So as we touched on in our last post, all things that relate to monetization in the online business world start with Traffic. It is the river flowing towards your online business. Feel free to let me know if I am getting too metaphysical sounding.

Anywho, once we have this traffic flowing towards us, it is our job to funnel it through some sort of conversion piece. The purpose of this conversion piece is to catch a certain percentage of the traffic flowing towards us and to convert them into some actionable event, such as a sale.

If you are sending traffic from an email list to a specific landing page on one of your e-commerce sites that sells a single product, or a single product with multiple variations, then in theory your conversion rate could get as high as 5%

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If a cow is purple in the middle of the woods with no one around to see it, does it really matter what color the cow is?

A lot of us have read Seth Godin’s book Purple Cow, which advocates making products remarkable so that the most powerful form of advertising, word of mouth, will naturally work in our favor. The term for such a revolutionary idea that spreads like wildfire is an “ideavirus”, as in the book Unleashing the Ideavirus by Godin and Malcolm Gladwell.

Here is the question though, are there limitations or even possibly dangers to being remarkable without a platform. When I say a platform, I mean anything which gives you a significant amount of leverage in initially promoting your company’s new offering. For instance in the world of online business your leverage could come from an email list of 100,000 members or a Facebook profile with 2000 friends.

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In our last post we discussed calculating value-per-visitor. This calculation is fairly straightforward when it comes to “front end” money to your website. However, when you start dealing with “back end” money, such as revenue from your opt-in email list, things get a touch more tricky.

Essential to this discussion is the concept of “discounting the future”. It’s an economic concept based on the idea that a dollar in your pocket today is worth more than a dollar you might receive a year from now, due to inflation.

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As Twitter becomes more and more popular, I think it makes sense to consider the possibility that Twitter may become the new standard for providing some of the same basic functions that RSS is known for. From a marketing point of view, I think that one of the most important functions of an RSS feed is the ability to create a crowd.

In our fast paced and frantic world we require the help of others to make many of our decisions. Instead of reading all of the blogs devoted to the areas that interest us, it makes more sense for us to briefly scan over the blogs related to our niche hoping to find a few that send us the signal that says “stop and read further, you may have struck gold”. One of those signs is the existence of a crowd, any kind of group or gathering sends the signal that at least a few people with interests similar to your own think that the site is worth their attention.

As human beings we can’t help but think, if it’s worth their attention, maybe its worth mine. Displaying a feedcount of 50,000 subscribed RSS readers instantly and clearly conveys the message “I am worth your time”. It is for this reason that some internet marketers have suggested “borrowing” the code from another blogger’s stats to display on your site. In my opinion Twitter provides this ability to create a crowd, inherent to RSS with the addition of some bonus features.

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Online entrepreneur Shea Gunther recently raised $20K in four days using Twitter and other media. Feedback Secrets caught up with Shea to ask him some questions regarding his unorthodox fundraising technique, and to get the scoop on his latest venture.

Could you tell us a little bit about your new start up venture?

I’m starting up a screen printing and t-shirt company. We’ll start with a handful of shirt designs and build out more lines focusing on green themes, social media and news, online celebrities, and pop culture.

How much money did you raise, how much equity was sold, and how long did it take you?

In four days I raised $20k and I have another person considering going in for another $5k. All told so far I’ve sliced off 30% of our equity to my investors/partners.

Can you tell us about your business background before you started using Twitter?

I’ve been starting businesses since I was 20 and founded a $16M VC funded online video dot com. I’m 30 now so I guess that means I have a decade of being an entrepreneur under my belt (that makes me feel old). My day job time spent is working on a new green web startup. I’m working with some amazing guys in Chicago on a news site targeting the college set. This is my fifth startup with $100k+ in funding and I’ve started a handful of smaller businesses in between and on the side.

How much did your business background, prior to establishing a presence on Twitter, contribute to your ability to raise capital so fast?

I think my investors and partners know that I’ve been around the entrepreneurial block. We’ve built a tight little business model and I think we’ll do good in the niches we’re going after. I’ve been friends with my lead investor for a few years now- it’s all about who you know and who knows you.

How has Twitter increased your leverage as an entrepreneur, both in terms of this fundraising effort and in general?

I’ve been able to build a network of acquaintances on Twitter that’s proven invaluable. I’ve made some very real friends out of people who started off as followers and it’s provided me a platform to promote myself, my work, and my friends work. Twitter has so far seemed to attract a high proportion of smart, high achieving people and it’s been great to be able to tap into that.

What are the different methods by which prospective investors contacted you with questions regarding potential investment?

I didn’t write a business plan for this one. I didn’t have time and frankly hate having to write them. I do a LOT of business planning, I just despise writing out the formal business plan. If I was raising $200k or $2M it’d be harder to justify not writing a plan, but because I was targeting people for $5k and $10k investments I was able to get away with it. I wrote a lot of emails outlining everything I had planned and followed it up with Q&As on the phone. It was actually a very easy process, everyone came in excited to get involved.

Someone left a reply on your Twitter profile suggesting that the SEC might not be happy about you raising funds on Twitter. What are your thoughts on this subject?

I said something to the effect of “I’m raising $20k in all, I’d welcome the links I’d get from an SEC investigation”. I’m not blasting spam out to a hundred million people asking for investments in the next hot new stock, I’m asking my big circle of friends if anyone else wants to help start a t-shirt company with me. Boing Boing would be all over any federal heat coming my way. That would almost be worth it alone. ;D

When can we expect T-Shirts to be available for purchase?

We’ll be up and running at the end of June, beginning of July. We’re in no huge rush to get up and want to make sure we have production and the whole sales and shipping cycle down before we sell shirt one.

Now-a-days there are several online options that will allow you to make money over the internet without spending any money at all. These include options such as Squidoo Lenses complete with sponsor advertisements, blogger.com blogs with AdSense ads, as well as HubPages.

The great thing about all of the above mentioned options is that they allow you test the waters of online business and get your feet wet without spending any money. With so many “free” monetization methods you may wonder why you should ever fork over your hard earned cash to pay for a domain name and web hosting.

These are great questions and the answer to these questions is… leverage. Having your own webpage allows you greatly increased control over your sites and this increased control increases your potential for online money making.

For example, let’s start by comparing a Squidoo lens with a domain name of your own choosing where you pay for your own hosting. First lets consider the Squidoo lens. A lens might make money from Google AdSense ads, Amazon’s affiliate program, eBay’s affiliate program, as well as other potential sponsors.

One of the downsides of Squidoo is that all revenue from your lenses are split 50/50 between you the “lensmaster”, and Squidoo.com. Squidoo lenses also contain links from your lens to other parts of the Squidoo.com website. This means that you are not in full control of the outbound links on your lens. If however, you own your own webpage you are in full control of any an all outbound links from your site.

Website traffic is extremely valuable, and as we like to say here at Feedback Secrets, “the lifeblood of any online business is TRAFFIC.” For this reason some website owners are very particular about where they send their outgoing traffic. Some site owners will only send their traffic to other sites in their own network, while others choose to charge for their outbound links.

Let’s say that you maintain a Blogger.com blog which eventually becomes popular. You may well decide that you wish to switch from the Blogger.com platform to your own domain and hosting. At this point you will face the challenge of trying to transfer as many readers as possible from your old blog to your new blog.

We should also consider email newsletters, which are often one of the most profitable attributes of small online businesses. As far as I am aware it is not possible to place an email opt-in form on either a Squidoo lens or a blogger.com blog. An visitor who opts in for your email list may well become a lifelong customer, therefore not having the ability to collect opt-ins can greatly hinder to money making potential of your online business.

There are many more reasons that having your own webpage increases your ability to leverage your online business. The purpose of this post was just to scratch the surface of the advantages of springing for your own hosting and domain.

If you liked this post you may enjoy our post on the monetization of web traffic.

Tags: Advantages of Habing Your Own Webpage

In any kind of direct marketing campaign there are several important numbers that are essentials to the success of your campaign. The numbers that we will discuss can easily be applied to internet marketing but in an attempt to keep things simple we will focus on direct mail for the moment.

The first of these numbers is the cost per-lead, this cost relates to the cost of obtaining a prequalified physical address. Here we use the term “prequalified” to simply mean, someone who is interested in your niche.

Once you know what your cost per-lead is, it would be valuable to know how much a single lead is worth to you in terms of dollars and cents. Determining your value per-lead lets you know for certain how much you can spend on each lead and continue to make a profit. Here is where things get a little bit tricky, a lead you obtain today could in theory pay out: a month from now, three months from now, or never. More…

If you are a plumbing expert and you have just created the latest and greatest plumbing tool since the lead pipe, you may decide that a sales letter is the best vehicle to get your product to market. So let’s say you write ten pages explaining what’s wrong with plumbing tools today, you remind them of all the frustrations and time wasted using conventional tools, and most importantly… you offer them a way out!

Imagine for a moment that you have crafted a compelling sales letter for your plumbing panacea that is worth it wait in GOLD. If you handed it to me, my reaction would probably take a quick glance at it and then throw it in the trash, because I am not in any way-shape-or-form interested in plumbing. But that does not matter! What matters is only the reaction of those who are interested in plumbing.

If your letter causes them to stop what they are doing, call a 1-800 number and BUY, BUY, BUY… then you have yourself a winner. Of course even with a great hook and a knock-em dead finish you are not going to sell them all… and that’s ok. Your interest lies in that portion that will hear the siren call of your prose and be compelled to act. If your conversion rate is .05% (1 out of 200) when sent to pre-qualified leads then your copy is pretty bad. If however, with the same group of leads you develop a piece that converts at 4% (8 out of 200) then you have got yourself some solid copy. Anything over 4% and your sales letter is worth its WEIGHT IN GOLD.

The process of developing your final copy usually involves a good amount of testing. If you have a list of 10,000 prequalified leads you may want to break off 1,000 of those leads at random to sacrifice for purposes of testing. This thousand can be broken up into ten groups of a hundred and used to test ten separate versions of your sales letter. Testing a version of your copy on a list of size 100 should give you a fairly accurate idea of how good a particular sales letter is. And of course lists of size 100 come with the added benefit of an easy to calculate conversion rate.

So as to the question of sales letter or junk mail, well it all depends on who’s reading.

Pick a niche, any niche… let’s say cigars and cigar related accessories. Since according to eBay’s “Prohibited and Restricted Items – Overview” eBay does not allow the sale of tobacco products through the U.S. version of its site (except possibly for some special circumstances) you can sell cigar related accessories on eBay and reap a harvest of physical addresses. Every time you make a sale on eBay you will be gaining a prequalified lead. These buyers are prequalified because not only are they interested in cigars, they are interested enough to spend money!

Even if you make an average profit of zero dollars per sale from your eBay auctions you should be happy. With every sale you will be gaining something of significant value, something that will pay dividends in the future. As your direct mail list grows you will be building a gold mine for yourself that you can mine for years to come.