Making your Website Profitable

Here are 3 options for making money from a website on the web. I have discounted webistes that display links only as that is link farming and I actually find them pretty annoying. Ethically you should have either a great social networking site, products (tangible or intangible) to sell or a great product that can change the way things are traditionally done to make things cheaper and more accessible to more people.

Social Networking

There are many success stories on the web that leave you scratching your head. Social networking is all about gathering as much information as you can from users and using it to make money from them as you provide a service that adds value to their life so that they surrender their personal information for free. It is then used for advertisers to sell to you which is where the provider makes their money. Friends Reunited was the first big hitter in the social networking hierachy and was sold for £120 million to ITV in 2005 (with an extra £55 milion depandant on performance). Its 15 million users each paid a subscription fee and a profit of £22 million was recorded by the end of 2007. However the subscription fee was dropped in 2008 as 47% of users had not renewed prefering instead Bebo and facebook. The market value dropped dramatically and in 2009 it was sold for £25 million and by 2011 its worth was valued at just over £5 million. So in a matter of 2 years the price dropped by a fifth. So the original husband and wife team who created the software did extremely well and deservedly so, they created a subscription revenue stream and had 15 million users signed up to the service. ITV was in effect purchasing the potential value of these users to create advertising revenue streams. Once another service came along that was better and allowed them to use it for free, users were off.

Bebo was the next big thing but the fickle side of social networking eventually led users to the superior and newer facebook product. The value placed on facebook is in the number of users they have and the potential for selling products and services to these uses determined by their likes. This is what brings in the revenue. You provide a free product that encourages you to reveal the things you like and advertisers will fall over themselves to sell them to you. Google operate in exactly the same way. They record what sites you like and your interests so that all adverts are personal. There is no such thing as a free lunch so the price of using any free product is your personal data is most likely to be sold to advertisers.

Eccomerce

Well known high street retailers stay in business through recognising and providing for their customers needs. Many have built their reputation up over many decades and so their website is part of the brand that people will use based on the goodwill and trust created over many years. When people start a web business they often forget this because the costs involved in creating a website differ greatly from signing a business lease and purchasing products to display and sell in the newly acquired shop. Many web sites fail to make money as a result of poor planning and sky high expectations that everyone who visits you site will want your product. It is important to realise that it takes on average 12 visits to a new site before someone will consider parting with their cash. Chucking money at advertising may get more visits to your site but if your business plan is poor and your products and service do not match your competitors then the visit is over. Much the same as if you walked into a shop and did not like what you see - you would walk out. So if you want lots of loyal customers you need to build a customer base that you intend to retain by continually providing a better product or service than your competitors with special loyalty offers and promotions. Succesful online sellers build up their good will and reputation overtime. Tt is often forgotten that Amazon took 3 years of trading before making a profit. It is all about filling a need. Amazon did it by offering prices far lower than the high street but backing it up with great service so people were prepared to wait to receive it in the post.

Great Products

The Microsoft purchase of Sykpe hit the airways on May 10th 2011 and left me in an absolute daze. Lets be honest it is not the first time a big hitter has paid big $s for a Company which does not make a profit. Sykpe is an amazing product and as more and more wireless broadband options become available the days when houses can ditch their phone lines, connect to a wireless cable and use call option packages like sykpe to chat to people using their broadband line are not too far away. The potential to decrease your call charges especially to mobiles and abroad will make a massive difference to people. I also consider twitter a great product because if used in the correct and positive way it allows people to instantly connect and hear from individuals (without PR speak) they would not normally be able to. It can be inspirational, thought provoking and an incredible call to action about matters and events that can make a diference.