How People Make Money Online

I went out to dinner with a couple friends on Friday night and after discussing blogging and how people make money blogging (some as a full-time job), the question came up of where the money comes from.

While I have only been blogging for a little over six weeks, I have been interested in online income for a few years now and have made some money on twitter as well as working for a blog in the past (I did marketing). I also used to be a loyal reader of ShoeMoney but haven’t kept up with it as much recently. Anyway, I know a little bit of how money is made online, and I wanted to share some of my insights.

1) Advertising

See those ads on the top and side of this website? That’s a revenue source. The more viewers you have (or, more importantly, the more clicks) the more money you can make.

The biggest source of ads online is Google Adsense. It’s simple and easy to set up. There are other sites that have services like Adsense, but Adsense is by far the largest.

Some bigger sites (and smaller ones as well) set up private ads where they negotiate a contract with companies. This has potential for higher revenue, but it does require some time setting up the terms of the agreement.

Overall the concept of online advertising is not drastically different than television or radio. The more viewers of a television program, the more expensive the ads are. It’s the same case online; the higher the number of viewers (or traffic) of a website, the more revenue potential.

2) Selling a Product or Service

Some individuals have websites or blogs that they update from time-to-time (or daily). This presence can be leveraged to sell a product or service. For example:

• Ria Thurston leverages her blog for customers for her pohotography business.
• Jimmy Pena leverages his blog for Excel freelance as well as to sell his random data generator add-in.
• Financial Samurai leverages his blog to sell his ebook.

Having a website or blog doesn’t always mean immediate income, but potential for future income. Let’s say you want to write about college football for a living. To simplify, let’s say you want to write about Big Ten football. A good way to start would be starting a blog about Big Ten football. After a season or two, you could easily become one of the authorities on the subject. You could either use your blog for income or you could potentially get job offers from bigger companies like ESPN, CBS Sports, etc. to write about the topic.

3) Affiliate Programs

Some people make a lot of money off of affiliate programs. Affiliate programs work like this: you post a link to a product, and if people click on it and purchase the item(s) that you are linking to, you get a cut.

A great example of a website built on affiliate links is Poker News. Their entire business model is built on referring people to poker sites. If you refer someone to poker sites, you get a cut (say 10%) of all the revenue that the site generates from that user. They have referred enough users to support their site and they continue to refer more and more users.

Amazon Associates is a big affiliate program where users can refer people to specific items or just generally refer them to the site. If a person gets to Amazon through your link and makes a purchase, you will get a small cut of that purchase.

4) Sponsored Content

Sponsored content is just another form of advertising. Similar to an advertorial in a newspaper, a company may be willing to pay to have a blog post written about a product or service they sell. Sometimes they control the sponsored content, other times they pay a blogger to review their products or services (this can backfire if the blogger finds their product or service to not work well or if they find issues with it).

As you can see, making money online is not something mysterious. The concepts are similar to how people make money other ways, such as advertisements during tv shows (the more viewers, the higher they can charge for the ads).

I’m sure there are plenty of ways to make money online that I haven’t even heard of, but I think I covered most of the major ways people make money online.

Do you make money online? What other ways can someone make money online?
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Photo by MoneyBlogNewz.

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