Earning Revenues on the Web
There are good times and there are bad times. Bad times don?t last long; bad news is that neither do good times last very long, writes Puneet Mehrotra.Updated: Sep 29, 2005 19:13 IST
“This time, like all times, is a very good one, if we but know what to do with it."
Ralph Waldo Emerson quotes (American Poet, Lecturer and Essayist, 1803-1882)
There are good times and there are bad times. Bad times don’t last long; bad news is that neither do good times last very long. Five years ago nobody had imagined the web would be such a boom. Remember everything with a dot com was perceived a losing proposition, the great dotcom crash and ‘school boys can’t run businesses’ etcetera. Just two years before that everything with a web address seemed like a road to a gold mine. Back to the present, what we are now witnessing is a boom phase. A boom time that is based on pure fundamentals having inherent growth and profitability strength. This boom is different from the previous bubble and will last long enough. This is the growth phase and you can benefit from it.
The Doctom Bubble of late 90’s
Internet economy is booming like never before. Revenues are soaring and websites have so much to offer. This time there is a distinct difference from the dotcom hype of late 90’s. The bells and whistles are missing and the web economy is based on strong fundamentals. Another interesting fact this time is that the economy is based on the current earnings of the web businesses unlike the late 90’s when the economy was based on anticipated future earnings.
So what kind of revenues should an entrepreneur expect?
In bullish times like these any web business with a good service/product offer and traffic should be able to make a good return. Looking at some figures.
Revenue from product and service sales
Suppose your website gets around 5,000 unique visitors daily (that’s 1,50,000 a month) and you have a focused site with a good product offer, a 1% to 1.5% sales conversion is achievable. In our case let’s consider a conservative figure of 1%. Let’s say your average sale is $20. You can easily expect a daily revenue of $1000, which works out to around $30,000 in a month.
Now the assumptions. How tough is it to achieve 5,000 visitors daily?
Well, that’s same as asking how tough is it to lose 5kgs. Both are easily attainable. A little effort, a little expert guidance and patience and 5,000 visitors daily is easily attainable.
The 2nd assumption. 1% conversion. How tough is that?
Well let me say, if you have a good website and your product offer is less than $10 1% is not very tough. This does vary for some business. Some products are easy to sell over the web examples of which are books, CDs, DVDs. Products by relatively smaller companies or products that require “touch and feel” or newly launched don’t get as high conversion ratios.
Conversions depend a lot on upon your website content, aesthetics, usability, sales copy, the convincing power of your website and the product per se. For example even a 5% conversion for an e-product would mean a high profitability whereas for a physical product to get the same profitability it would mean achieving atleast 20% conversion.
$30,000 a month. That sounds good. If it was that simple why isn’t everyone making it?
Maintaining your weight is simple too. Why is half the word obese then? Being happy is simple too. Yet unhappiness prevails and psychiatry is a booming industry. A relationship is simple too. Yet see how complicated things are, if you read any of the Agony Aunt columns.
There are companies who have developed such networks on the web which would perhaps have been unthinkable in the offline world in those budgets. The fact is web has changed the way business works. Many companies refuse to believe that. The choice is yours; you either believe those old companies or see and experience the radical changes happening in the ebusiness world.
Revenue from Advertising
If content is king, then traffic is gold. Now if your website is getting 5000 visitors a day which is around 1,50,000 visitors a month don’t expect any wonders from advertising. Perhaps a $1500 to $2000 per month should be good enough.
But if you wish to be one of those suckers like me who survive on advertising and nothing but advertising then read on.
Your first aim should be to get atleast 20,000 visitors to your website daily.
How tough is 20,000 visitors daily?
Not tough. But not easy too. Sustained effort,expert guidance, patience and voila!
Once you manage getting 20,000 visitors a day then your revenues could work out to be somewhat like this:
You add contextual advertising to your site. Chisel and fine tune your way to achieve atleast a 5% CTR (click thru ratio). It’s not easy but not difficult too. It took me around 2.5 months to get it right. I get a CTR between 5% to 10%.
If you achieve a 5% CTR and you get an average PPC (pay per click) of $0.50 (which is very conservative) your daily income could range around $500 that’s$15,000 a monthfrom contextual advertising alone. CPM advertising would rake in a couple of hundreds more.
If PPC (pay per click) of $0.50 sounds high to you, consider the average PPC I get is around $1.5. And yes let me add, one of my sites has a PPC of $100! Yes that’s $100 per click. Probably the highest on the Internet so far.
The boom times have just begun. I am no pundit but mark my words, the Internet Economy is likely to go beyond most us anticipate. There is a strong reason behind this. Strong fundamentals combined with sound revenue models. The analysts forecast online sales to continue experiencing double-digit increases primarily due to the growing number of online buyers.
If the late 90’s was the flirtation phase, this is the happy marriage phase. In the flirtation phase entrepreneurs were exploring for revenue models and anticipating future earnings. In this date and time entrepreneurs are implementing revenue models and relying upon current earnings. The distinct point of difference is current earnings as different from anticipated earnings.
First Published: Sep 29, 2005 19:13 IST