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How to Make Money on the Internet

 A Primer on Internet Marketing

 A Special Report for The Business Forum

John Hathaway-Bates, President and Executive Director of The Business Forum, recently inquired “if anyone was making money on the Internet?”   As a result, David and Nancy Gardner of Gardner & Associates Consulting accepted the challenge of trying to uncover the answer to this question by interviewing Adrian Bye of  Mass Market Consulting, an expert in Internet Marketing.


Dave:  What are most business owners missing about the opportunity with the Internet and a web presence?

Adrian:  I view one of the most powerful things about the Internet is that it is an incredible direct-response medium. So all of those infomercials on TV, long sales letters you get in the mail that we all throw away have been proven effective in generating lead and customers -- the Internet is actually a powerful medium for handling all of that sort of stuff.  It doesn’t mean you have to resort to spam and tacky things to make your business work.  What it does mean is that the economics around those business models are very powerful.  For example, an infomercial will have an offer where you can call in and for $9.95 and receive a course on real estate training.  But the real point of that is to acquire that customer, so that you can then go on to sell them higher priced things.  That is what the Internet is very good at. If you can design your business model around one theme that really gets someone’s attention initially and gets them in the door so that you can start establishing that relationship, then you can then follow-up and build a value-based relationship and then sell them more expensive stuff, which is where the profits are.

Dave:  Is anybody making real money as a result of the Internet? Are there differences between large and small businesses with the Internet?  Are there terrific examples of doing this really well? 

Adrian:  There are a lot of people making a lot of money.  There are people who are making, for example, some money on pay-per-click.  We hear about Google’s AdWords and the Yahoo advertising on the right side of the Yahoo page - people make some money on those, but the problem is that it is very difficult to get a lot of volume. You can run some ads.  But the average small business owner doesn’t know how to track the performance of those ads and so the area that I hang out in is an area called CPA (cost per acquisition networks).  These are very much general mass market offers that fit general mass market things. 

As an example, a client came up with a new type of skin-care for sun blocks to help prevent skin cancer.  The developer has had skin cancer twice so he came up with this special sun block.  If we can test it and determine if there is enough of a market for this particular product, then it is something that we could sell as an initial front-end product at low or no profit to acquire the customer and then offer other products after that to generate real profits.

Dave:  You are talking about consumer products.  Do you have any comments regarding industrial products or manufactured goods, etc., and how people are using the Internet in those areas? 

Adrian:  The same types of processes still apply.  It still comes down to lead generation, and so in terms of Business-to-Business context you might do a lead generation program.  For example, you might conclude as a consequence of a visit to a web site that “you are really interested in industrial fans, doing research on fans, and, well, come and visit our site - give your name and email address and we will give you a special white paper explaining all the ends and outs of purchasing industrial fans and the 10 most common causes of fires and what you need to do to make sure that you have everything in place so that you are protected.”

Dave:  That initial relationship may be built with a non-sale item such as a white paper?

Adrian:  Yes, especially in a B-to-B context where what you are selling is high price product.  If you have a lot of upside margin potential with a product or service, that is where you can then decide we want to generate a certain number of leads and determine what you are willing to pay for that lead.  A lead for us is a name, an address, a phone number.  Limit the amount of data that you are collecting from people because the less data you collect, the more likely they are to give it to you.  But you decide how much data you need per lead and then that is where you can go into small avenues to start with, for example, Google’s Pay Per Click, and run some advertising and then decide the value of every lead to us. Where our profit margin is a $1,000.00, we are willing to pay up to $200.00 per lead.  And so you set up this opt-in form and do some nice testing so you can get a really enticing offer - you can never predict what people will do or how they will respond — the only way you can really get there is by testing a lot of different things.  As you test different combinations, you will find something that really is enticing to people, you will be paying Google for a set amount of traffic and you will end up paying a certain cost per lead.  You might be deciding that you will pay up to $200.00 cost per lead, and in some cases, you might get it down to $1.00 per lead if it is cheap traffic.  That is when you build some great margins. 

Nancy:  So you do believe in the Pay-Per-Click approach to driving traffic to a website?

Adrian:  Yes, I like because it is the least complicated and it has the biggest benefits, which is mass market consumer stuff.  But we use it also for testing - it is an easy way to get something out there.  Get some ideas of how people are likely to respond to it and then we will evolve it up a couple of steps.  But for B-to-B things, it is fine. There are going to be people searching for all of the components, for our example, of industrial fans.  They use Google just like everyone else does, and they have the same interests.  What can also be nice in a B-to-B context is that a lot of our companies really don’t know how to do this stuff very well, if at all, so there may be no advertising there, which means you have no competition, or if they are doing it at all, they may be buying some ads and sending them to the home page, and the home page is not designed to generate leads and so they are getting a few phone calls every month, but they are not quite sure where they are coming from and maybe they are coming from the website and maybe not.  Define cost per lead and then it becomes very clear.  What is really great about it is that when you have this model working there, you can take it out to a lot of other places.

Dave:  Adrian, I want to go back to a point you just mentioned -- capturing a name and an email address for each and every website visitor.  So many people like anonymity when they go to a website.  Are you suggesting that you put something ahead of the white paper to collect this information? 

Adrian:  Yes — even if you are getting a lot of bogus data.  Tell them when they submit their name and email, “thanks for giving us your email address.”  We are sending you a download link so you can download the white paper.  The key point of this, and anyone who is doing a lot of selling will know, that it is about delivering value first.  If you are initially just trying to sell to people right off the bat, that can work when people are absolutely desperate, but generally, it is a lot better to have a value-based relationship built first, and then build around that value once the trust is in place.  The key to being able to collect that name and email address, etc., is to have a page that is enticing enough and attention-getting enough, so that they are really going to want to give you their email address. The highest rates I have seen are 50-60 percent of conversion rates - so even at its best; it is only 1 in 2.  Typical is 1 in 5 - and that is fine.

Dave:  How would you feel about the people that “get away” because they weren’t willing to give their name and email address?

Adrian:  They are not that interested and we don’t care.  The other part to build on that is, we let them get away, but then what we want to do is build some optimization on the page so we are showing 2 or 3 or 4 or 5 versions of the page simultaneously.  On one version of the page we might say, “We will give you a white paper on industrial fans, including 10 tips on installing the fans.”  Headline #1.  The next one might be “Discover how industrial fans can save your company $1,000.00 a month in air conditioning bills.”  That is Headline #2.  The next one might be announcing the next generation of industrial fans.  The point is, we test different ways of presenting our white paper until we get the one who is going to be the most attractive to the largest possible group of people and  then we have something that works.  Once you get something like that working, it stays working. 

Dave:  You are doing this on the initial page that they go to, and not your pay-per-click ad or do you test both? 

Adrian: You can do both - test it all at one time.  With the marketing we do, the pay-per-click ad is called “the creative,” and so we are always doing testing of “creative's.”  One of the things that can happen with Pay-Per-Click is that the traffic can be small, but if you have managed to find a lot of keywords and there is a lot of search traffic going on, and you have found some good areas and they are converting at a cost-per-lead that makes sense, then it makes sense to do a lot of testing against the ads.  Some people spent a lot of time testing where they are only getting 5 clicks per day to get accurate test results, I like to see a couple of 100 to a 1000 clicks at a minimum.

Nancy:  Do you use Wordtracker to identify keywords — the words that prospective visitors enter in the search engines to find an appropriate web site?

Adrian:  My focus at the moment is less toward pay-per-click just because of the volume and so I just use it for testing.  I have some small tools that I use just for getting keywords for testing.  Wordtracker is a good one.  I have used it a lot in the past. 

Dave  How important is having a web presence today?

Adrian:  I actually think that there are a couple ways to look at it.  In a lot of cases, it may not be that important.  It is important to consider it like a “brochure” such that when you send a brochure to potential customers, you can refer them to a place where they can look you up on the website.  In that aspect I think it is important to have something extremely simple which just says, we are smart enough to have a website and here is all the basic information about our company like you would get out of a press kit.  I would suggest that, beyond that, if a company is not doing things along the lines of lead generation and this other stuff, unless they are going to do it right, it is not worth worrying about and they should focus on acquiring customers through other channels. 

I just see so many websites that are really poorly put together.  They have done all this work on eCommerce, shopping carts, integrating catalog systems, and they don’t work.  Unless you are going back to this direct response stuff - set things up in a way that the site is going to sell and that you have got things worked out drive a lot of traffic to the site and you know what you can pay for that traffic, I don’t see there is a point.  My response would be, “Take it seriously, or don’t do it.” 

Dave:  If I have a good web presence, what marketing can I discontinue 

Adrian:  I suggest you don’t immediately stop anything - make decisions based on the math or the economics.  If you know about things like your cost-per-lead (the Internet is great because you can track everything) if you know what your cost-per-lead or cost-per-sale then you can take those kinds of performances and bring them out to other media.  For example, if you are advertising in the Yellow Pages, you could get a special phone number from Yellow Pages and you could pay for an ad for a year and measure how many calls come into that number and calculate from overall sales volume that is generated from a Yellow Pages sales ad. That will give you an idea of the cost-per-lead or cost-per-sale. 

If you start to look at all of the different ways that you are reaching out to your customers, and be able to define them in terms of what the cost-per-lead or cost-per-sale is, then it will become very clear and easy to decide which places to keep going with and which ones you don’t. 

One interesting example - a guy I met on the plane about 6 months ago was saying how he started learning about understanding the relationship between his advertising and acquiring a new customer.  His dad had a business and he was telling his dad that he needed to be able to track this stuff.  His dad was paying for all sorts of magazine advertisements and radio, etc.  And when he started doing some tracking, he found he was spending tons of money on different advertising, but, in the end, the only one that was really working and was working incredibly well was  a Yellow Pages ad that was bringing in 95% of his business.   After he did this review, he dropped all other advertising (after 1 year) and focused on Yellow Pages ads. 

Dave:  Do business people really understand the role of a web presence and are they capitalizing on its power?

Adrian:  That is easy to see if you go to someone’s website and they are working hard to get email address from people and they are producing enticing reasons for people to give their email address, then they are, otherwise they have a site that is used as a brochure and to share press releases (this is helpful).  People do come to your site and get to know you better.  But to my mind, it is all about getting the lead.

Dave:  What are the common mistakes you see companies making on the Internet?

Adrian:   Not understanding concepts of direct response.  Not being able to create an offer to attract people’s attention that is simple.  People get caught up in websites that are very ego-driven.  The worst ones have been these big horrible Flash website - big animations, dramatic music in the background - you immediately look for “skip intro” button.  That is the exact opposite of what I am talking about.  My sites are generally going to be quite ugly, but really get people’s attention and really get them thinking, “Wow, it is exactly what I want.  This page was written for me just written for me and solves my problem.” Those are what works.  It’s not about ego but about cost- per-lead.  Not about doing it in an ugly way that turns people off, but doing it in a way that is going to really work. 

Dave:  How important are metrics in terms of understanding results?

Adrian:  For us, metrics are everything.  I have talked about the cost-per-lead and getting that person on the list.  That is everything.  There are then more metrics as well :  what is our  30-day customer value, or 1 year customer value, and so we get an idea that once we have someone who has joined our marketing program, how long are they going to hang around typically.  What are the things they typically buy?  What are the things we can typically sell them?  If we have been paying $2.00 per lead - perhaps we think it is working well.   We find out that annual value that we are selling  $20,000.00 of things to that person, but only paying $2.00 - we could get more people interested in advertising for us if pay $50.00 or $100.00 a lead.  Let’s put our price up dramatically because we know our annual value is $20,000.00. 

Dave:  What is Search Engine Optimization and how important is this? 

Adrian:  Don’t spend time at it.  It can be a little difficult because you end up at the whim of the search engines.  It is all about designing pages that are simple in terms of being indexed by the search engines, and having lots of relevant keywords.  If you have done good Search Engine Optimization on your website it means that when people are searching for those words, you come up first on the free results on the left hand side and that you have done things like putting title tags on top of the page, also headlines talking about Industrial Fans, and then sites linking to you which talk about industrial fans and they link to your relevance. 

The right philosophy is to do some very basic Search Engine Optimization on your site so that in general and in not very competitive terms you will be searched for.  But given you are so much at the whim of the search engines and so vulnerable, I would urge caution about being too dependent on this approach. I have friends who were making $300,000 a month decrease to $10,000.00 a month just because there has been some new algorithmic change in the search engine search algorithm.  You can’t build long term stability on that.  Whereas if you have a paid model and you know that every time you pay $10.00 a lead, their annual customer value is $2,000.00 that is something you can build a business model around. 

Dave:  What is the difference between a Web Designer and a Web Marketer?

Adrian:  A Web Designer makes the web site look nice.  A Web Marketer designs business models that work within the context of the Internet.  It’s like the difference between the Sales person and an Office designer.  The sales person goes out and brings people in the door. 

Dave:   What are the key elements of a web marketing program?

Adrian:  I consider the following elements essential:

  • The business model is clear

  • Know the metrics all the way through

  • Design and implement websites that will support those business models

  • Having a follow-up system in place that can be just email, but it also can be using phone, or could be having sales staff calling on people. 

With all these elements in place, it becomes an automated system to run your business.

Dave:  So, it is very intentional, very well thought out, and closely monitored. 

Adrian:  Yes, it is monitored closely in the beginning.  Once you get these things set up, It just works and it keeps on working for you.

Dave:  Do you see this being more relevant in mass market consumer type of environments?  Or is it more appropriate in the Orbitz or Amazon.com worlds? 

Adrian:   eBay and Amazon are doing it as well.  eBay will have ads on Google that say, “come to eBay we have lots of keywords that you are looking for” - it is the same generic ad everywhere, but eBay is doing is that they are putting these ads out all across the web.  When people are searching for, for example, “industrial fans” and they are going into a page that just passes the search term along to eBay, so that they can do a search and potentially buy something.  eBay designed metrics so that it all works and they are in the end they are just paying a certain cost-per-sale or cost-per-acquisition to these people as well. 

Dave:  If you were at a networking event and met a CEO of a company who was interested in deriving greater value from their web marketing, what would you ask about to help you get started thinking about their situation? 

Adrian:

  • Find out what their sales staff do today or how their selling process works today

  • What is their lead value?

  • How much does it cost them to get that lead?

  • What methods are used to acquire those leads?

Dave:  And that would give you insight into what is working and how to tailor a web marketing program?

Adrian:  Right. Each situation is entirely different. For example, I met a COO for an insurance company - with specialty areas in the music industry.  It is a B-to-B base.  Search traffic volume is so small - presence so dominant that a lot of this stuff doesn’t really help them that much.  So, if it is a $500 million company that has a very big presence in a very small space - it is going to be less relevant than for a company in a much bigger market that is trying to get attention. 

Nancy:   What about affiliate programs to drive traffic to your web site?

Adrian:  Let’s say we have our company and it is working well with our lead process and we are paying $5.00 per lead - once we have that working and it is working on Google and we are comfortable paying $5.00 per lead or $20, etc., we can then take out to other places and get that traffic in the same way through an affiliate program.   Let’s say we are doing industrial fans, there are 5 websites that are doing blogging about industrial fans.  We can go to those guys, make a small deal and tell them - pay $20 per lead that comes in, they send us their traffic for industrial fans.  It’s just another avenue for getting people in the door and getting attention. 

Dave:  What about building a list, building a relationship with that list, and having increasingly higher-priced product and/or services?

Adrian:  The point with that is that when we are talking about building a list, we talked about how to get that lead in the door, that person on the list; the next step is what we do when they are on the list.  This is something that successful business people already have; it is not about making one initial sale.  We don’t want to sell just one MacDonald’s hamburger, we want them to come in and be happy enough with what they got so that there is a strong loyalty factor there.  This is when the rest of your company’s programs that you already have in place kick into play. Let’s say you already have a $20,000.00 industrial fan.  Rather than selling that right up front is one way to sell value and get that trust in place - we can put sale stuff on it and we can be selling smaller, cheaper stuff initially to get attention and then lead to greater sales where profits are.  The key is to have that list, have that relationship with customers, and a lot of people reading this will already be doing this through a regular monthly newsletter or something they are sending out to their customers/clients.  It is the same kind of concept - just moving it out onto the Internet.  Delivering value to them in a way that you are not just sending a newsletter full of things just about you, making sure that it is a newsletter that is useful to the readers. 

Dave:  The last thing that I am little concerned about is what I call voyeurism where people come to your websites, but they don’t want to be known.  They want to do it anonymously.  We previously talked about getting people signed up on newsletter, I often e-mail them and inquire what types of subjects are they interested in, what is your role, etc.,  and it is harder than heck to get people to respond. 

Adrian:  That is normal.  That is why it is good to have all these systems in place so you can have a sequence that, on the third day after they signed up to your list, the system automatically sends them that message - and you don’t have to think about it and 1 in 20 will respond and that is perfectly fine.   The reason they are not responding is that they don’t trust you yet.   As you send more information with more information with more value that is directly helping them and what it is that they need to know and do, as more of that happens, they start to say, this guy knows what he is talking about.  That is when they are going to start responding more.  It is just a matter of building that trust. 

For example, a company may have newsletters previously sent out that they can reuse a lot from; this can be set up quickly.  Then it is just a matter of time and people going through the process. 

Another thing to help generate more trust more quickly, as people opt-in with the email address, you talked about one really good thing is writing back and asking them why did they joined.  Another is to have them e-mail you and set up a time for a phone call - brainstorm for 20 minutes on their particular situation.  Give it away for free.  Again, it has to be handled very carefully because you can be overwhelmed or too have people wasting your time.  It is a mutual thing.  It is not about you doing everything to please them, it is making sure you are attracting the right people as well.  But if you do that right, it becomes another way of building trust more quickly. 

Dave:  It is interesting if there isn’t the trust you can’t get them to respond in any fashion, or if you do get them to respond, the response is often a very terse, “just send me the newsletter.” 

Adrian:  That is because you don’t have the trust.  That is the difference between talking via email, or talking via phone, or face-to-face.  This is why we will always have an airline industry and a need for sales people to get on that plane and fly.  You often can’t get that trust unless you are meeting face-to-face. 

Concerning “face-to-face,” I did work with a guy from HP - they do a lot of work virtually but then every  3-6 months there’s a division meeting - all get together in a hotel for 2-3 days - conferences, sessions, just to get face to face - many times people meet who have never  met - huge way to build that trust. 

Dave:  Do you use Internet-based surveys at all? 

Adrian:  Yes, quite a bit with the larger firms.  It is a great way to find out what  is going on inside their heads because it is hard to guess.  Survey Monkey is a terrific tool.  And another simple way that we have been using a lot is to just send an email asking, “What is your most important question about _____________?”  It’s an example of response rates.  On a list I have of 48,000, I got 1,300 responses to a question like that in four days When the lists get large enough, you can get a lot of information back and it was a big help.

Dave:  Adrian, thanks for sharing your insights with The Business Forum.  We appreciate your insights very much.


About Adrian Bye:  Combining sharp technical acumen, a keen sense of human behavior and a yen for marketing, Adrian leads online marketing initiatives focusing on highly targeted mass audiences. His analytical mindset has made him among the foremost authorities in advanced split testing, lead generation, and backend monetization. His life in technology sprouted at the age of twelve when he began writing programs in Assembler on his Commodore 64 at home in Tasmania, Australia. In 1995 he developed technology partnerships for AIESEC, the world's largest student run exchange organization. By repositioning their technology programs he was able to negotiate two-dozen valuable new partnerships with prestigious organizations such as Adobe, Cap Gemini Ernst & Young, Hewlett Packard, Microsoft, and Symantec. His career quickly took off, landing him in Silicon Valley, where he helped refine Oracle's Java strategy as a Senior Product Manager in Oracle's Server Technology division. Today he splits his time between Miami and the Caribbean, where he runs several multinational ventures.  He can be reached at www.massmarketconsulting.com

Business Forum members may contact Adrian for a FREE 30 minute brainstorming of their Internet strategy.

 

About Gardner & Associates Consulting:  We eliminate business execution problems that threaten profitability and/or growth. We can be reached at www.gardnerandassoc.com


David Gardner is a graduate of San Jose State University (BA) and Santa Clara University (MBA).  In 1998, the Board of Directors of the Institute of Management Consultants elected Dave Gardner a Certified Management Consultant, CMC. The principal purpose of the Institute of Management Consultants is to establish professional and ethical standards for management consultants. By attaining the CMC designation, Dave has joined the ranks of over 20,000 CMCs worldwide who have demonstrated their professional competence and commitment.

Nancy Gardner has more than 20 years of professional experience working with people in reshaping their personal and professional goals to achieve more balanced and fulfilling life experiences.  She has been involved in crisis interventions, life path changes and relational dynamics.  She is a Principal of Gardner & Associates Consulting. She is responsible for website design and management, marketing and business development, and for conducting value assessments of human investment in companies. Nancy holds a BA in Psychology and an MA in Clinical Social Work  (University of Denver)
 


Previous articles by David Gardner:

Profitability for small Manufacturing Companies
Understanding Margin Leaks
10 Lessons a Mid-Sized Manufacturer Learned Implementing ERP


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