps is better than no steps at all

By taking the scientific approach to your business, you are going in the right direction, and sooner or later you will start seeing result on your daily income from your online business. It can be very frustrating to see that you only make small number of sales and leads early in your business, but the fact that someone is actually doing something making you money, is an evidence that you have something that works for someone. Now you just have to use all your evaluation tools to identify when it works for who. By doing this, you will increase the chances for earning more money, but it can be a time consuming job, that is why long term is the key. Try to identify what works, and tune that, try to identify what do not work and redo that. But remember: What works short term, may not work long term. Adsense ads all over your website may work for unique new visitors, but I bet you see a high bounce rate and low pageviews/visit.

Do not expect wonders

If you have competition on the business you have chosen to focus on, you will have to fight hard to gain market shares and traffic to your business. Sometimes people find a niche where competition is low and traffic is great, but I do not think it happens too often nowadays. Hard long term work will make it work for you, but do not expect short term miracles when applying a long term strategy to your online business. Sooner or later traffic and earnings will explode if you focus hard. There are no easy ways to success (except luck and exceptional timing)

Conclusion

There are no shortcuts to making huge amounts of money online. But you can gain leverage on your competition by setting up long term goals, KPI:s, evaluate daily, weekly, monthly, tune your product, listen to your users and have faith in your business being a success long term. Avoid setting short term goals that may harm your long term product strategy.

The Strategy behind Google Chrome

Posted on September 4, 2008 by mattias

No one, not even my wife, have missed that there is a new player on the browser scene, Google Chrome. Though we have different views on the topic, both me and my wife had the same questions and comments popping up.

Why are they releasing a browser?
If someone can gain market shares on the browser market, Google can.
Is this a good or a bad thing?

Of course there are no definite answers to any of the questions, and I think they have the chance to gain market shares if they manage to make the integration with their services in such a way it feels natural to use Google Chrome instead of any other browser available (and fully functional).

But the big question is why they are releasing a browser and how it effects the end user.

I will try to reason around this issue, without getting into the conspiracy area (just touching it slightly).

In order to understand Google Chrome, we have to identify where Google have their biggest earnings and what focus Google have. Google focus on search and their income comes from a lot of different services both for end users and for businesses, with their biggest income generating from advertising. They are building a solid online office suite, Google Apps, and they probably make a dollar or two on other services as well, but the big thing is advertising. I believe that there are three main reasons Google have entered the browser market.

1. Increase Possibility to Target Ads

Google have strategically and slowly moved the positions when it comes to knowledge about user behaviour. In the beginning long time ago (10 years exactly), the user was “anonymous” and only shared entities such as geographic location, recurring visits, clickstreams etc etc, the ordinary web analytics stuff all websites without user accounts get by using Google Analytics.

Later Google Account was released via services such as GMail, Search History, iGoogle and other personalised services enabling Google to gather more data for business purposes such as ad targeting and personalised search results. With Accounts enabled on these services, Google could gather personalised data while using services where you needed to be logged in.

Google Toolbar was the next step in further evolving the possibility to gather personal data, but still Google only gathered information from people who actually installed a toolbar, I do not know the numbers, but I believe that the ratio may be pretty low. Still Google could increase the knowledge about those users, gathering information when surfing on other properties than Googles, but, and a big but is that they made this sharing of private material opt-in, and probably lost a lot of information that way.

By offering a browser, focused on usability, stability and ease-of-use, they will now target the really big audience, and they can hide the privacy issues in a EULA. By owning the browser chrome, they will gather enormous amounts of user data, making it easier to target people with ads contextually targeted both to content and user behaviour.

With their own browser, they can start showing targeted ads even on websites that do not affiliate through their Adsense program.

2. Remove Technical Barriers for Earning Money on Advertising

By owning the browser, Google can make sure that targeted ads do not get blocked. Maybe this is not a huge problem right now, but as a strategic decision, it is important, by trying to move the masses to start use Google Chrome, Google can be sure that whatever technical solution they choose for displaying the ads, they will know that ad impressions will be higher and given that, conversions will rise, and given that Google Inc. will earn more money.

3. Distribution Platform for Coming Services

Google Chrome is Googles iTunes. I believe Google are building a distribution platform, enabling them to start targeting new markets, where companies such as Apple, Amazon, Netflix, Rhapsody and other companies earning their revenues from micro-payments.

Google are going to increase the marginal for advertising revenue, but in order to really grow, as fast as we have gotten used to, they need to find new mass markets where they really can earn money from transactions. So believe me when I say that within a couple of months Google will start taking market shares from Apple and Amazon on digital items such as music, movies, applications for the web and Android.

Conclusion

Matt Cutts says that there are no hidden agenda behind this, they just wanna make the web a better place. If I where a share holder on Google I would not like those kind of arguments. “making the web better” is just that, an argument, not a strategy. And as a public company Google Inc. must find new ways to increase the market value of the company. I believe Google Chrome is the fundamental piece in Googles future platform taking market shares from competitors such as Apple, Netflix and likes as well as the Chrome will enable Google to increase the marginal on their advertising programs.

11 Ways to Increase Your Website Traffic

Posted on April 7, 2008 by mattias

Create Good Content

The best way to increase traffic to your website, is to offer good content or service. If people like what you are offering, they will come back to you and they will link to you. There is no single technique better than this one for generating traffic to your website. How many links do you think wikipedia, Facebook, Twitter or Firefox has? What they have all in common are great content, in different forms.

Search Engine Optimization

If the Search Engines cant find you, you dont exist. If you cant compete with wikipedia, facebook, twitter or firefox for good content, you have to use all the white-hat SEO-techniques you can find in order to optimize your website for search engines. This can be done both on-site and off-site.

Link Exchange

Contact people who run websites or blogs similiar to yours and offer them a link to their site in exchange for a link back to you. This is a good way to start building links organically to your website. When your website is getting more and more popular, more people will contact you with similar offers. Only link to sites that actually has something to do with what you are offering. In order to maximise the search engine optimization, make sure the links you get corresponds to the keywords you are targeting.

Affiliate programs

If you are selling something online. Start an affiliate program and track referrals and give some of your profit to the one who referred the customer to you. If your offer is ok, people will start talking about your affiliate program and start generating traffic to your site, hoping to convert a user and earn a dollar or two. I think more and more people will start using this as a way to drive traffic to their sites. As it is today affiliate programs are mostly used by big players.

Pay Per Click Search Advertising

There are a couple of big solutions today for PPC (Pay-Per-Click) Advertising. The biggest name in the industry is of course Google Adwords. Yahoo and Microsoft also offers solutions for PPC-advertising. With PPC you either target a number of keywords and buy advertising space next to search result, or you buy advertising space on other sites that fits your targeted keywords and website content.

Banner Advertising

A lot of big blogs offers advertising possibilities for banners. Today the most commonly used format for banners on blogs are the square ones you often see above the fold on the right on blogs such as Problogger.net and alikes. The CPM for these type of banners differ a lot but I am sure you can find a good deal for such banner advertising if you look around the blogosphere. You can also post on webmaster forums such as forums.digitalpoint.com where you will find a big and alive community.

Social Networks

Use your contacts to drive traffic to your website. Use both your offline contacts and your online contacts. Typical examples on driving traffic to your site could be the following:

- Mail all your contacts (if they are part of the intended audience) about your website
- Create a Facebook Group that focus on your new website
- Sign up for MyBlogLog.com and promote your website as a commmunity
- Promote your website on MySpace
- Create a short (fun) movie and post it to YouTube.com
- Change your signature on all forums you are active on to include your new website
- Print a t-shirt with your websites url on and wear it to work and when shopping

Competitions and give-aways

Create a simple competition where you hand out a prize or two. The typical prize could be an ipod and a lifetime VIP-membership on your website. If you really want to build traffic, create a competition that acts as a link bait, making the contestants create natural links in forums and such. This is one of the most effective way to get links and traffic. But you have to have somewhere to announce the competition. I would suggest using competitions when you have started to gain an audience.

Link Baits

Link baits are powerful, but sometimes difficult to come up with. It is important to understand the concept. Link baits are content that gets people to link in numbers. A typical example could be someone naming their child Google, a woman throwing up on live TV, a funny letter, a mugshot or just something stupid. You get the picture? Link baits are important but also a question of timing and luck. Typical content that can be considered link baits is:

- Top 10 lists
- Articles with authority that helps people on a matter where there are a lot of interest
- A funny picture, story or movie
- Unique Content such as screenshots from new software or screencaps from upcoming movies
- Something cool or astounding

Link Building

Link building incorporates a lot of different techniques and approaches. This is long-time job and something that builds traffic long-term. But done right it is going to make a huge difference for your traffic. Link building can contain these approaches:

- Article submissions
- Directory submissions
- Social Network submissions
- Commenting on blogs
- Add link to footer in forums you are active in

Buy Traffic

There are a lot of different solutions available out there for buying traffic, from targeted traffic from adwords to people redirecting to your site from domains no longer in use. As you can see the quality of the traffic may differ a lot and you have to take this into account when thinking of buying traffic. But watch out, dont let good offers fool you, a lot of scams exists out there, if someone is selling 10000 unique visitors for $10 it is probably too good to be true.

In order to maximise the profits from the increased traffic, it is important that you know your front end architecture. Front-end architecture covers a vast range of topics within web development, seo and other areas.

Viral Marketing

Posted on April 6, 2008 by mattias

What is viral marketing?

Viral marketing is another outlet for advertising. It is highly effective. It has somewhat of an domino affect. Most viral marketers target individuals who have outstanding networking potential, in hopes that the product or message will be passed along.

Here is a brief example of viral marketing:

Let’s say I am marketing my new video. I am going to give out 3 free copies. I am giving my video to those who I feel have excellent marketing skills. I am generally hoping that those 3 individuals will praise my video enough to pass along the word to a few of their friends. In other words, viral marketing encourages people to pass along a marketing message voluntarily.

Worlds most valuable startups

Posted on April 2, 2008 by mattias

Silicon Alley Insider reports that they have boiled down to 25 contenders competing for the title “The Worlds Most Valuable Startups”. They are seeking help from people actually being involved with these startups, as users and well-informed readers.

A reminder: The goal of the SAI 25 is to find the private digital-industry companies that have the best chance of being worth the most money someday. How are we defining “worth the most”?

Generating the most free cash flow,

Having the highest sustainable public-market value (sustainable = cash flow), or

Getting bought for the most money.

We are taking into account valuations already ascribed to such companies by private-market investors, but we give greater weight to our own assessment of the companies’ future earning power.

I do not know all brands, but some of these are potentially big names in the future to come. Stardoll and OpenX are two of my favorites. I believe OpenX fills a big gap for big players wanting to take control of their advertising online and Stardoll offers a product that generates a lot of users (and money), Barbie Online must be good business.

Facebook Flyers – thoughts and estimates

Posted on October 3, 2007 by mattias

I bought some adspace today on Facebook Flyers, I believe this will be huge! But I have to wait two days before I make some analysis of the results, but it is much easier to target your audience than with Google Adwords. I will post before saturday with conversion rates/CTR and so on. The pricing starts very low, so it is easy to just try out, I think I have just found a new way to drive traffic!

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