How Do Websites Earn Money? — Top 5 Methods

If you’re aiming to create a profitable online business then it’s crucial you learn ways of monetising your traffic. You might start out by focusing on one income stream, and diversify into another. Here’s how most successful websites are earning.

1. Affiliate Marketing

There’s no end of third party products you can promote on your website as an “affiliate“. You earn a commission by referring customers to that product via a unique tracking link assigned to you.

To start out as an affiliate for a product, you sign up to an affiliate program and provide your website URL, as well as other basic credentials. The company will verify that you and your website are suitable for promoting their product (unless they aren’t picky). You’ll be granted access to ready-made adverts or unique “tracking links” to place onto your website — in articles or blog posts, for example.

If any of your site visitors buy a product via your unique link, you’ll be rewarded with a commission. Most affiliate programs offer increasingly high commission incentives the more customers you refer. For example, the basic cut might start at 20%, with the potential to earn up to 50% on all referred sales.

On this website, I promote some third party products. Ones I’ve used myself, and found to be helpful.

Advantages

• You don’t need to own or develop a product to be able to earn from it. You’re only objective is to market the product.
• It’s a scaleable model. The more traffic your website gets, the more people you’ll refer to third party products, and the more you’ll earn. That’s the basic principle of online sales.
• You can leverage from existing traffic to increase the profitability of your website. You might, for example, begin promoting new products which your audience might be interested in.
• No upfront capital required to get started. You don’t need to invest anything (except your time), making it attractive to young entrepreneurs.

Disadvantages

• As an affiliate, you have to be careful not to bombard your readers with product links. It’s off putting, and detrimental to your image. Learn more about providing value to your audience.
• If a product you promote isn’t up to scratch, then it reflects badly on you for referring it. Be highly selective.
• Affiliate links are forbidden from several of the most popular email clients (e.g. Mail Chimp). Using them in newsletters will get you banned! Learn more on e-mail marketing do’s & don’ts.

2. Paid Advertising

There are many formats paid advertising comes in, such as:

• Banners: eye-catching (often animated) adverts, with links which take you directly to a product website.
• Text links: embedded into posts, so that readers are enticed to take a further look.
• Images: similar to banners, except the images are static. Usually integrated into articles/posts.
• Job boards: a section of the site where individuals pay to advertise their services (e.g. website developers, or SEO specialists).
• Guest posts: a third party pays a fee to write a page on a website, with the view to increase exposure to their own product, services, or ’cause’.
• Product reviews: influencers (e.g. popular Bloggers) accept money in exchange for a product review. Very common in Youtube Vlogging.
• Social media posts: those with large followings are paid to post about a particular product. For example, celebrities sharing images of themselves wearing branded clothing.
• Email marketing: using an opt-in list to promote products on behalf of another company.

Advantages

• Very little work required from the site owner. It’s often entirely down to the purchaser to provide the content for the ‘paid advertising space’.
• High quality guest content adds value to your website and improves SEO. It provides exposure you may not have gained otherwise.
• Lucrative. Many sites earn the majority of their money from paid advertising space.

Disadvantages

• High risk of subjecting your audience to biased, promotional — even ‘spammy’ — content. This is detrimental to your website.
• The quality and tone of guest content will vary, making your website ‘uneven’. Learn more about appropriate writing styles.

3. Services

Once you have an audience — such as newsletter subscribers, social media followers, and website traffic — then you’re in a position to provide services. Many site owners will testify that this is the key to increasing their earnings.

Here’s some examples of online services:

• Courses & Tutorials: being knowledgeable and respected in certain fields means you might be in a position to teach it. This could be in the form of an online course, or a physical presentation (e.g. a seminar).
• Consulting: some website owners charge by the hour, providing advice on their area of expertise.
• Freelance Writing: many site owners publish their own content, and therefore have the skills to write freelance. I’ve taken on a few freelance writing jobs myself, in fact.
• Design, Branding, Business Development: website owners often have some other skills — graphic design, or SEO, for instance. These services are required by many new startups.

Advantages

• Provides a ‘safety net’ of extra income whilst website traffic converts into other sales.
• Potentially opens to the door to new & exciting projects, job opportunities, and collaborations.

Disadvantages

• Services are hands-on, and less scaleable than other income streams. There’s a risk of being sidetracked, and neglecting the main objectives of the site.
• Many services — such as freelance writing and marketing — can already be outsourced via popular sites such as Upwork.

4. Selling Products

There are numerous products, physical and digital, you might decide to sell via your website.

Many online shops sell products using the Woocommerce or Shopify plugins for WordPress — or Sellfy for digital products. There’s plenty of other shopping cart platforms to help get you started.

Some examples of products commonly sold online:

• e-Books
• Music
• Photography
• Images, web graphics and vectors
• Exclusive podcasts
• Webinars or video training courses
• Software
• Templates (e.g. for emails or websites)
• Plugins (e.g. WordPress)

Advantages

• An ‘always on’ business model, capable of accepting payments at any time, from all over the world.
• A scaleable model. Increasing both website traffic and conversion rates can be highly lucrative.

Disadvantages

• Unless you’re drop-shipping, physical stock requires upfront investment. And where bulk buys are the only viable proposition there’s a risk you won’t sell enough units to earn a profit.
• Physical stock relies on other entities such as suppliers, fulfilment centres and delivery companies. It’s difficult to control all factors. It won’t always run smooth.

5. Selling Itself

Skilled SEO experts, who understand how Google page rankings are decided, can generate a steady flow of organic traffic to their website. They often do so with the intent of selling it on. Build up a site’s value, sell it, and repeat.

I’ve met people doing this for a living, earning enormous sums from it. Companies are willing to invest in ready-made sites; traffic being the asset.

Advantages

• With the right knowledge it requires a small investment for a high return.

Disadvantages

• Secrecy issues. It’s difficult to scale the business when there’s highly valuable, secretive  SEO/marketing strategies being used.
• The methods used may require constant adaptation as Google algorithms become increasingly sophisticated. Many Black Hat methods, for example, will lose their effectiveness in the future.

Hopefully that clears things up. The majority of online income streams will fall into these 5 categories.