The Return Policy – Friend or Foe?

As my newsletter readers will already know, I had the first return of my Real Blog Videos last week.

I guess ClickBank requires or requests people making returns to give a reason, so I did get an explanation for the dissatisfaction.

To summarize they said that they could find the same information for free elsewhere on the web. Fair enough I guess, but there is the large amounts of my own personal experience and tips that are also present that are not available elsewhere.

Since ClickBank issues the refund I didn’t, luckily, get a chance to argue. A no hassle guarantee is supposed to be easy for the consumer [I’ll grow up soon I hope].

Today, as my wife was leaving the house I asked her where she was going, “just doing a few returns,” was her reply.

Mmmmmmm.

You see my wife is virtually a professional shopper…luckily for me it is for her work :) and the return policy often is a deciding factor in where she shops. Due to the nature of her business it is much more efficient for her clients if she buys a big selection and then returns the leftovers.

Hassle her about returns and you’ll lose a big hunk of business.

All this to say, I guess, that I’m glad I had ClickBank handling the return. It amazed me how much my confidence in my product was shaken by the one simple return!

Here’s the punchline to the story…

While obsessing over my stats today…I noticed the person who requested a refund [they were from a rather obscure country…with a bit of a reputation for not exactly being totally legit when it comes to copyright issues and they were my only sale to that country so it was easy to tell who they were] and they have been watching the videos every day since the return!

Now I didn’t know whether to be happy or angry. I guess they couldn’t really find the info anywhere else! I ended up feeling both anger and relief.

Lots of business reality lessons in this one:

A no hassle return policy is essential in the sales process.
Returns hurt when you’re personally involved in the quality of the product, but the reasons are really worth listening to.
Theft is a reality of doing business.

I sent this person a polite email asking for them to please pay for the videos but needless to say they have not. I don’t think it is the best use of my energy to do anything other than just let it go at this point. My lawyer friend just laughed at me when I asked what recourse I had.

Just felt like sharing some of the ups downs and downs and lessons learned of the Info Product Business…thanks for reading along.

Jon

Business Term – Return on Investment

I’ve been spending a couple hours a week for a few weeks now playing Cashflow 101. Mostly I play alone and I intentionally put myself in a really difficult financial position when starting the game, to see if I can still get out of the rat race and get rich. It’s all in the spirit of training my brain to understand the world of money.

One thing that is clear is that the game boils down to a simple formula…you get rich by acquiring assets [things you control that put money in your pocket, and hopefully appreciate too]. What frustrates me about the game is that it is so “real estate centric.” ROI this % and blah blah blah. I have as much feel for real estate investing as I do for women’s Olympic weightlifting.

So I started wondering if there was any correlation between real estate investing and Internet businesses and I started thinking…if each little green house from Monopoly was the equivalent of a website, then maybe I had a way to transpose my understanding of the Cashflow game into an arena that was more useful to me.

ROI = Return on Investment

Here’s the formula we’re going to play with. This is usually calculated in a yearly time frame:

(payback – investment)
———————————— * 100 = ROI in %
investment

Let’s work through a typical real estate investment card from the game:

Condo For Sale – 2Br/1Ba

38% ROI, may sell for $45,000 to $65,000

Cost: $55,000 Mortgage: $50,000
DownPay: $5,000 Cash Flow: +$160

In the game you always take this deal.

Next I went to a place I know to buy and sell websites online and found what I believe to be an average website being sold:

Site for Sale:

Cost: $10,000 Mortgage/Financing: Not on this planet!
DownPay: $10,000 CashFlow: $900/mth

Our ROI then becomes:

(10,800 – 10,000)
——————————- * 100 = 8%
10,000

Now you might think that 8% kinda sucks [although a lot of folks would be darn happy with 8% but this is what would be classified as a high risk investment so you’d want to get more than 8%].

However let’s take a look at year 2…since we are paying for the entire investment up front, there is a dramatic change. Let’s say we “invest” another 100 a month to promote the site and profit remains the same as year 1:

(10,800 – 1200)
——————— * 100 = 800%
1200

Yes, that is 800% !!! Try finding a deal like that in the real estate market.

Then being the good Rich Dad disciple that I am I couldn’t help but think that the only thing that would make things sweeter would be if I could finance the deal, and not have to lay out 100% of the cost up front. After all the purpose of the game is to “control” assets and gain cashflow, and the best way to that is to use leverage a.k.a. “other people’s money.”

I know it would be nothing for me to find, say credit card money of 20 or 30k to play with….

[BIG FAT HUGE DISCLAIMER **** THIS IS JUST A FUN EXAMPLE **** PLEASE DON’T DO THIS UNLESS YOU TAKE FULL RESPONSIBILTIY FOR YOUR ACTIONS AND ARE PREPARED TO LOSE ALL YOUR MONEY AND RUIN YOUR LIFE]

…yes that is “danger” music you hear in the background.

So if we HYPOTHETICALLY finance our website with credit card debt [I’m not being too precise with the numbers here…just generalizing].

Year 1 looks something like this:

Cost: $10,000 Mortgage/Financing: $9,000
DownPay: $1,000 CashFlow: $600/mth

(7,200 – 1000)
——————— * 100 = 620%
1000

That’s a 620% return and $600 a month net cashflow with only $1000 out of pocket and you’re paying back $300 a month on your $9000 credit card debt, which means you’ll have it paid out in 4-5 years.

Who needs real estate?

With Internet usage still in its infancy, Google just had it’s 8th birthday, for example, the web real estate boom is naturally just beginning.

However, there is one major difference between the Earth and cyberspace and that is of coarse the law of supply and demand. With a finite Earth and an rapidly expanding population, the value of real estate must increase. In cyberspace there is no such limitation on expansion.

Only simple domain names in the popular extensions [.com, .net & .org] have any real scarcity value and that will continue…unless of course someone figures out a way around it, which in the world of technology is almost certain.

Conclusion

There’s very good money in online real estate investing, but you had better know your stuff as the risks are higher than with physical real estate. Also, the time frames are likely to be tighter, meaning what is a good site now, will almost certainly be lower value in 5 years without someone skillful guiding it into the future.

I guess the bottom line is that buying web sites as investments is more akin to buying businesses than real estate. Higher risks and potentially higher returns, and also higher maintenance requirements.

I’d like to hear your thoughts on this topic, especially if you have any experience in either real estate or website investing.

Jon Symons
Playing Cashflow 101 obsessively, so you don’t have to.

 

 

Previous Comments Below:

on,
You’re not comparing apples to apples. If we are discounting the amount of downpayment returned in each year you will see that in year one your RE investment returns 38%. In Year two after discounting the $1920 returned to you, your RE Return is 62%. Third year 166%, and from the fourth year onwards, assuming you spend only the $100 on marketing (more than I ever spent to get a tenant in place) and discounting inflationary price increases (average of 4% per year compounded – so your rental income actually doubles every 18 years without any increases due to external pressures such as labor market conditions, etc), your ROI then climbs to over 1900%.

Again, this means that the $5000 you put down on your credit card or whatever, would be repaid in 32 months or so (plus interest) and the building itself has an inherent value, if only for taxable gains due to depreciation.

An interesting thought though – why don’t we set up a bank for financing websites? Lots of due diligence, but micro-cap loans of less than 10K a piece should be easy to do without too much trouble.
MyAvatars 0.2
By Jon, October 6th, 2006 at 8:56 am

Thanks EdmontonShaz, I knew my real estate calculations were a bit shaky.

“why donΤt we set up a bank for financing websites?” ….m m m that even scares me :)

The concept of what we would reposess if they miss payments is the most troubling…they could really ruin the site…it’s not like there is an inherent land value on these things.

Now if we took more of a venture capital approach where we installed ourselves as directors in exchange for a percentage of the investment, that could work.

Will be fun to chat about it the next time we get together.
MyAvatars 0.2
By EdmontonShaz, October 6th, 2006 at 9:45 am

Or you could get a personal guarantee on the loan, amortize it over 18 months, charge 24% interest, and have the server in a foreign tax haven so the money is virtually untraceable and repossession would be available on all items they own including residences.

An idea anyway.
MyAvatars 0.2
By Jon, October 6th, 2006 at 9:55 am

You’re making the credit card financing option look pretty good for the buyer :)
MyAvatars 0.2
By Tyler, October 6th, 2006 at 11:03 am

Small financing can be accomplished through Prosper.com. Lending or borrowing is an option. I wonder if a company can set up an account with prosper and specialize in internet/website loans?
This would relieve some of the administrative hassle.
Just my couple of pennies.
P.S> Jon thanks for the help with nhldigest.com. I have been promoting it a little since I went “live” three days ago and my goal is to get 100 uniques tomorrow.
Thanks again!
Tyler
MyAvatars 0.2
By EdmontonShaz, October 6th, 2006 at 3:37 pm

Unless the buyer is overseas in a non-first world market and does not have access to ready credit as we do here.
We might have to look into creative compensation packages in case of default. Perhaps a bunch of hours of website development or technical assistance to a multi-national company in lieu of actual payment.

Sounds like force servitude in a way…. Maybe a re-think is needed.
MyAvatars 0.2
By JibberJobber Blog » Blog Archive » Miscellaneous Miercoles, November 29th, 2006 at 8:01 am

[…] Finally, there is a new game that you might want to check out if you have an entreprenuruel spirit, or want to make money online. You may have heard of Guy Kawasaki’s (Rich Dad, Poor Dad) board game kind of like Monopoly – this other game claims to be the first and only internet marketing board game – its even called… Internet Marketing Board Game! The idea behind this kind of game is that you have a ton of fun while learning about techniques, processes, tools, etc. From what I understand the team behind this game has done a ton of research (they have their own company that teaches people this stuff) and done “testing” in southern California (I’m guessing that testing a board game is way more fun than testing software!) So why do I post this here? Because my message is about career management, and there are a ton of people that have other income streams that help in case of a job loss. It is not cheap, and I haven’t played it yet, but knowing these ladies it is complete and fun. Geez, I wonder why I haven’t been invited to play, as they live in the same city as I do […]

 

My To-Do List System

There are some websites dedicated to the humble “To-Do” list where you can find all kinds of tips and even samples of real peoples lists.

I’ve never found an online or web-based to-do system to be effective for me. I guess I like the tactile nature of a paper based system.

I have played around quite a bit finding a system that seems to be flexible enough for anything that I throw at it, but still simple enough to be easily used and understandable at a glance.

My Latest System

Since I good to-do system can make a big difference in terms of productivity I thought I’d share my current system, since it has been working really well for me.

The Elements

Like I said I like paper based systems, and the magic of this system is the humble sticky-note. It affords my paper based system to have many of the flexibilities of a digital system. I can edit, sort, shuffle and recombine or mash-up items from my lists and then put them all back if need be.

Advantages

As you finish a task, you remove it. I love the feeling of seeing the papers get more empty as opposed to previous to-do lists that get messier as you finish tasks. This clearing up space is a subtle but powerful metaphor; and it more accurately matches the process of getting things done.

Visually pleasing. If you have a bit of discipline, and create the sticky notes with a system of colored notes and pens, the pages end up with a visually appealing look. This reinforces a sense of calm and order which can be important when tackling a big list!

Scan-able lists. Related to the previous point, but if the pages all contain only 10 or 12 items maximum, they are scan-able, which is important when deciding which one to tackle next and for prioritizing.

Mix and match. The best part of this system is that you can mix and match your lists. I usually go over all the lists each night and create a “Today” page for the next day. I just grab a few tasks and then prioritize them onto one list as my next day’s most important things to get done.

Here Is How it Looks

to-do list master

Above is the basic with my four sheets of letter size paper. I sort them according to priority. Then I can select individual sticky-notes tasks and create a “today” sheet.

to-do list monthly

These are my monthly lists. They allow me to begin to see what I want to accomplish a couple months out.

closeup

Here’s a close up of a current month sheet. If one of the projects on here [like the "New Theme Ready" one above] has a lot of sub-tasks then I’ll create a separate sheet for it and remove the stickies from that sheet. When they are all done, then I’ll remove this one.

The goal is to remove all the stickies, before I run out of month!!

Any comments on this system? How about your own to-do systems, please share, I find that they are a fascinating form of personal archeology :)

- Jon Symons

8 Tools & Tips for Picking a Domain Name

This is the final installment of my domain naming series. It’s just a bunch of tips and tool that I’ve used for brainstorming and selecting the perfect domain for your projects.

Consider that the domain name is the single most important part of your website and it’s also the most difficult piece to change once your site is live. It’s worth taking care to make a good choice to avoid domain name regrets down the line.

1. Avoid Keyword Ambiguity in Your Domain Names

Humans understand word meaning with a level of sophistication that search engines don’t have. “Art of Money” is clearly about money to a human ear, but to a search engine it’s a site that is equally about “art” and “money.” You can read my full breakdown of choosing keywords in domain names.

2. Use a Domain Naming Service

With good domains getting harder and harder to find, a new professional industry has popped up: the domain namer. In my article on domain pickers, I’ll tell you about a service where you can get a killer domain name (from tons of possibilities) by putting dozens of professional domain pickers to work for you for a only $50.

A poor man’s version of a domain naming service, DomainsBot provides a pretty damn good suggestion software. It is software, so don’t expect subtleties in the suggestions, but it can help. I’ve used it a lot in the brainstorming process.

3. Use Scoring Software

I personally use a piece of software that rates potential domain names (and even URL structures) based on a huge database of statistical analysis of top ranking web sites. You can read my Nemeas review for a complete walk through of how it scores possible domain names.

4. Backorder an Existing Domain Name

Sometimes you’ll find a domain name that has expired but hasn’t become publicly available for repurchase. The public are told that these domains will come available in 30 days but the reality is a little different than that.

If you find a domain that you like that is expired (actually the term is Pending Delete) and that domain has any kind of positive history (meaning it has a Page Rank, any decent Alexa rating or a DMOZ link for example) then it is unlikely it will ever hit the open market. You’ll need to register with a backorder broker. I use Snapnames and you’ll have a chance to grab the domain before it gets released to the general public.

There will be a 2 or 3 day auction and you can expect there to be stiff competition for most keyword rich domains, but if you’re really attached to the perfect domain it may be worth the investment. Many of these domains can come with good inbound links, or traffic already in place.

5. Buy an Existing Unused Domain

Doesn’t it just burn you up when you finally think up the perfect domain name and it has been registered but there is no website there? The last statistic that I heard was something like 70% of all registered domains did not have a website on them!

A whois lookup allows you to find out the contact information for the domain owner. Don’t be afraid to shoot of an email or even phone a domain owner. Many times it will be a professional domain speculator, who wants full value for the domain, but you never know when you might get lucky and someone has just lost interest and will let you have it for the cost of a transfer.

6. Look Out For Skeletons in the Closet

Watch out for domain names that have been trashed and banned from Google or other search engines. What happens to search engine spam sites? Google bans them from their index. So if you purchase a site that has been banned, it can be difficult to get Google to put it back into the index, no matter how great the site is that you build on it.

Make sure you visit the Internet Archive and look up any domain name that you are buying on their “Way Back Machine” to see what kind of sites have been on it. Besides search engine spam watch for other types of sites that may not be harmonious with your brand (porn, drugs, warez etc.)

7. Sleep on Your Domain & Vet It with Friends

Sleep on it and vet it – I have a friend that, two days after he registered it, found out that his latest “killer domain name” actually contained a very unpleasant slang term in it.

Especially when you are working with multi-word domains it is actually easy to miss unintended words if you are focused on the keywords. Take away: get fresh eyeballs on your domain name before you commit to it.

Also, make sure you vet with people you trust and that won’t steal your idea; I wouldn’t post it to a public forum to ask for feedback.

8. Take Your New Domain for A Test Drive

Mostly used by professional domain investors, domain tasting allows you to register a domain and throw up a page and see if the domain gets any traffic. For up to five days you can test drive the domain and then, if it doesn’t suit your taste or you change your mind, you can get a refund.

That’s it for my domain naming series, I hope these tips and resources will help you find the perfect domain name and avoid that unpleasant situation of needing or wanting to rename your site after it is launched.

Any other tips that you have that I haven’t covered? Or other questions?

- Jon Symons

Are You Buying Silver Yet?

I have this friend who’s really into silver. I mean really into it…he eats on silver plates, with silver forks and drinks from silver goblets.

This particular guy also used to be an investor relations officer in a previous job incarnation. So it’s safe to say he knows his way around the stock markets.

The last time I sat down and had coffee with him I wrote this story about silver investing on my old site. That was May 26, 2005 and silver was ~ $7.00 an ounce. At the time he went on and on telling me why silver was going through the roof.

About 2 weeks ago we had coffee again and it’s all he can do not to sell his kids to put his money into silver.

Normally, despite my earlier mini-rant in my own comments, I’m not the kind to buy high and hope a stock goes higher. But here’s what my silver obsessed friend says.

Current world wide consumption of silver is about 1 billion ounces annually. Worldwide production is 500 million ounces annually. That’s a 50% shortfall annually.
There is much less silver than gold in the earth.
A big one: silver differs from gold in one key factor. When gold is ‘used’ it is normally still available. For example you create a wedding ring…after a couple years you still have the wedding ring and the gold is still available. Silver is used primarily in industrial processes, meaning when it is ‘used’ it is gone.

He went on and on with good reasons but the bottom line is that the underlying fundementals on this precious metal are fabulous. The market has still, for the most part, missed the biggest story of the year in investing.

What is interesting to us is that the mainstream media and average investor have no idea what is going on. CNBC has a ticker in the morning that includes some commodity prices, but silver remains absent. Web sites such as MSN and Yahoo spit out headlines about Google, retail sales, and oil � it is only on rare occasion that gold is mentioned and that is when the price breaks $400/oz or $500/oz. Even the commodities sections of major financial web sites seem to ignore silver…

A little more than twenty six years ago, when the silver market was being cornered, the general public started to wake up. At the very top, there were news stories about average people taking their silverware in to be melted. While we are not anticipating a repeat of early 1980, it is logical to think that the bull market will not end until we see the public paying attention to what is going on.

Why? Silver isn’t sexy. It has been devalued by the public because of comparisons with gold. You know the saying at the Olympics…”second place [a silver medal] is the first loser.” Fine with me.

So better a year late than never. I broke down and got some advice from my buddy and started buying. General advice he gave was to buy only bullion or mining companies. Paper silver is about as worthless as paper dollars…it isn’t backed by any real reserves and when the market realizes that the price of actually silver bullion could skyrocket.

About ten days ago I picked up a hunk of bullion for what seemed, at the time, the exorbitant price of $10.50 an ounce. Today, only ten days later it is worth $11.50…almost a 10% gain in 10 days.

Yesterday I also followed more of his advice and grabbed three junior [and highly risky] mining companies. ORM.V at .80, CZN.TO at 1.25 and GPR.V at 1.70. In less than 2 trading days ORM is flat, CZN is up 2.3% and GPR has gained 11.2%.

It just looks to me like there is a silver volcano about to erupt here. It does take guts though because I’ll be the first to admit the prices on all these stocks look very high.

I’m curious to hear what others think about silver right now. Why isn’t the story bigger? Is it only the new ETF that is artificially driving up prices?

Disclaimer: I’m not a professional advisor or investor. I am not telling you that I think you should do the same as me and actually purchase any silver or stocks of any kind. If you do buy any silver or stocks you do it at your own risk and you take full responsibility for any losses that you incur. Investing is risky and you should consult professional advice before entering into any investments. Whoosh!

Money Making Tips From Top 5 Project

Here’s my list of highlights from ProBlogger’s latest (and greatest) group writing project.

I’ve selected only the ones that will further us in our goal to make $100 a day in our Internet businesses :)

Top 5 Top Blog Posts in SEO by Solo SEO
Top 5 Easy Ways to Create Information Products by Gobala Krishnan
Shut Up And Write by Novelr
The Top 5 Most Half-Baked Ways I’ve Tried to Earn Money (And What I’ve Learned) by Money Under 30
5 Must Have WordPress Plugins by Workboxers
The Top 5 Things that Hinder me from Internet Income by Kalibur
SEO Plugins For Your WordPress Blog by Pure Blogging
My Top 5 Successful Bloggers Who Made a Difference by Liz Strauss
Top 5 Domain Branding Tips For Bloggers by Domain Works
Top 5 GTD computer tools by Daily Iteration

And a few very noteworthy ones I found linked from posts in the project:

How a Best Posts Page Will Increase Your Blog Subscribers by Stuntdubl
6 FREE Ways To Turbo-Charge Your Blog by Kumiko’s Cash Quest
Affiliate Marketing – Conversion over Volume by Net Business Blog
Five Ways to Grow Your StumbleUpon Network: An Ode to Altruistic Stumbling by Dosh Dosh
Making A Career Out of Blogging by Dot My Spot

Some great new blogs on here. There are three benefits to Darren’s projects. The first is all the great linkage that happens, the new readers who find your site and then the cool sites that you get to discover.

Be Do Have

After watching the Rich Dad / Rich Woman video that I featured in last night’s post I had an important realization about the path to fortune. And I’ll get to that in a second.

Here are some of the common inner dialogs [including my own] of a person who wants to be rich.

“If I had an income of $XXXX a month, then I would, of course give to charity or tithe.”

“When I start making twice as much as my expenses then I will be able to afford to save for my future.”

“Once I get ahead then I’ll start putting aside a contingency fund.”

“If only I had a new car then I wouldn’t be too embarrassed to a [whatever people with new cars do].”

“If I had a new laptop my business would be more efficient.”

In the video last night Robert and Kim said that they put money aside for saving, investing and tithing BEFORE anything else, even when their expenses were much greater than their income.

How can that work out?

To be honestly I don’t have a clue. It makes no sense in my mind. But in my heart there is something completely lovely about it.

In the Rich Dad books he mentions that most people operate in this manner.

If I could have [blank] I would do [something good] and then be [happy, content etc]. It is like trying to blackmail the universe. I admit it, the thought, “if I win I’m going to donate 50% of my winnings to a worthy charity” has passed through my head many times as I purchased a lottery ticket!

I’m willing to change as long as I get what I want first….mmm, sounds kind of like a two year old.

If you believe in a universe that is interested in you basic good, why would it cater to that kind of behavior? It won’t…that’s why the vast majority of people are poor, even if they have money in the bank.

Kim and Robert worked the other way around.

Be -> Do -> Have

Be generous, and adopt the way of a wealthy person irregardless of your financial situation. Then you will be operating as a wealthy person in the things you do. Naturally from this space you will attract opportunities to create wealth. You will be more inclined to do the things you love, since that’s how a wealthy person would spend their most valuable asset.

And that can only lead to success in life, which will naturally get you the toys and income to be able to give, save and invest even more.

Going with the current or against it? Me, I’ve been playing the me first game up until now but time for that to change.

Tithing, saving and investing when my bills outweighmy income is like committing to my own success. A determination sets in to make the business grow and to continue to enjoy the ways of a wealthy mindset.

Next step will be to calculate how much money I actually made last month and set aside 10% to each of tithing, savings and investing.

I am also going to put a portion of the tithing into something on the Internet, since that’s how I earn my living it seems fair to give back.

More coming soon on this important topic, anyone care to join in on the fun? Maybe we can start a “Carnival of Internet Tithing?”

Jon

Are You Working in Google’s Sweatshop?

Are You Working in Google’s Sweatshop?

blue_pillIf you have Google’s AdSense on your site then please raise your hand and say YES [You can add Amen if you like too].

Do you remember the scene in the first Matrix film where they show the reality of the earth and the humans are all being used as batteries. Even though their life energy is being sucked out of them they are content because they are fed a constant illusion of how great life is.

Using AdSense on your website is just like that. You may have a good income…maybe even great income, by most measures, but do you have a real business…no.

Do you have control of your customers? No. You give away the rights to monetize your customers for 35 cents a piece and you have no way of ever contacting them again.

Can Google turn off you revenue without reason and without warning? Yes. Did you know that even if you had earned $10,000 dollars and it was the 29th of the month and Google decided that you have committed click fraud they can terminate your account and you’ll lose that month’s revenue? That sounds a little sweat-shopish.

Think of AdSense as this huge harvester of Internet traffic. It goes around to all the little websites and practically steals their traffic for pennies and gives it to merchants who turn it into big bucks.

This kind of thing gets people pretty excited…they read about how Nike makes sneakers in the Philippines and pays workers $3 a pair and then sells them for $150, but it’s the same on the web with AdSense. You sweat on your blog creating content and building traffic and then you sell it at sweatshop prices because you don’t have enough business sense to realize where the real value is in your traffic.

 

red_pillWhat if that click that you’re getting 35 cents for on average is turning into $20 on average on a merchant’s site? Wouldn’t that be kind of the same as with Nike? But what’s more amazing is that all us blogsters think it’s so fantastic that AdSense graces us with a couple bucks each month.

We really are living in the Matrix. I have no evidence that such a ratio is the reality, just call it a hunch…think of it this way, why would so much money be pouring into the AdWords system, if it wasn’t yielding a very good return.

At least think about taking the red pill and having a look around at what is really going on on the web. Here’s a chart of what I call the “Internet business food chain”:

  1. Sell Your Own Products
  2. Sell Other People’s Products to Your Email List
  3. Sell Other People’s Products off of your website [Affiliate]
  4. Create Content and Sell Your Traffic with AdSense
  5. Buy Traffic [keyword bidding] and direct it to someone else’s products

The higher you are on that list, the more you have a real business, the more money you can potentially make and the less you are vulnerable to the whims of other people, some of which don’t care very much about you.

Okay that’s my rant for today…say it once with me…”Just Say No to Crack-Sense.” You can do it, it isn’t as hard as you think to begin to move up the Internet business food chain. Brainstorm a few product ideas related to your site and spend some time developing them.

Previous Comments:

Jon – I really liked this post, and have linked to it from a forum I recently set up where people can discuss Canadian entrepreneurial issues.

It’s very early days for the forum – not much traffic yet and I’m still working out how I want to proceed with it, but you are very welcome to come by and have a look. Any comments you have would be appreciated and, of course, feel free to post.

Shawn
By James D. Brausch, July 7th, 2006 at 3:02 pm

Welcome to the real world Jon! There aren’t many of us awake yet and we need your help to wake up the others.

Amen!

-James D. Brausch
By Andrew, July 11th, 2006 at 11:34 pm

Just because Adsense carries risk doesn’t mean everything else is a smooth ride. The people I know personally who have made the most money online have done 3,4 and 5. Selling your own product is not always the best or most profitable path.

I’ve read case studies of people trying to sell their own products on their sites and barely breaking even, switch to PPC ad monetization and their incomes jump to six figures.

Of course, it will depend on what your business is. As a general rule of thumb if your site has a large volume of content Adsense and other PPC programs will work well because you are pulling in such a diverse range of traffic from search engines that is not interested in your product but rather looking for something else.
By Jon, July 12th, 2006 at 8:53 am

Hi Andrew,

What is boils down to for me is just trying to see things a little differently with regards to AdSense.

“I�ve read case studies of people trying to sell their own products on their sites and barely breaking even, switch to PPC ad monetization and their incomes jump to six figures.”

When you say this it just means that other people [the ones buying the PPC traffic] made better products.

If you’re making six figures off of AdSense, then someone else is making seven figures off of the traffic you are sending them…it has to work like that.

My article is suggesting [more to myself than anyone else...since I have made six figures from AdSense too] that it is better to be getting the traffic sent to you rather than sending it away for a few pennies.

Yes it is more work to make good products…but the payouts are exponentially bigger too.
By Andrew, July 13th, 2006 at 12:08 am

“If you�re making six figures off of AdSense, then someone else is making seven figures off of the traffic you are sending them�it has to work like that.”

Absolutely not true, there are a lot of advertisers who are bringing in a negative return on investment. Online dating companies are so desperate to keep the numbers of users from dropping that they now routinely spend between $5-$10+ just to get a single free registration to their site. Why do they do this? Possibly to keep their stock prices up or to make them more attractive for an aquisition.

Additionally, it is simply not realistic to have a product for every single visitor coming to your page. The specific case study I was referring to was a home improvement columnist, Tim, of AskTheBuilder.com. There is no way he, as a writer, is going to sell faucets, landscaping, bricks, chimenys, gas fireplaces, etc. etc.

I think you are right in telling people they should be selling their own products, but you are wrong in ranking it at the top. Making money online is all about traffic and how you efficiently monetize it. Sometimes that means selling your own product. Sometimes selling your own product is the worst approach.
By Jon, July 13th, 2006 at 9:06 am

Hi Andrew,

There will always be specific cases that go against the generalities that I am presenting. If people are willing to operate at a negative cash flow, they won’t be doing it for long.

All I know is that it is clear to me, in my internet business, that making products that people are willing to pay for, is more stable and has more growth potential than selling my traffic to other sites.
By FashionMista, July 13th, 2006 at 11:48 am

I sell my own products on my website. I developed a blog to promote my website/online shop, but it turned into a blog featuring other designers and neat oddities. I just said no to Crack Sense on my website (no way!), but do have it on my blog as a thank you to Google for freely maintaining my blog space…which I guess they could take away at any moment, as you indirectly pointed out…But I go back and forth on it. The revenue from it lets me by half a loaf of stale bread if I lived in the late 1800s, but it’s the gesture I participate in. I also own a whopping two shares of stock, so I’d like to help keep their ad revenues up. :)
By Alberen, July 15th, 2006 at 1:52 pm

Jon:
In general you are right. I am an Adwords buyer and in my case it costs me $3 in adwords to make $29 in revenue.

I am really amazed at the amount of dollars people are making by generating traffic. That will only keep working if there are good products on the web.

Now, here is what I would like to know, if I have a product or service how would I generate business WITHOUT a PPC program. Even (some) web designers/hosts catch flak for having ads on their site.

What needs to happen is that the online community needs to figure out how to accept more commercial endeavors without going through adsense or selling their soul (I am surprised the PayforPost thing has any legs at all.)

I would much rather pay someone a full $5 to get me a customer than to pay adsense $3 and hope it happens. I know that I just described an affiliate program…. what needs to happen is figure out how bloggers can generate revenue other than the ways currently available to them.

By the way, your sweatshop analogy is a good one.
By stas bekman, July 16th, 2006 at 1:59 pm

Very nice article, Jon.

I think what bugs me the most is that publishers have no control what so ever over their AdSense accounts. I’ve written the article: “How to Bring Google AdSense Down” Or “You are Guilty but We will not Tell You Why” and “How to Resurrect Your Google AdSense Account”, where I cover a story with my account being shutdown, no reason given and then the hard process of ressurecting. It’s the most popular article on my site – My guess is that there are thousands of publishers who lose their accounts daily.

As for selling your own products, it seems that it’s actually easier to sell someone else’s products. Most affiliate programs offer 50% and more. And in my personal case, I wrote a book Practical mod_perl, but the funny thing is that my Amazon associate revenue for that book is higher than the amount I get paid by O’Reilly as an author!

Oh well…
By The end of AdSense sweatshop? at Seeking Revenue, August 4th, 2006 at 5:16 am

[...] Increasingly publishers are turning away from what they feel is the “Google’s AdSense Sweatshop“. [...]
By Rich Dad and Your Internet Business | Art Of Money, September 20th, 2006 at 8:52 pm

[...] I’ve spent my fair share of time slagging AdSense as a bad foundation to build an Internet business on so I thought I’d explore the concept of what is a good idea in this post. [...]
By Ei, March 4th, 2007 at 4:17 am

Awesome, man
By The Kaizen Business › Get Off The Crack Ads, March 26th, 2007 at 8:33 am

[...] Don’t believe it? Check out the points made by Jon over at Art of Money about the crack ads sweatshop. [...]
By Are You A CrackSense Whore?, March 29th, 2007 at 9:09 am

[...] once read an interesting article where Google’s AdSense marketing was referred to as “CrackSense“, I had to laugh when I heard this phrase, because it rings so [...]
By Abi, March 31st, 2007 at 3:49 pm

Well Jon, you are so right.. But you can look at it this way, create content and bring visitors to your site, do your affiliate promotion, get them to subscribe and make them leave by paying via adsense..

Step 2, 3, and 4 in one…:P
By Tom LeDree, May 14th, 2007 at 9:06 am

I’d Just like to say I love the fact the bottom of this post has a Google AdSense advert. :-)

You make some good points in your post. I enjoyed reading it.
By Google Adsense- A reality check-Just how much can one make? – Idiot Affilate, June 18th, 2007 at 2:57 pm

[...] of money has a very interesting article on adsense that I believe is worthy of checking out called “Are you working in Google’s Sweatshop?” Jon kind of highlights what most of us already know- The make money online food chain would place [...]
By Make money log, October 10th, 2007 at 1:56 am

I agree your“Internet business food chain”. Google adsense cann’t a main revenue of a site. I plan to post some related affiliate programs to my site. Adsense not a real online business i think, just only a popular earn money way.
By elvin, February 29th, 2008 at 11:43 pm

I have digg this.great post
By Digerati – SeizeThePage.com, September 27th, 2008 at 6:52 am

This was a very informative post and I am so glad you broke in down like you did and really have given me a reason to come up with my own product to sell on some other niche site. Thanks.
By finding-people, October 6th, 2008 at 3:49 am

Great post. I have about 30 sites up and running with adsense on them, and I have heard all of the comments “adsenseless”, “cracksense”, but I love that “Adsense Sweatshop” phrase you coined. It rings so true.

After reading your article I felt a bit distressed, but then thought that there is a huge market niche opened up for someone to come along and create a more equitable model and take a mere commission on the linking of buyers to sellers.

Adsense is exercising Google’s market power at the moment, so one can only hope that someone sees these profits and comes up with a better model (for advertisers and publishers) and people will suddenly replace their adsense with something else.

So far, I have tried ad-brite, and it just is not the same… I have it on one site for a test, and all I ever seem to see advertised are half naked women plugging dating sites. These girls are always near me. :)

Great article.

…Stay tuned for more info on getting Crack-Sense free.

$100 a Day Blogging! Discover My Top 5 Action Steps

his post has been submitted to ProBlogger’s latest Group Writing Project. It is also a part of a feature article series here on Art of Money, called the make $100 a Day Blogging project, in which I attempt to grow this site’s earnings to the $100 a day level and document all the steps along the way (so you can boost the earnings on your own blog.)

#5 – Perform Great Market Research

The sad fact is that most blogs are doomed to low earnings before they ever begin.


Most bloggers “choose a niche” for their blog, but that is only a small fraction of the legwork needed to tell if a topic is going to be profitable. You’ll need to know:

  • how many people are searching for your topic?
  • what kinds of products are changing hands in your topic market?
  • how does it compare with other niches in terms of traffic and money changing hands. This means devise a metric and use it to measure a few potential niches, that way you begin to have an understanding of the relative value of each niche.

#4 – Carry Out Competitive Analysis

What value to visitors can you provide that your competition are missing? This is your competitive advantage. If you want to succeed and make decent money, you’ll need one.

Don’t be afraid to compete with the big boys, or an already entrenched site, but know that in order to do so, you’ll have to be better than they are at something important (SEO, quantity of posts, quality of posts, breaking news, insider info etc.)

How are the sites you are going to compete with making money? Do you see room for improvement?

Steal (not their content :) ) from your competition: don’t be afraid to borrow category names, ad positions, title tags etc. The web is an open book, once someone is successful the evidence is there for you to use to your benefit.

#3 – Use Great Tools

Using freebie or low cost tools, like hosting for example, often represents a lack of confidence more than a lack of money. If you knew that you were going to make $100 a day from your blog, wouldn’t you spend $10 a month on hosting and $10 a year for your own domain name.

Other tools that can make a big difference:

  • off-line blog editors (Ecto, Windows Live Writer etc)
  • keyword research tools
  • affiliate link cloaking software
  • subscriptions to industry only publications
  • ad servers
  • educational products related to blogging, online business or your topic area

#2 – Develop a ‘Succeed at All Costs’ Attitude

Most people expect success and money to come to them easily, but the fact is that it doesn’t work like that. 99% of the time, money and any other forms of success go to whoever earns them.

Whoever has done the best preparation and developed an advantage and can best execute a plan will make the most money. Competition is a good thing, when you’re on top you’ll be glad it isn’t easy for others to make it too.

Success if for people who have ruled out failure as an option. Most people hold onto comfort and the status quo and then wonder why their blog doesn’t make any money.

Entertain this ‘what if’ scenario…

Tomorrow you wake up and you’ve been fired from your job, and you HAD TO make enough money from blogging to pay your daily expenses, what would you do differently? How would it change your approach?

I’m guessing you would:

  • write better content
  • be more creative
  • work smarter
  • network more

Personally I have just increased my expenses dramatically (to purchase a condo in a city where real estate prices are through the roof) and I’ve decided to make money on this blog to make up the difference.

Pressure can bring out the best in us; I’m already enjoying working on this site more than I ever have as I embrace the challenge.

#1 – Monetize Like Your Life Depends on It

A lot of bloggers are shy about putting ads on their site. In my opinion this represents a lack of confidence more than anything else.

Would you be shy about asking for your paycheck at your job?

If you have decided to blog with the intention of making money, then produce valuable content and expect to be compensated for it.

That’s if for my top 5 action steps to make $100 a day blogging. If you want to follow my whole series on blogging towards $100 a day you can grab my feed, or bookmark the project home page.