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Making money online is easy. Making a living by making enough money online is hard.

About 4 years ago I worked in a software company. I had a few sites based on free scripts and made some extra money from them. I wasn’t holding it in a secret and one of my co-workers asked me how to get started. Took me about an hour to set him up with hosting, adsense and free directory based on phpld script. I even showed him all my traffic sources and told him that he WILL make money online (just like most gurus selling ebooks ). Well, he did. $5 the first month while his directory was PR0. I had a PR4 one back then and it made $300 or so a month. I also showed him what the landing pages and simple 2-3 page sites were. That’s when he started to dive in SEO, affiliate marketing and do his own thing. A few weeks down the road he showed me his new ugly ass site built around clickbank product. I laughed at first, but 2 weeks later it was pulling couple hundred bucks a week and he sold it a month later for 5K. Back then things were different, it was a lot easier to SEO a site, however, I was really surprised how quickly this guy picked it up. He put some time into learning + trying and it payed off.

A few months later another coworker (lets call him Hacker J) asked me how to make money. I did EXACTLY the same thing for him. Got hosting, set him up with adsense, showed my traffic sources and set up a directory. He took his directory more seriously, looked through the sites, made sure they were all quality, etc, spending several hours a day to go through about 300+ listings and verify the quality ones. While he made the same $5, he spent a ton of time reviewing his submissions. A month later he decided to stop. The reason, as he said, was that he was not in India where $5 may get you by.

3 years has passed. I still talk to my friends. It happened that Hacker J got laid off and asked me how to make money again. This time instead of explaining everything, I shared a few blogs with him. After a few days of learning, he asked what kind of sites should he make. Even though directories lost it’s peak, I still advised him to start with those as he already knew how to get 300+ visitors a day. Except this time he learned his lesson.

He is a programmer, so automation is not something he is not familiar with. He learned to automate creating these directories and bought over 800 of $0.79 .info domains (aff link). I checked with him today, 37 directories are up. He made around $5 yesterday and about the same today from his 37 sites. This time he spent some time writing the scripts to automate 99% of approval process and still keep the quality of the directories by adding a spam checking algorithm. He still has a long way to go, but according to his plans, 800 directories should make him $100 a day, while they are pr0. Not sure if it will be more, but I get around $100/mo from 12 older ones that I still have. As a matter of fact he may even get lucky and sell it as a network for 20K+ ($25 each is reasonable). However, his business model seems to work so far. It should take 8 days to pay for the domains once he has all the sites up. This may also be a good bottom layer of his new site network.

Based on this real life example I can see how:

1) One person gets it easy while another one fails based on exactly the same material.

2) A person fails but succeeds down the road trying to do the same thing from a different perspective.

3) People waste time trying to build something they can call a quality product rather than collect a quick buck while they can. I don’t think it matters much anymore. phpld directory is a phpld directory, not going to make dmoz out of it.

Learn to automate as much as you can. If automation is not an option, learn to outsource. If you do it right, it may be even cheaper that automation. Perhaps I will talk about outsourcing in my next post or a series of posts. Not sure when, still super busy working on my new house…

As for now, you can read this post and forget about it or do something to get started.

One way to increase your online income is increase the click through ratio on your ads. There are a ton of information on ad placements, best performing ad formats, ad colors, etc.  All this information is relevant and can put a few extra bucks in your pocket, but there is something else that has more effect on CTR. As you can see on the image above (just made a screen shot, but it is pretty much the same day to day), the click through rates are completely different. While most show a small fraction of 1%, another one shows over 9% CTR.

What is the deal you may want to ask? Did I misplace some of the ads? No. As a matter of fact, the image above shows a few channels sorted from the ones making the most to the ones making the least income amount. The first channel shows 0.12% CTR and we tested ad placement forever on that site since we get a ton of traffic on it. This is pretty much the best it can do. Yet, the ad that shows 9.09% CTR is placed on relatively new site and we did not test the colors, formats or ad positions at all. Just through one out there and bam, a little under 10% every day now.

The main reason why you can see such a HUGE difference is because of the niche. We have always been building sites for the webmasters and seo people. Whether it is tools or services, all of these have CTR that is usually lower than 1-2%. After years of experimenting with ad positioning,colors and formats we gave up testing, there is no sense since webmasters are the most ad-blind users. Instead, we decided to give it a try for another niche. We created a website where the most visitors are regular people with no advanced knowledge of the web or how it works. Got some traffic, placed a banner and noticed a huge difference right away. Gave it a couple of weeks to test but the results are still the same.

If you are trying to maximize the income from existing sites by increasing the CTR, try repositioning ads, changing colors and formats. You will be able to gain a few more clicks in the end, but it doesn’t matter much if you are not getting a lot of traffic. If you see a low CTR, you are in the wrong niche for Adsense. Try something different, target regular people with no knowledge on how web works.

I have seen a few more interesting examples of high click through rate. Back when I worked in the custom software company, my coworker showed me his adsense account with almost 20% click through rate. I thought he was really good at ad placement before I took a look at his website. It was one of the ugliest and unstructured websites I have ever seen. I had no idea how to navigate through the site when I saw it and ads were the only things that were catching my attention. I do not recommend doing it however. He was happy, money was good, but he did not focus on loyal users and therefore his the income stayed the same forever. Meanwhile, I was improving one of my sites and went from 1,000 page views a day over 10,000. I started making way more with a lot lower CTR. Focus on positive user experience, keep google happy and build user loyalty.

So, if you have a good site, loyal visitors and good growth, low CTR would work in the long term. However, if you have built a website and get a lot of organic traffic but the visitors simply don’t like your service and never come back, don’t get discouraged. If you traffic is the same month after month, just make the website super ugly. Ads look a lot more attractive on an ugly site. You can also switch to pay per view ads and get paid for every 1000 impressions. Since webmasters don’t want to click on your ads, you can make them look at the ads for a few seconds before they can click “skip” if you want. Usually visitors get irritated with those and you may lose some, but if your service is truly useful and unique, they have nothing to complain about.

Back to the main point, I believe that your niche has more to do with CTR than anything else. No matter how appealing your ads are, people like me are ad-blind. Know your visitors and do your own research. As for me, regular internet users who have no knowledge of the web are the best ppc audience for me (preferably 4-17 and 50-90 year old).