Here’s another powerful model for an online business.
Building a market is different from the previous example of Expert Model in that you don’t need to be an expert, nor even offer your own product or service.
The concept is to accumulate thousands of highly targeted people onto some form of list or online property which you own and control.
First of all, it’s important to understand that random, un-targeted lists of people are virtually worthless. A list of one million random e-mail address has no value to anyone but a slimy spammer, and even then it’s a low value. However, an e-mail list of targeted people can be worth a fortune. And I really do mean a fortune—like 7-figures of personal income over time.
Moreover, not all forms of lists are equal.
This is still the gold standard of online marketing. When a person willingly provides his/her e-mail address, they are telling you, “I’m interested in what you provide and I want to know more.”
This is both the opportunity and permission to engage in a protracted conversation and, in many cases, to develop a personal rapport with the individuals who comprise the list.
The next most valuable way of building a market is to operate a targeted website. Having a busy website about digital photography with Canon DSLR cameras, or about vacation travel to London, UK, or about waterskiing is a significant financial asset.
As a practical matter, most businesses with a busy, targeted website also build an email list. However, it’s common for website traffic to be ten times the number of people on the associated mailing list and that traffic is very valuable.
There are dozens of social media sites today. But at the top of the value list are Facebook and Twitter. Having a Facebook page with 100,000 fans is another example of building a market. The same goes for having 100,000 Twitter followers.
There are a couple of caveats here. First of all, there are ways to cheaply purchase thousands of fans and followers. Having 50,000 random followers in Pakistan has almost zero value to a North American or EU marketer—even if they all joined your ’59 Cadillac Lovers fan page.
But, more importantly, the Terms of Service at social media sites vastly favor the site over the users. That means in a millisecond your account could be closed or otherwise blocked from generating income for you. Poof! There goes your business. (It’s happened.)
The value of social media, in terms of building a market, is to drive the right people to A) join a specific e-mail list you own and control, B) visit a specific website you own and control, or C) both.
Other Social Media
Many other social medial properties like Pinterest, Snapchat, etc. can be leveraged to build a market. However, the same major caveat applies to these: you don’t own and control them. Nevertheless, they can be cheap, powerful and exacting tools to building a market. Their ability to target an exact niche of a niche is unmatched.
Ways to Monetize a Market
So what do you do when you have a website with tens of thousands of monthly visitors or thousands of names on your email list? Of course, it depends on how you engineered your business from the start, but here are two common tactics.
Suppose your “niche of a niche” is people who love 1959 Cadillacs. Over time you collect thousands of people into your market and all of them are very interested in anything to do with ’59 Caddys.
There are many companies that sell into this marketplace. Makers of replacement parts and accessories, classic car auctions, hobby model makers, insurance companies that offer coverage for classic cars, automotive television shows seeking viewers, regional, state and national car shows, and so on.
These companies have advertising budgets and they specifically look for tightly targeted markets where they can spend their money and get results. They will pay good money to show an ad on your webpages and especially in your e-mails.
There are also uncounted smaller companies that would want to get their advertising in front of these people. No doubt you’ve seen rotating Google ads on many websites. The owners of those websites are paid a small amount each time a visitor clicks on one of those ads.
This business model can be a good fit for people who are more introverted and don’t want to be a visible “expert” in a niche, but still have a very keen interest. For example, people don’t care much who actually owns and operates Crazy-4-’59-Caddys!! They just care about the quality and volume of information available.
In certain niches it’s likely the owner of the website would also be a serious hobbyist and consumer of many products and services in the niche and be able to make valuable recommendations.
For example, a person could operate in a ‘niche of a niche’ for people who build R/C models of military aircraft. The same principles would apply as the Cadillac example, except the owner would be more visible. As a person with many years of experience he could make personal recommendations of models, radios, servos, and accessories to purchase.
Importantly, these recommendations are linked to online sellers who pay commissions on every sale. So in addition to whatever advertising this niche might attract, there is an additional stream of income from sales generated by specific recommendations.
Almost any tightly targeted marketplace has financial value. Of course, some have much more value than others. Identifying and then building a market of many thousands of people can be personally rewarding when it is a subject you are passionate about. There are proven ways to generate substantial, consistent income from advertising and commissions without ever developing your own product to offer for sale.
Toward your personal freedom,
Pete Sisco & Connie Brentford