How to Build a Rock Solid Internet Business

This guest post was provided by Michael Wittmeyer, a longtime Internet marketer and co-founder of www.jmbullion.com.

With over five years in the online gambling affiliate space, I know all too well the risks of running a business that relies heavily on third parties. After going through several Google penalties, having affiliate programs cut my rates or go out of business entirely, and constantly worrying about the USA cracking down on the industry itself, I decided enough was enough.

My main focus moving forward is to build a business that is as independent as possible, so that I can worry less about what others are doing and worry more about what I’m doing.

This article is going to discuss some of the main areas of dependence in the Internet marketing world, and explain how you can reduce this reliance to become as independent and rock solid as possible.

Relying Too Much on One Traffic Stream

One of the most common dependences in the Internet marketing world is having a business or offer that relies entirely on one traffic stream. Some examples of this includes an affiliate who runs PPC on only one network (Facebook, Adwords, etc), an Internet retailer who receives all of their traffic from one specific media buy, or a content provider who receives all of their traffic from one search engine.

Although running a profitable business with only one traffic stream to maintain seems very simple and desirable, it really isn’t. One traffic stream can be wiped out overnight, leaving your business in shambles. If you don’t believe me, look at the following examples that I’ve personally witnessed:

Example #1

In the early 2000s, gambling affiliates were raking in boatloads of money by running PPC ads (on Google) that were simple affiliate links leading directly to online poker websites or online casino websites. Affiliates with literally zero experience in the online poker world or even the Internet marketing world were making unbelievable amounts of cash, as all they had to do was run ads for the poker website’s name (think “Party Poker” for a key phrase), type a simple ad title and description, and put their affiliate link in as the destination URL. A $0.25 or less click would often result in a $200+ CPA.

Then, Google decided to change their policy so that PPC ads had to link to a landing page as opposed to directly to the affiliate’s tracking link. Any PPC affiliates that lacked experience in HTML or web design were instantly wiped out, as they lacked the ability to create a website to which they could send their PPC traffic.

Later, buckling to pressure from the USA government, Google decided to shut down Adwords for gambling terms entirely. Affiliates who never bothered to learn SEO or other ways to drive traffic were out of business overnight.

Example #2

A few years ago during the “acai berry” rush, affiliates who were ranking near the top of Google for terms like “buy acai berries” or “acai berry supplements” were doing extremely well by driving their traffic through affiliate links to retailers who actually sold the product.

Since these were such competitive search terms, affiliates would have to put up lots of cash and work long hours to get their websites ranking near the top. The rewards were certainly worth it, as you could make $XX,XXX/month once you reached the top for the better search terms.

However, Google kept a close eye on this market, and several of the more aggressive affiliates ended up receiving harsh Google penalties shortly after reaching the top, thus moving their websites way down in the rankings and cutting off their revenue stream.

Hypothetical Example #3

I haven’t done too many media buys throughout my career, but that is another situation where Internet marketers can get too reliant on a single traffic source. For example, imagine you were running a retail website and purchased advertising on a high-traffic website with visitors who perfectly fit your target demographic. Imagine that this media buy worked out extremely well, and ended up driving tons of traffic and sales to your retail website.

Many Internet marketers would become complacent in this situation and fail to seek out new traffic sources, as they have a proven stream of traffic with a relatively fixed month-to-month cost. However, what if any of the following happens?

- The advertiser realizes how important they are to you, and decides to raise their rates considerably, knowing that you have no choice but to pay them whatever they wish.
- The advertiser receives a Google penalty or loses a key stream of traffic, thus sending significantly less traffic and sales to your website.
- The advertiser’s traffic base is largely composed of repeat visitors, thus reducing your click-throughs each month as more and more of their visitors have already been exposed to your advertisement.

As all of the above examples prove, one traffic stream (no matter how profitable or seemingly “safe”) can be wiped out extremely quickly. As a result, any Internet marketer who relies too much on any given traffic stream is overly dependent on a third party.

How to Become Independent:

Ensure you never rely on any one traffic stream for 50%+ of your business. If you do, immediately focus more of your efforts on building new traffic streams. Even if you have relatively diverse sources of traffic, always seek out new traffic streams both to increase your revenue as well as to protect yourself from the loss of any one traffic stream.

Relying on Organic Search

Although I already touched on this a little bit, I wanted to talk more about Internet businesses that rely entirely on Google, Yahoo, or Bing organic search traffic. Having an organic, free, and targeted traffic stream is about as good as it gets, but unfortunately, relying entirely on organic search does have its concerns – namely penalties, injections, masked keyword info, and ever-changing algorithms.

Penalties

Between algorithmic filters and manual penalties, you always run the risk of losing a sizable portion of your organic search traffic overnight, even if your site follows the search engine’s guidelines to a T. This isn’t a common occurrence, but I have personally had three or four (very good) sites that were hit by filters, which cost me a lot of money, as I didn’t have any other traffic streams in place.

Search Injections

Even if you do sidestep penalties and maintain your rankings, most organic rankings are becoming less and less valuable as Google pushes their own agenda with bigger (and more) PPC ads, comparison ads, local injections, news injections, video injections, image injections, and social injections.

I have personally seen several search queries where the first organic listing was actually below the fold, as it was pushed down by expanded PPC ads and a Google comparison ad. I expect this to only get worse as Google adds more and more features and continues to meddle with their search results.

Masked Keyword Info

Another detriment to running a strictly SEO-focused business is that Google no longer allows you to see the search keywords that many visitors used to find your website. When you are reviewing your analytics, analyzing visitors who searched “Not Provided” doesn’t really tell you much about where to focus or reduce your efforts.

Changing Algorithms

Even if your site is doing great today, who knows what the next Panda update or other major algorithmic update might bring? You could go from hero to zero overnight, and if you don’t have any other traffic streams in place, you are in a lot of trouble.

How to Become Independent:

Make SEO a piece of your marketing strategy, not the entire strategy.
Include PPC, which is more stable and provides more keyword information.
Focus on user experience first, and SEO second. This will improve your on-site metrics, increase your repeat visitors, and increase your natural mentions, all of which will lead to better search rankings as well.

Relying on Partners

As an affiliate or online retailer, you are almost always relying on several partners to keep your business running smoothly and profitably.

Examples of an affiliate’s necessary partners might be: your affiliate programs, your ad networks, and your link partners.

Examples of a retailer’s necessary partners might be: your affiliates, your wholesalers, your payment gateway, and your merchant account provider.

The risk of relying too heavily on any single partner is that they could go out of business, change their terms and conditions, decide not to work with you anymore, etc. A perfect example of this is as follows:

I was a partner in a precious metals affiliate website, and we were doing well promoting APMEX.com through their very favorable affiliate program. There weren’t really any other viable precious metals affiliate programs at the time, but we weren’t concerned with this as we were making good money with APMEX.

We decided to buy a few more expensive precious metals domains to build out and expand our traffic base. Shortly after we had put a lot of time and money into these new affiliate sites, APMEX abruptly shut down their affiliate program for reasons we never really understood.

We scrambled for a bit to find a new retailer we could work with, but there were very few options, and none of them came close to converting like APMEX. Had we not decided to start our own precious metals retail site, we would have been totally out of luck.

How to Become Independent:

As an affiliate, make sure your traffic stream is general, as opposed to partner-specific (think ranking for “bonus code” or “promotional code” terms), and work with several partners to ensure that if one stream of revenue disappears, you’re still ok.
Consider starting your own retail site to avoid relying on affiliate programs.
As a retailer, make sure you have backup plans in place in case your payment processor changes their terms or closes your account. Also, don’t rely too heavily on any one affiliate or search term, as it could go away quickly.

Relying on New Customers

Affiliates that earn all of their revenue from one-time CPA payments, or businesses that earn all of their revenue from purchases by new customers, both run the risk of losing their traffic/new customer stream and thus, losing a huge chunk of their forward revenue.

How to Become Independent:

Focus on visitor/customer retention – capture visitor names/emails by offering a “freebie” or giveaway, send automated “reminders” to customers who haven’t visited your site or made a purchase in XX days, push your RSS subscription, offer coupons to existing customers, keep newsletter subscribers updated on the happenings at your website, etc.
Utilize ad retargeting to pull back customers or visitors who have been to your site before. This makes your new customer marketing go much further at minimal expense.
For affiliates, consider negotiating for a recurring % of revenue instead of a one-off CPA payment. This ensures that even if you lose your traffic stream, you will still be paid for your old referrals’ new purchases.
For retailers, consider adding a membership sort of service or product that produces recurring revenue every month or year. This ensures that even if you lose your traffic stream, you will still have forward revenue.

I hope I’ve convinced you by now that dependency on any specific partner, traffic stream, or revenue stream is less than ideal for an Internet business. If you felt any pangs of worry as you read this article, focus more of your efforts this year on spreading your dependencies to ensure your business can survive losing any individual traffic source, partner, or revenue stream.

3 thoughts on “How to Build a Rock Solid Internet Business”

  1. Simply want to say your article is as surprising. The clarity for your put up is simply spectacular and that i could suppose you’re an expert on this subject. Well with your permission allow me to take hold of your feed to stay up to date with approaching post. Thanks 1,000,000 and please continue the enjoyable work.

  2. I fully agree with your article. However, it seems very hard to reduce risks. Many affiilates in the gambling space rely on search engine traffic. And for many of them, PPC is not an option. The price per click is just too high compare with the revenues a click generates… Or do you have another opinion on this?

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