[This is the sixth in a series of posts about entrepreneurship as a way to protect your income in a bad economy.]
A prior post listed 13 steps to find your own best way to earn money on the Internet.
If you’re skeptical or wary, as I was, you’re probably thinking each step sounds like a small project in itself.
You’re right.
Each Step Is a Small Project
The key is that they’re small projects. They don’t take a lot of time, and they don’t cost a lot of money.
Your investment is tiny compared to that of starting any other business that can deliver as much revenue.
The purpose of this post is not to teach you how to do each step, but rather to take away the mystery and to show you the process is straightforward and achievable.
Then you can decide whether you might be interested in pursuing this path further. If so, I can point you toward other resources for more detailed information.
Then we’ll get back to other topics about the ups and downs of life in sales. Fair?
Choosing Your Market
This step involves both introspection and research. First let’s address the introspection.
You’re going to read the word passion a lot in the next few hundred words.
We’re starting here because passion one of most important factors in choosing both your market and your offering.
If you can’t get passionate about either your market or your product, you probably won’t stay motivated enough to be successful selling on the Internet.
Which Markets Do You Know or Belong to? Which Do You Care About?
Think about both your work and your personal life.
What groups of customers or markets have ever made you to think the grass might be greener if you were selling to them instead of the ones you sell to now?
What markets might aligned to your temperament, your interests, values, and personal style?
Which additional markets do you feel you know something about? Which do you think you may enjoy working with, if you can’t do so through your current job?
What Excites You When You’re Not Thinking About Work?
When you’re not working, what groups, clubs, associations, churches, volunteer groups or activities, sports, arts, crafts, hobbies, cultural interests or other sources of satisfaction have been consistently important in your life?
Make a list. Then rank the entries on your list, put the ones you’re most passionate about at the top.
Is Your Market Big Enough, and Is It Buying Enough?
Now for the research.
Just because you’re passionate about a topic doesn’t mean it provides a viable market to serve.
You can use several methods to determine market size and viability:
- Think about where people in your market are likely to “gather.” Where do they go to swap information? Look for online forums and discussion groups. Research associations and other organizations that may serve their interests.
- Think about the topics they’re likely to search for on the Web. You can use a variety of free or low-cost tools on the Internet to see how many people search on different keyword phrases.
- Are any e-zines, newsletters or physical magazines dedicated to the markets you’re thinking about? If so, it’s evidence that someone’s making money by advertising to them.
- Who’s already making money by selling to your market on eBay? How many vendors are selling products that would appeal to your market, how many transactions are occurring, and what’s the range of price points?
- Does Amazon.com list book titles that would appeal to your market? If so, how many? Amazon ranks the sales of each book title. It tells you how each compares with the sales of all titles Amazon sells. How do the books that appeal to your market rank on Amazon?
Clearly, there’s more to this process. You’ll get all the details you want if you’re interested.
Can You Reach the Market Cost-Effectively?
Some of the answers to the preceding questions will tell you how people in your market already get their information. Using a variety of techniques that we won’t cover just now, you can hitch a ride on any of the media that are already in place.
You can list products or services on eBay and Craig’s List at no charge, but you pay a fee when you sell. These sites can be cost effective because they cost you nothing unless your product sells.
Free Search and Paid Search Advertising on Google
Chances are very good that as you grow your business you’re going to have to advertise your product or service through paid advertising on Google or one of the other popular search engines.
Google gets far more search traffic than any of the others, so we’ll focus on it here.
When you enter a keyword or phrase into Google search, you get two kinds of results. The first is a series of free listings, which appear against a white background and to the left of the page, toward the center as you look from top to bottom of the page.
You Can’t Pay Google for the Exposure You Get with Free Search
The web sites that come up on these free searches arrive at the top of the list because Google has determined that those sites are the most likely of all sites to contain the most useful information related to each key word or phrase.
Google determines these rankings by using algorithms (or mathematical logic). Google keeps these criteria secret and keeps refining them.
Although you can use a number of techniques to increase the likelihood of your site being listed higher in the free search results, Google won’t take your money to do it.
Google cares mostly about giving the searcher the best possible search results. They’ll be happy to take your money all day long for paid search ads, but not a penny for free search.
You Can Buy as Much Exposure As You Want with Paid Search
Along the top and to the right side of the search-results page you will also see a series of brief ads that run only two to four lines long. They never contain graphics. These are known as “paid search” or “pay-per-click” (PPC) ads.
The advertiser pays Google a fee each time a searcher clicks on one of them, whether or not the search buys anything.
The amount you pay for ads on Google can range from a few cents per click to $10 or more per click.
How Google Sets the Price of PPC Ads
The cost of a pay-per-click advertising on Google depends on a number of factors, including the ranking of the ad on the page(s) where it appears, the popularity of the keyword phrase to other advertisers, the relevancy of your ad to the keyword phrase the user searches on.
Google shrewdly uses an automated bidding system that in effect auctions the most favorable PPC ad positions to the advertisers who are willing to big the highest prices for them. The more competitors for an ad position on a particular keyword phrase, the higher the price will go.
Higher PPC Rates Point Toward Profitable Markets
You can research the cost per click for different keyword phrases by using tools that are readily available on the Web.
The Google bidding system makes the cost of PPC advertising on Google is a key indicator of how much a market is willing to pay for products or services vendors are selling.
Here’s the logic behind that.
Higher PPC rates for a specific keyword phrase signal that advertisers have bid them up. They’ve bid them up because they are willing to pay them.
The advertisers’ willingness to pay high rates suggests either of two possibilities:
- Most advertisers must be making enough money from their ads to justify continuing to pay for them.
- The advertisers are stupid (certainly possible for some new ones, but not likely for most who have been advertising awhile).
What should you conclude if the PPC rates are very low for a keyword phrase you’re interested in? Does it mean you’ve found a golden market niche without competition?
Probably not. Lack of competition is a red flag.
Considering the hundreds of thousands of online marketers who have been scouring the Web for all manner of opportunity, chances are good that others have already tried selling products or services to your keyword phrases.
If few advertisers are bidding on it, maybe only a few have made any money at it. And the rest might be clueless. You check which is more likely, but let’s save that level of detail for a future post.
Another caution: While higher PPC rates imply that someone is making money on a keyword phrase, they don’t necessarily mean you can.
You need to think about how profitably you could compete with the better-established advertisers.
More on this and the rest of the 13 steps in the next post.
Stay fresh.
–Scott Silverback