Website investors and entrepreneurs Matt and Liz Raad spill the beans about how websites make money.
Liz: Hi! It’s Liz and Matt with you. Today, what we want to do is answer one of our very frequently asked questions which is, how does your website make money? Because I think a lot of people still look at websites as something that’s associated with maybe an offline business, it’s kind of like a brochure online and not really a money-making system in itself.
Matt: And I think people often get confused about how you actually make money passively likewise or anything like that.
Matt: They don’t quite understand what it is we do and these little websites that we own. So, let’s clear that up.
3 Main Ways
Liz: Yes. So, there are three main ways. Obviously, our investment strategy online is to buy websites that are generating our income as passively as possible and as leveraged as possible because we don’t want to buy ourselves a job. We’re buying ourselves an investment that returns money and cashflow.
Matt: Maybe we should start about pointing out websites we don’t own.
Matt: Because people frequently thought you must own e-commerce sites where you sell in lots of products and things like that. We do none of that, we don’t own any stock at all, we sell no physical product. Which leads us into what do we sell online.
Liz: So, there are three main ways that we monetize our websites or there are three main ways that we – sort of websites that we look at to buy. The first one of those is that they are a website that sells advertising.
Matt: In essence.
Liz: In essence. Basically, what are the websites that people are coming to visit them all interested at maybe a particular topic, it might be around a product, it might be around a topic. It could be anything like dog training, it could be things like health related things.
Matt: Like how to lose weight after pregnancy.
Liz:Relationships that might be also topics like that and we actually have advertised who would like to get their message to those people who are interested in specific topics. So, if we got a website about dog training, then we have people who have dog training programs or things like that. They would like to put their ads on our websites.
So, that’s how a lot of our websites make money. We have advertisers paying in front of our visitors. So, the good thing about that is, to make money, we don’t have to do anything. No transactions involved, it’s just a matter of getting visitors to a website for their eyeballs to see the advertising.
Matt:And it’s about creating a good website at work as well and converts. And that’s what we tweak when we do a renovation on the website. They’re the main areas for tweaking by the way. Just conversions and amount of traffic that come to it.
Liz:The second thing that we look at is, aside from advertising, we’ll also sell information. So, an answer to a question. A lot of what is searched for on the internet is actually answers to questions. How do I or how do I get rid of acne? Or how do I treat this? Or there are a lot of questions that gets – how do I stop my baby screaming?
Matt: I was going to say, how do I get my baby to sleep through the night? Desperate people looking for solutions. So, we help them.
Liz: Yes. So, we have a lot of sites that are monetized by what’s called e-books which is electronic form books that people can – when they do want to buy them, they just download them. So, again, there is nothing we need to do physically in order for that transaction to happen. All we need to do is generate eyeballs on that website who are interested in answering that particular topic or that particular question.
Selling Other “People”
Matt:And I guess the third why we choose – by the way, again, is selling advertising in essence is selling other people –
Liz: Well, what we call OPP. So, you might have heard in real estate, we talk about OPM using other people’s money to leverage up. What we use is OPP which is other people’s products. So, we don’t actually stock any products. What we might buy is website that’s focused on a particular product.
We’re going through an example the other day about outdoor gas heaters. Bizarre. There are lots of other things that – or anything that basically sells on Amazon, you could create a website around or buy a website around and you basically promote these products.
If someone wants to buy it, they click on a link, they go over to a place where they would buy it and we get paid an affiliate commission. So, we don’t have to do the delivery, we don’t have to do returns or warranty claims or anything like that. All we are doing is sending leads, sending buyers over to a place where they can buy the actual product.
So, again, that means incredible leverage because we don’t have to own any product or any stock.
Matt: And we should point out, we do this, it’s called an affiliate arrangement. Basically you get a commission. We can do this to anything on the planet.
Matt:And anywhere. It can be products or services. We can promote particular products like power drills or outdoor gas heaters or we can promote information products like e-books which we sell ourselves but also, we promote other people’s e-books. So, if someone has a really good e-book that actually helps people lose weight after pregnancy, then, we’re happy to promote that on our website because we’ve got that sort of traffic coming into our website. And so we’ll promote it and we get a commission from it. Or we can help sell leads for businesses and help them. Same thing, we get a commission for sending traffic to businesses and for services.
Liz: So, those are our three ways of monetizing. We either sell advertising, we sell information, and we sell other people’s products. All leveraged ways to generate income online and create a cashflow website, business that is now an online property asset that we can value and we can sell.