TL;DR: Websites mainly make money through affiliate marketing, display add revenue, product sales, subscriptions, or paid services/content.
Many people are looking to make an income online through blogging, eCommerce, or other types of avenues. But, how exactly do websites make money?
Generally, the tried and tested concepts that most people are familiar with such as commission based sales, direct sales, advertising, and paid services are exactly how websites make money, they’re just digitized versions of an old method. In essence, making money online hasn’t re-invented the wheel, it’s just now a digital wheel.
In this article we’ll cover most of the ways websites generate revenue. We’ll talk about avenues such as; affiliate marketing, display advertisements, direct product sales, and a few other avenues you may have not heard about.
Let’s get to it!
One of the most common and lucrative ways to monetize a website is through affiliate marketing. For a lot of people, they hear the word affiliate marketing and think it’s some sort of hyper-modern online method of making money, but it’s really nothing new.
To put it simply, affiliate marking is essentially earning a commission on a sale. Therefore, in it’s simplest terms affiliate marketing is: commission based sales.
Let’s have a look at a hypothetical scenario of how a blogger might earn money though affiliate marketing.
Bob is looking for a new pair of headphones, and want’s to make an informed choice about the best pair of headphones for himself. He goes to google and types in “Best headphones for listening to jazz”. He find a bloggers site “HeadPhonesRus” who provides some really insightful write ups and reviews about headphones.
Bob reads a few articles on “HeadphonesRus”, which doesn’t sell headphones directly, but rather earns commissions on sales of headphones sold on Amazon. Bob decides to buy some headphones and clicks on an affiliate link on the blog. The link then re-directs bob to the headphones location on amazon. Once Bob pays for the headphones “HeadphonesRus” will earn a commission on Bob’s purchase
Note: Affiliate marking isn’t limited to physical, or Amazon products. In-fact, there are many digital, and non-physical products that have affiliate programs.
If you’re interested We suggest you check out places like:
- App Impact Radius
- Commissions Junction
- Share a sale
These are aggregators which have thousands of affiliate programs in one convenient place. There’s everything from pet food to protein powder. Whatever you’re interested in trying to promote, there will likely be an affiliate program for it.
Why would companies want to give away comissions?
Well, simply put, affiliate programs can be powerful avenues for companies to garner sales, expand their brand, and customer base without having to directly pay for advertising.
Furthermore, the marketing and content produced by bloggers and affiliates is generally of very high quality and provides more ‘bang for your buck’ versus a traditional banner advertisement.
- Can be highly lucrative
- Low costs and barriers to entry
- Commissions can be reoccurring (passive income)
- Can generate passive income
- Highly competitive
- Not as easy as it sounds
- Can be difficult to earn sales or commissions
- Usually takes months or more to see progress
- Affiliate programs can be terminated at anytime, potentially crippling your income and revenue streams.
I’m sure you’ve been to a website and seen loads of advertisements for products or services related to the niche of that website. Well, unsurprisingly, when someone clicks on those advertisement the website earns some cash.
Display advertisements can be a good way to monetize your website, but will require high amounts of traffic to generate any significant amount of income.
There are lots of different display ad networks to choose from, but generally if you’re new or have low traffic you’ll start off with “Google Ad Sense”.
Generally, there is a progression people will make with display add networks. The more traffic your site gets the bigger opportunities you’ll have for higher paying add networks.
They are as follows:
Popular display add networks(in order of progression):
- Google Adsense (no minimum traffic required)
- Ezoic (10,000 visitors/mo required)
- Monumetric (10,000/mo)
- MediaVine (50k sessions per month)
- AdThrive (100k/monthly page views)
Niche Specific Add Networks
There are also add networks which are specific to your niche. These types of networks generally will only work with websites that cater to specific niches and may have other requirements such as hits per month. They also tend to pay better than Adsense and other low tier add networks.
Revenue from display add networks can vary wildly depending on which add network you’re using and monthly traffic numbers. Here are some numbers to give you a rough idea of what you might be looking at
- Easy way to monetize your site
- Potentially lucrative on higher tier add networks
- Can be used in addition to affiliate links
- Passive income
- Requires a significant amount of traffic to see a decent return
- Have to apply for higher tier add networks
- Many people use add blockers these days
With the rise of Shopify and others like Wix and WooComerce, it’s never been easier to start selling something online. Online shopping has shown consistent growth over the past decade and is on trajectory to continue to grow and be an ever increasing sector for retail purchases.
Becoming an online merchant has a lot of appeal, as the upside potential of revenues can be significant. But just like running any other type of business there are lot of moving parts and aspects to consider.
eCommerce websites work just like a traditional brick and mortar store, they generate revenue through sales. The caveat is that most or all of the transactions take place on a website!
Things to consider
There are many different ways to structure an eCommerce business. You can DropShip, make your own goods, stock an inventory of pre-purchased goods, or a combination of these methods.
Drop shipping is a popular method because it reduces the barriers to entry, as the amount of capital required to get going is fairly small.
Online stores can be a good outlet for people who create their own crafts or products, think: soap makers, jewelry, food products, etc… The benefit of an online store is that it opens the entire world as a marketplace for your goods or services.
Running an online store requires attention to detail with a focus on book keeping, taxes, and product regulations. Therefore, Good communication, accounting, and book keeping skills will come in handy.
You’ll also have to consider your profit margins carefully as there are hidden costs with shipping, taxes, money transfers, web hosting, advertising fees, and other business expenses.
- Huge upside potential on revenues
- Drop shipping allows almost anyone to try it out
- Expands your marketplace
- Can be somewhat passive if you’re creative and clever in how you set your store up.
- Can entail significant upfront costs depending on business structure which exposes you to more risk if you can’t move products
- Complexities with shipping, book keeping, and managing the moving parts of a business can be daunting
Paid Memberships and Gated Content
Another way that people monetizes websites is by charging clients or users for access to the service or content on offer.
Maybe your website offers the best stock picks of the month or year, and in order to get access to the top picks users have to pay a monthly, or yearly fee to be part of your network.
Many websites also make use of “gated” content. What’s that? Generally, most websites will have quite a bit of “free” content, but gated content is “premium” and requires you to pay to access it. Websites like the NewYork Times, or Financial times are example of gated content. As they’ll offer 3 free article per month or unlimited access if you pay.
- Can generate reoccurring revenue
- Subscriptions can be lucrative
- “Members” only content can require a significant time commitment in order to update and provide new high quality material to your subscribers.
E-mail marketing is a great way to earn money. It works by converting visitors of your website into loyal followers of your content.
If you produce high quality, valuable content, many of your readers or visitors will want to stay up to date with your newest offerings. You can capitalize on this by building an e-mail list.
Building an e-mail list with your visitors allows you to build a ‘relationship’ with them. You can do this by offering your visitors help, or free information, that way- they’ll be more than likely to want to hear what you have to say.
E-mail lists can be used to send your visitors offers, promotions, or anything else you think might be of interest to them. In-turn you can earn money from these offers via affiliate links or direct sales.
There are various methods of going about e-mail marketing. Some of them don’t even require a blog or consistent new content, but rather are based off of using “lead magnets” to capture e-mails, and then market products and service to those captured emails.
- Can lead to significant long term revenues
- Builds a relationship with your visitors
- E-mail lists are valuable
- Low barriers to entry
- Can take some time to build a list
Sponsored Posts and Sponsorships
If you’ve made a name for yourself, or your website draws in a significant amount of visitors, companies and people will pay you for an article to be written about their product or service.
This happens all the time outside of websites. Companies sponsoring athletes is one of the most blatant examples, and the same concept applies to popular websites.
Buy Sell and Flip Websites
The easiest analogy to this is what happens in the real-estate market. Investors find houses they think are worth “flipping”. They then buy the property at a discount, improve the house, and then sell it for a profit.
The same concept can apply to websites. Many people find websites for sale, improve them with new conten, a re-design, or beef up the SEO, and then sell them for a profit.
- Can lead to long term passive income opportunities
- Good upside potential
- Can be done from anywhere
- Requires an eye and certain know how
- Some risks are involved if you can’t flip for a profit
We’re not going to write too much about these other ways to monetize a website as they’re generally not as lucrative, but we’re including a small list just to jog your mind.
Check out our other full article on how to make money online for more ideas.
- Pod Casting
- YouTube Videos
- Host polls on your Website
- Product reviews
Making money online can be an exciting endeavor, as it allows you to work on your own terms and often times wherever you want. Some people think just starting a website will lead to riches, but most of the time you’ll need to monetize it in order to make some money.
People genenerally monetize their websites via:
- Afiiliate makerting
- Banner advertisements ( display add networks)
- Direct sales
- E-mail marketing
- Paid or gated content
Keep in mind that you don’t have to use just one method, as it’s common for individual to use a “hybrid” of these different monetization methods. A popular method these days is to use well placed affiliate offers alongside banner advertisements.
Really, earning money online draws from traditional methods such as: sales, commissions, and sponsorships, which are things we’re all probably pretty familiar with. These methods have just been digitized and modernized in some ways.