Traffic is typically the business model for hobbyists and “web ventures” though some companies try to leverage it as revenue.  Sites that predominately rely on traffic for revenue rarely promote their own product or service.  Typically the site is designed to fill a niche.  The really successful ones make up the rags to riches stories that every web venturist dreams of. 

So  where does the money come from.  One of two ways:

1. Selling advertising space.
2. Referral linking for commission.

Selling advertising is the most common by far.  With Google Adsense making advertising easier than ever, any person can attempt revenue generation from ad space with little effort.  A site owner doesn’t have to sell the deals, Google will do it for them.  Sounds great right!  Here’s the catch (there always is one), most people make next to nothing, or nothing, on their advertising.  Google will place the ad but if no one clicks on it you get a whopping goose egg for payment.  Hence traffic makes revenue.  The more people to the site, the more chance an ad gets clicked, the more revenue generated. Google will do it’s best to put relevant adds on your site but that puts the responsibility on you to have a target audience.

Referral commissions are similar, and also have broker companies.  (Fair warning, many of these sites are scams and want sign up fees.  Once you sign up and pay your money you get exactly nothing in return).  However, there are some legitimate services that sell product through referral links.  Some type of ad or link is placed on your site, visitors click it and go to the sponsor, if they buy something and it’s tracked to your site, you’re paid a commission.  You essentially take on the role of lead generator for someone else and it’s up to you to compel visitors to get there from your site.

Both methods have two critical problems.  The first is that visitors tend to be less and less likely to visit ad links, though Google is beginning to buck this trend.  In the case of referral commissions, they are even less likely to click and buy.  These resistances make generating significant revenue challenging.  The second problem is generating enough traffic to make it a viable revenue stream.  Let’s be honest, many of the successful traffic and social sites are lucky.  There was no in depth analysis done to accurately gauge a market deficiency.  Someone did a project or started a site because it was fun, it happened to hit a niche, the site owner was smart enough to develop that, and the business took off (read the link above for a case in point).  Predicting social media hits is extremely challenging, I can’t do it, any honest internet marketer will admit that they can’t as well.  The odds are similar to predicting the lottery, that few social or traffic driven sites succeed.  This is not a knock on social media marketing, which can be a valuable piece of a marketing matrix, it’s a knock on building a business that is social media or generating revenue solely based on traffic.

The point is that traffic can be turned into money.  New and better tools are available to do it.  However, building a sustainable business from it is hard.  If it wasn’t everyone would have advertising revenue flooding in from their site.  If this is your goal, two pieces of advice are prudent.  First, be passionate about what you’re creating because financial success could be a long time in coming.  If you enjoy the project and learn, that can be the fulfilling part.  Second, put the work in.  These sites succeed from good content for a solid niche market.  If you are knowledgeable enough in a specific area, people will be interested in your content.

One final thought, if you’re toying with using this a secondary or tertiary revenue stream, think through it.  Advertising can undermine credibility for the wrong market and end up costing a lot more than it brings in.

This is the most common thing I hear from people with a “web idea”:  I build this or that, and make money on the internet (subtext: I should be a millionaire within the year).  While there is money to be made on the internet many people have been brainwashed by dishonest ads and get rich quick schemes.  The internet is like anything else, money can be made with a good idea and work.  It’s not going to fall into your lap just because you make a website or application.

So in an effort to debunk some get rich quick notions I’ve broken down legitimate opportunities into 3 categories and explain how people actually make money through the internet.

1. Traffic
2. Products
3. Services

I’ll break each one down into categories in the coming posts and show how each one has potential but also takes time and effort, sorry, I don’t have an incredibly easy way that anyone can make $20,000 a month.