What’s the best source of traffic to make money online? Is it advertising-driven traffic? Or is it so-called free traffic—organic search traffic?
The answer is clear: use free traffic to build a business model with a clear profit margin and then use online advertising to get every last possible paying customer until you reach the the limit of that profit margin.
Here are the details:
Can You Sell It?
Could you make a profit selling cars, houses, computers, refrigerators, carpets, or any of the millions of other things people regularly buy? Maybe—but you’ll never know unless you try.
Unfortunately, selling physical goods in real life usually requires a serious investment of time, money, or both. It costs a million dollars to open a tiny car dealership, a realtor’s license requires weeks or months of studying and tests, and even the just-over-minimum-wage salespeople at Best Buy have to undergo training.
But selling stuff online is much easier and much cheaper. Amazon has millions of products and all it takes to sell them is 10 minutes to sign up for an affiliate account and 10 minutes to 50 minutes to write simple sales copy.
After 20 minutes to 1 hour of effort, you still won’t know whether you can sell it, but even if your experiment fails, you can walk away without feeling like a failure. Can the guy who owns the failed car dealership, or who never sold a house, or who got let go from Best Buy say that?
Collect Your Statistics
If you keep working at Internet marketing, you will eventually make sales. After you start making a few sales a week, you’ll begin to see trends. If you’re smart and capable, you’ll collect data to quantify those trends and turn them into statistics.
One of the most useful statistics is your sales rate—how many people do you need to land on your site or your sales page in order to make a sale? Most complete statistic programs let you automatically collect this information. For example, Google Analytics lets you setup goals—make your goal page a page which confirms that the sale has been made and you’ll get live updates on your progress.
But don’t worry if you can’t get live statistics. For example, you’re selling stuff through Amazon and the best you can do is figure out how many people you refer to Amazon and how many of them buy. You can always enter your statistics into a spreadsheet and do the math.
What’s important is knowing how many people need to view your page before you make one sale. With this number, you can start an effective advertising campaign.
Turning Statistics Into Campaigns
Let’s say you’re selling DSLR cameras and it takes 100 people visiting your site through free traffic (organic search traffic) before someone actually buys a camera. That’s an excellent 1% sales rate—but if you only get 300 visitors a month, it could be a rather small income stream.
Advertising lets you rapidly expand your traffic. You have a baseline statistic, so you can estimate the effectiveness of a potential advertising campaign. Let’s say each camera you sell costs an average of $1,000 and earns you a 5% commission, so you make $50 per camera. If you estimate it will take 100 visits to your page to sell one camera, you now know that your Pay-Per-Click (PPC) rate is $0.49 or less.
Give the campaign a limited trial and see what your actual advertising-based sales rate is.
Where The Magic Happens
The reason neither free traffic nor online advertising by themselves are the best strategy is that they each have a weakness which the other fixes.
Free traffic is great because it’s free. (Although you invested time or money into writing the content on your site.) But free traffic tends to be anemic. Niche sites typically target only 1,000 visitors a month, so they need to either sell high-end items or the niche site owner needs to run lots of small sites.
Because free sites have so little traffic, they’re almost impossible to split test, and without split testing, you can only make improvements to the site by guessing.
Advertising is great because it drives lots of traffic to an ad, so even a low conversion rate on a low-price product can generate thousands in monthly sales. But quality online advertising is getting more and more expensive, making low conversion rates unprofitable.
But if you can create a profitable site based on free traffic (even if the profits are small), you can use advertising to drive enough traffic to your site to use testing. This is something most sites based on free traffic will not do, so you may be the only person in your niche getting testing results.
With testing results, you can improve the number of your conversions for both your free and advertising traffic. Let’s use the example above where you received 300 organic visitors and made $50 per sale.
At the 1% sales rate, you made $150 monthly income from your organic traffic and could profit from PPC expenses up to $0.49. If testing against advertising-driven traffic lets you double that, you now make $300 monthly income from your organic traffic—and this is true even if you didn’t make a penny from your advertising traffic.
You can now also spend up to $0.99 per ad, letting you get even more traffic to run your tests even faster. It’s possible you could add another 1% to your sales rate, bringing your monthly income from organic traffic to $450—and, again, this is true even if you don’t make any money from advertising.
Stop thinking of free traffic verses online advertising and start thinking of free traffic PLUS online advertising.