I did the research here for a post due to be published on my blog this Friday.
Without realising, many of us are literally throwing money down the drain promoting sites that have a fraction of the potential they would if we knew what to change.
In this post I ran calculations on over 2,000 recent website sales on various marketplaces including Flippa and Digital point, to find out which type of monetisation strategy yields the highest revenue per unique user. When looking the different monetisation types, this relies on Flippa data as this is the only marketplace which supplies this.
The idea behind this is simple; How much money you make isn't really down to how much SEO you do. It's how well the site is set up to convert and monetise the people who visit. For example, I can build 100's of links to a site that has badly configured adsense ads and make little money regardless of how much traffic is generated. On the flip side, I can do half the work and get half the traffic but still make many times more if that site is set up to sell a product for example and does so with a great conversion rate.
To test out various theories I looked at revenue per unique user - the average amount a site generates for every unique visitor it gets. Here are the results (the full criteria used to create these results and a much more indepth description of everything here will be published this Friday via RSS)
The full article goes into more depth (including measures that were put in place to increase the likelyhood the results were representative and accurate), but here's a brief overview of the most important conclusions:
Adsense alone = a quick route to slow growth
One of the lowest RPUs and hence one of the poorest methods of monetisation for a site was Adsense / Advertising only which barely makes $0.11 for each unique user that visits. Adsense is probably the easiest way to start in IM and I personally think it's a great way to make a dent in generating a passive income, but for the same amount of effort you could quite easily double or even quadruple your income from that same site with a few small changes.
A combination of both affiliate sales and advertising yields the worse results overall, worse than advertising / adsense alone.
The type of site which made the most revenue per unique user, gross and net, were sites that sold a product or service.
Flippa has no strict guidelines on what this is, but from the data I analysed it consists of
- Service offerings (mostly SEO related) such as proofreading, traffic selling, link building and Facebook / Craiglist services
- Ecommerce offerings including dropship sites
- Web Applications
- Info products and Digital Downloads (with ownership rights)
It seems logical that this type of business would have the highest RPU, as almost all of the revenue is gross profit (with the exception of dropshipping). Not only will these sites generate more cash when you own them, if you decide to sell, the average revenue multiple far exceeds any other type of site, especially when you have an asset (content rights or software) included in the sale.
To stress the point, picture this; you have three sites that you choose to work on in the same niche. All are brand new sites and you spend the same amount of time doing exactly the same amount of work. Assuming you manage to attract 1,000 visitors per month on average for those six months
- An Adsense site is statistically likely to make you $660 in profit.
- A site selling a Clickbank product ($27 ave per sale after refunds, 0.6% ave conversion) statistically likely to make you $972 in profit.
- A Product based site (e.g. ecommerce or your own DVD / Ebook product) is statistically likely to make you $6,360 in profit.
These figures are based on averages, but generally will stack up unless some 400+ transactions were all anomalies.
There are logical reasons to own an adsense site, some of which I've taken from discussions with peope on forums, but not all these are 'good' reasons. My excuse was 'comfort zone' and fear of failure. Doing something different always lost to doing something that I knew would work (i.e. adsense), so the choice of potentially failing or guaranteed success was an easy one to make. Not thinking big enough has potentially cost me 000,000s in lost revenue for all the time I've spent promoting sites that could be making more money with the same level of promotion.
Here's a list of things to consider:
# There are practical reasons where an Adsense site is still the best option which include, lack of time initially to do something else, lack of suitable products in a marketplace (e.g. government / community / social) or ease of ownership (although I dont think selling an affiliate product is much more difficult)
# If you're actively promoting adsense sites, ask yourself if they could support a product based offering such as a dropship store or an information product and give serious consideration to switching. It may not be broke, but that doesn't mean you shouldn't fix it!
# If you've been doing your own linkbuilding for over a year and you're doing it for an adsense or affiliate site, stop now! You've served your time - outsource everything you understand and devote your hours to creating a product
# There's an opportunity in searching for websites for sale that are adsense only but have good traffic. Simply changing the monetisation would more than likely increase its revenue based on the existing traffic figures
The full article goes into more depth and also covers affiliate sites and how they fit into everything. You can find out when it goes live via my RSS Feed