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Internet Business Models Part 2

By Edited Apr 29, 2015 2 2

The Affiliates Model

We continue our look at the various business models on the internet with the affiliate marketing model, this variation has some common factors with the AdSense and shop variations.  Using the affiliate model means promoting other peoples' products or services through your site, basically if you have a website you can sign up as an affiliate to one of the affiliate marketing networks such as Tradedoubler or Affiliate Window; these typically have a wide range of merchants (companies with products or services to sell) under one ‘roof’,  choose which ‘merchants’ you want to advertise on your site, place the ads on your site, and anytime someone clicks on your merchants ad and makes a purchase you get paid – this is obviously a simplified version of the process.

Commissions tend to vary  depending on the merchant/product and if you go through one of the Affiliate Marketing Networks you will generally have the ability to track your conversions, cash and will often get useful statistics such as the conversion rates of merchant (i.e. what percentage of customers who see an ad go onto purchase a product or service).  The bigger and longer established Affiliate Marketing Networks tend have more merchants on their books (which means more choice for you) and tend to have more help at hand for newbies to get started.

Pros and Cons?  Well on the pro side you can generally get this business model up and running pretty quickly, you don’t physically have to produce a product of service, and if you pick your merchants carefully there are decent commissions to be made.  On the cons side, to make this work you need to ensure that your website is linked to the affiliates ads or links that you put on it – for example if you run a website about playing guitar, you might have some advertisements or links from a merchant that sells guitars or offers guitar tuition or offer to do guitar customization... you get the picture.  In other words things work a lot better if you site is congruent with the ads placed on it.  All in all I quite like the affiliate model, especially when it is not overdone and adds value to a website. I also think it can be a good part of an overall strategy for an internet business.

The trick with this model is to not overdo it,  and any merchant advertisement placed on your website or blog should add value to the content on the site and it  not distract from it.

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Membership sites

Membership sites are a growing trend on the internet, and are mostly founded on the principles that most offline membership sites are based on – in other words a subscriber to the membership site usually pays an on-going monthly or annual fee (in the offline world think Wine, Book or Golf Clubs) for exclusive product, content, special offers etc.  This model is often very appealing to the members, especially if the membership site truly offers something which is difficult to find or almost impossible to find elsewhere, members also tend to feel a sense of community with other members of the site, especially if this is in a niche area.

To set-up a membership site needs some thought, primarily about your prospective audience, and you definitely need to have done your market research to find out if there is an audience out there for what you are offering (remember if you set up a membership site, it will offer your members special information, offers or products that might be hard to find elsewhere, this will involve no small effort on your part – and this will be a long-term commitment on your part whether 2 people sign up or 2,000).  You also need to research what your audience are looking for in your site, is it discounts to the trendiest shops in town, or information on how to best make a business more efficient?  On the plus side for you, the prospective membership site owner, there are some good benefits, first of all a regular and (if you do a good job) fairly predictable income.  A good membership site can have the potential to generate a good and consistent income, if you have done your research, attracted the right members, and most of all keep your members interested and happy by producing interesting, up-to-date and consistent content.

Members
Credit: Pixabay

Specialist and Product sites

These business websites specialise in a specific area, usually in a broad or narrow niche (e.g. backpacking in South America, Making Money with eBay), they are often dynamic sites (such as blogs where new posts might be placed every week or two on the specialist subject keeping readers up to date with the subject.  To make these types of sites profitable (and also just as important - keeping the producer of the blog interested in the subject) they need to attract visitors, this is invariably done by producing good content for the site, whether that be written articles (blog posts), videos or podcasts (audio).  If a specialist site offers great value to its visitors, then more visitors will come to the site, and should rise up the Google rankings by way of good content, other websites linking to it, good SEO etc.  Most of these sites use a combination of the above methods of revenue generation (i.e. affiliates, AdSense), they also often produce their own product linked to the subject they are discussing in the site – often these are what is known as ‘information products’ , so our example of the Backpacking in South America site above might produce an information product such as an eBook “The Backpacker’s Guide to South America”, which readers of the blog/website might be interested in and so purchase direct from the website or maybe via the Amazon Kindle store.

Information products, such as eBooks have a lot going for them, they can be a lot of work to produce and ‘promote’, but as long as they don’t date too quickly they can keep producing a recurring income over the long term just like the royalties on a song or a book – the principle is do the work well, do it once, send it out into the world and it will keep on earning – almost like the holy grail of internet marketing – Passive Income...but that is another discussion for another day...

You will find other internet business models  in the first part of this article on InfoBarrel.

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Comments

Apr 13, 2014 10:53pm
spragusa
Interesting. Do you think that the affiliate programs are looked at and frowned upon? Maybe the new wave of internet biz is through Membership sites?
Apr 14, 2014 7:12am
acko10
Hi, thanks for your comments I think the affiliate model is OK, but as with most internet business, the key is having enough traffic coming to you site(s). Similar scenario with membership sites - I think its all about the traffic.
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