Horizontal Or Vertical Business Models: Which Is Right For You?

By Yaro Starak
45 Comments

I recently received this unsolicited email from Craig Shinney (slightly edited to protect identities) –

I just wanted to write to tell you that about one year ago, I started getting into Internet marketing and experimenting with all sorts of different methods of the various types of blogs and tools that all the different marketers recommend. It was an amazing journey.

The reason I’m writing is to say that you were the first “expert” to catch my attention. I read through your archives almost religiously before branching out to other marketers. After putting up a bunch of crappy websites (that did in fact make me some money), I have since completely abandoned reading anything by those other marketers and have remained a faithful reader of your blog.

I’ve since come to the conclusion that it’s all about creating quality content, as you instruct your readers to do, not “trick” your visitors into buying something you’re not at all an expert on, written by Filipinos who can’t even use proper English.

Obviously Craig is generalizing when he talks about Filipinos, as there are no doubt plenty who can use proper English and are subject matter experts. The point he’s making is that many marketers teach a business model that relies on using outsourcers, who often don’t have English as a first language, to create ebooks and other information products, which are then sold online using clever marketing.

The quality of these information products is sometime suspect, yet with the right marketing process, including some good copywriting, sales will come.

There’s nothing inherently wrong about this model. You find a need in the market, then use other people to create products to meet that need. Your job is to wear the marketer’s hat, do the research, find demand then put the pieces together to serve that demand, then rinse and repeat.

I call this a horizontal business model because instead of going deep in just one industry, the strategy is to move from market to market, creating websites and products to sell to unrelated industries until you have a small army of small income streams. If each website you set up can make $200 a month in profit, then you only need ten or twenty successful implementations of this system to reach “quit your job” money.

This model has proven very successful for many people and is taught in various forms as an entry strategy into the world of Internet marketing.

I’ve promoted many courses that teach a version of this system, with the most successful from my point of view being Niche Profit Classroom. If you want a much more detailed breakdown of this strategy, check out my interview with Adam Short, the creator of Niche Profit Classroom.

Why I Chose To Go Vertical

The system I teach to people, which Craig touched on when he mentioned creating consistent quality content, is to go vertical in your market (or “go deep” as I have previously written about).

However going vertical is about more than just creating quality content, it’s about market domination through consistency and long term asset building.

Only briefly early on in my online career did I chase the horizontal strategy. For a very short few weeks I thought I might strike it rich with Pay Per Click marketing in AdWords, to send traffic to landing pages and then offer affiliate products or send that traffic to pay per lead offers.

If I could “crack the code” that so many other AdWords experts had supposedly done, I could set up campaign after campaign and spend $1 to make $1.10 back. I would essentially go horizontal across different markets using a PPC traffic generation strategy, which today is still taught and used by many marketers to make millions of dollars online.

I quickly realized that I much preferred to develop a meaningful connection with a small group of people – my tribe or community – who I would foster and help, often for nothing in return other than the recognition that I was helping people. Emails like that from Craig certainly help motivate me, so thanks Craig.

Obviously I wanted to make a living too, but thankfully I had the patience to do one thing online for a period of time without much financial reward, because I could see where I was going, and enjoyed what I was doing. That, and I had already built a successful online business that was paying the bills, so the pressure was off when it came to blogging and carving out my place as an expert.

Therein lies the challenge of “selling” what I currently teach. Pitching hard work using concepts that are essentially a foreign language, is not going to convert well. Yet when I talk about my system of going vertical into just one industry, long term asset building, establishing authority and then leveraging it to create multiple stable income streams around the one identity, that’s what I’m selling – hard work.

The horizontal strategy is easier for beginners to come to grips with and has a much higher likelihood of returning some income in a shorter time frame…and let’s face it, selling hype works when you are dealing with an uneducated, insecure and susceptible crowd, looking for a way out of their current life. It’s easier to offer a taste of the dream, rather than explain the reality of what’s ahead of them.

The Best Of Both Worlds

In my case, I prefer the vertical path because I’m more creative writer than I am scientific number cruncher. Hence when I talk to a guy like Jeremy Schoemaker (Shoemoney), who loves the numbers, I feel a sense of envy at the relative ease that he can turn a profit just tweaking conversion rates.

Of course it’s possible to have the best of both worlds and Jeremy is a great example of someone who has both leveraged his love of pure marketing and profit creation, as well as create a brand and community around himself. However you will understand after a conversation with Jeremy that writing to his blog is not his first love, he much prefers the testing and tweaking of what makes him money.

Again, there’s nothing wrong with any of these models or motivations, what’s important is that you understand what you are getting yourself into and what motivates you.

Transitioning To A Vertical Model

Here’s why I don’t like the horizontal model –

Everyone Needs Recognition

One thing I’ve noticed lately is marketers who are successful at making money, eventually realize that they want more than just the money – they want recognition too.

A primary motivation every human being has is the desire to have meaning to other people, and just selling ebooks created by other people quietly from your home is not going to feed this desire.

Once you start making money, you may find yourself with motivation to share your knowledge and experience with other people – to actually participate in your community and perhaps even establish yourself as an expert.

Sure, you still want to get paid to teach and talk about what you do, you wouldn’t be an entrepreneur if that wasn’t true, but an equally important desire is to have people benefit from what you create and for you to experience the return from this – to see the outcomes other people experience and feel warm and fuzzy on the inside as a result.

This is a wonderful thing, it forces us to care about other people beyond ourselves, even though ultimately we are doing it because it makes us feel good. As long as we all benefit, you can’t complain right?

So Which Model Is Right For You?

I’m not going to advocate you choose one business model over another because your personality and current life situation dictates what is best, right now, for you.

What I do want you to take away from this is an understanding of the advantages of going deep and following a vertical focus into one industry.

The financial and personal gains from doing this can be quite significant. You will feel that you are building something you care about, which can motivate you to do extraordinary things, like write new blog posts to your blog each and every week for five years. That might seem incredible right now – yet most people manage to go to a job they hate five days a week, 9 to 5, for years, which to me, is much more incredible, but not in a good way.

If you’re going to put effort into something in your life, make it something worthwhile.

Yaro Starak
Vertically Integrated

About Yaro Starak

Yaro Starak is the author of the Blog Profits Blueprint, a report you can download instantly to learn how to make $10,000 a month, from only blogging 2 hours per day. You can find Yaro on Facebook, Twitter and .

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45 Comments

  • Hi Yaro,

    Very well said. I think that the bottomline is in delivering long lasting value to people. Without value, one can make money but it will not last.

    By the way, thanks for being fair in writing about us Filipinos. I believe that we can all help each other out regardless of our nationalities.

    Regards,
    Jeric

  • Outsourcing, be it BPOs or Internet Marketing, is a ‘double-edged sword’. It should be approached with caution. Most often, quality is compromised. I would rather buy an ebook or video by a subject matter expert rather than by an clever, opportunistic marketer.

    Outsourcing appears to be perfect on paper but hassle-execution is an altogether different matter.

    Simply put, I would buy a marketing book by Sir Branson rather than by some marketing VP from an MNC. Similarly I would rather learn trading from Nicholas Darvas, Jesse Livermore rather than from self-styled gurus and self-proclaimed experts.

    My point is that if you ultimately choose to outsource, get a subject matter expert to write it and proof-check it. It should live up to expectations of the buyers. Or else face the music… Refunds, chargebacks and ultimately extinction that is!!!

    Slick marketing gimmicks alone doesn’t last in the long run

  • Hello Yaro,

    I’m sorry, but I have to say it : I definitively choose you as my main and principal source of information about Internet marketing and blogging ;) .

    I bought your product “Blog Mastermind” and then had access to your “Membership Site Mastermind” product as a bonus for buying the Product Launch Formula via your link, and clearly, of all the products that I bought about Internet marketing and blogging, these ones are the ones that changed the most my life : now I have a quite popular French blog, I launched a membership product in December that generate approximately €3000/month (less than one year and half after the launch of my blog) and will soon reopen the product for a massive launch with a lot of affiliates (objective : €10 000/month).

    I tested a lot of others things, included Niche Profit Classrom sites, with which I had quite a success, but not as deep and great as my blog. I followed a lot of Internet Marketers too, but I realized last week that it is with you that I have the most good connection, and I decided to switch off the noise and to focalize mainly on you, mean that I will try to read most of the articles of this blog that I didn’t read yet, and generally read less of what others write and more about what you write.

    This article just comfort me in my decision, as you described precisely something that I had a quite fuzzy picture. I understand now that I have more affinity with the vertical model, and this concept alone is worth all the money that I gave you ;) .

    Thanks for your great content and please continue to feed us with your knowledge !

  • Hi Yaro, very in depth content but Well perhaps I really haven’t thought about that at all. May be I want to go horizontal than vertical since it seems easier to go wide than deep.

    But well I may need sometime to find out that process.

    :)

  • This was a very encouraging post. It is with perfect timing too. Right at the moment when I am deciding whether to focus on building a site or do PPC adds. I am definitely not the analytical type. And I am having a hard time choosing even one niche because I feel the need to be at least somewhat in love with it. Thank you for reminding me of the beauty of building vertical.

  • Superb article Yaro! I’m actually most impressed by your openness about WHAT you (and ALL other people) get out of running businesses, whether it’s online marketing or anything else.

    It really is about being selfish, RATIONALLY selfish. Doing things that don’t benefit a person simply doesn’t make sense. It’s the way that people ARE and trying to conceal this with altruistic rhetoric is, in my opinion, manipulative and pathetic (which is why I don’t like politicians and other “community leaders”, who tell us that they’re doing it all for us).

    I believe that running a vertical business is the way to go for people who want a nice “fuzzy feeling” along with money in the bank, but there’s certainly room for horizontal businesses too (a la Shoemoney).

    You are without doubt my favorite internet marketer because of your honesty, both with your readers AND YOURSELF.

    Thanks Yaro.

  • I think that implementing both a vertical and horizontal business model can also be beneficial. To me it seems like vertical is a better long term solution to building a business, yet horizontal can pay for the bill while building the depth on your business.

  • Wow, yea you just described me Yaro. I have an iphone apps business and a niche website business, both give me freedom and a full time income, but the points you made on why you dont like horizontal are completly true. The reasons you stated are one of the reason why I am constantly looking for ways to diversify. Building an authority site takes years, but from looking around the web it is a solid marketing platform to stand on, and more importantly you get to make a positive impact on other people. Something I think we all want to do.

  • Another one of your enlightening articles, Yaro. I always wonder why I can’t do niche affiliate marketing after trying for more than a year now. I’ve tried PPC and Facebook advertising just to lose money. I’ve tried SEO to get more traffic to my niche websites just to be disappointed (cause of non-buyers traffic). I worked my ass off…

    And I blamed myself for this failure. Many marketing gurus have claimed that they’re able to make hundreds of thousands of dollars with this strategy.

    So, what’s wrong with me?

    Fortunately, after reading your article, I realize maybe I’m more like you. A vertical entrepreneur. Maybe that’s why i enjoy blogging and writing about what I know of internet marketing on my site. Maybe that’s why I love hanging out in forums and blogs on the topic that I love and express my opinion. Maybe that’s why I much prefer to listen to you (your blog), ProBlogger, Frank kern, and other marketers who build a slow solid business in one niche than, say, Shoemoney (I love him too, but not as much as you ^-^). Because, you, Darren, and Frank are more like myself…

    So, thanks for opening my eyes, Yaro.

  • Hi Yaro. Great insights into vertical and horizontal business model. You are absolutely right when you said choosing the right business model depends on one’s personality and life style. I used horizontal business model when I first started my online endeavor and had some sucess with it. Here recently though, after reading your blog regularly, I have been fascinated with vertical business model.

  • When you go horizontal, to use the term that you have coined, you have lost touch with yourself. When you are in the vertical model however, you enjoy doing what you do and the money making part of it is an offshoot of that joy of doing something that satisfies you.

  • Lew

    Hi Yaro! :)

    As always an informative article. While still trying to build upon my blog Lew Newmark: My Domestic Life, I have decided due to my current financial situation to try and take the plunge into affiliate marketing also and make a run there also, but your blog and Darren Rowse’s blog are still my main sources of information and inspiration.

    Lew

  • This is a great post Yaro. I think it is extremely important to know that the work one does has purpose and is important. One is a lot happier when they find the philosophy and passion that drives them. Also, keep in mind that sometimes our pay from volunteer *work* can be more rewarding than dollars, euros, etc. every could.

    Not to toot my own horn but here is a personal example. One of my friends who runs a whistleblower website about mortgage lending, the largest in the industry which was getting around 50,000 unique visitors per day, was maliciously sued for defamation, again and again, and repeatedly asked me for assistance on this latest case. The lawsuit almost ran him out of business but when it got real bad I talked two attorney friends of mine from law school (Bill and Russ) to assist me on his case pro-bono (for free!). We handled the case all the way through appeals to the Supreme Court of the state it was being litigated in and won. This was a huge victory for free speech in the realm of Internet, journalism as applied to ‘bloggers’, and several other areas.

    Did we make many dollars from it? No, it actually cost us some! Was it a ton of hard, demanding and meticulous work? Yes. Do we feel huge satisfaction for wielding the sword of the law in defense of all of our freedom of speech? Yes!

    • This is indeed highly inspiring and I congratulate you and your friends who did what needed to be done because of your passion. Recognition and rewards are bound to come.

  • Yaro,

    This is a well great article and thank you for sharing your insights on this matter. I think it is best to serve both sides of the spectrum here… but I believe in the long run the vertical business model serves best for engaging your market and building an integrity driven business model.

    James

  • I think it’s just like courtship where you play the field before settling down with one partner. Stay horizontal and keep your options open and then when you find a niche somewhere, go vertical. :)

    Till then,

    Jean

    • This is a highly stimulating comparison! One could write a novel on this concept!

  • Yaro,

    When I first started looking at ways to transition myself from a 20 year career in the corporate world to a ‘DOT COM’ lifestyle, I also thought that affiliate marketing was the way to go. But the competition is immense with almost no entry barriers, which means your future profit margins are always at risk and out of your control.

    The only reason I can charge a high fee for my consulting work is the knowledge that I have accumulated over the years – something that is impossible to do in a short amount of time.
    Like you, I need the intellectual challenge that going vertical in a market gives you. The world is full of middle-men tweaking profits in horizontal markets. I’ve had several clients who focused on using income strategies like eBay to make a profit, but wouldn’t you know, someone always comes along and blows your profits by invading your ‘turf’ and there aint’ nothin’ you can do about it except move on.
    I’ll take the long but deep approach to building my business any day – taking inspiration from guys like you.

    Andrew.

  • Yaro, has anyone told you that “Everything you say sucks”?

    No, I didn’t think so, because everything you say is Gold, mate!

  • As a newby to the blogging world, I found this post rang a lot of bells for me. I’ve been totally overwhelmed with the possibilities for monetizing and passive income sources from a blog, yet Yaro’s words kept ringing in my head … create quality content and love what you do FIRST. I’ve decided its more for me about creating the content, getting the message across and whatever comes from that comes. I’ve always realised that I’m a letters and words person way more than a number cruncher so thanks Yaro for getting my head in order!

  • The vertical business model works better for me as a long-term sustainable kind of endeavour, versus constantly adding and dropping small sites to keep your income up. I think the “spread yourself over a gadzillion flogs each making you $10 a month” model is not the one for me, and it is yesterday’s success story, and not the future of internet marketing at all.

  • Yaro,

    Been reading your site with abandon the past two days and weighing it against the others. I’m strongly considering sending you the $500 for your program…

  • another great post..

  • You speak my language. I’m a fan of domination through quality, consistency, and long term asset building.

    I’ve directly seen the impact of how a catalog of results builds momentum over time.

  • Hi Yaro,

    Interesting post with the unsolicited email at the start of it.

    The question of outsourcing is always open and it seems that people have opposing views on it. It has many advantages and disadvantages and I’m not sure what is better.

    Going vertical is likely better in the long run but it seems also more risky and like putting all your eggs in one basket. Great if it works out the way it did for you.

    Vance

  • Great article! It is a good idea to copy several websites that each one makes a couple of hundred.

  • Ron

    I think I can choose or test the best of both worlds, I mean, may it be Horizontal or Vertical. Its just a matter of testing and checking what works best to all of us.

  • Great post!
    I personaly don’t believe in any horizontal models or make quick and easy money online.

    I hardly see any passive income monetization in a blog, unless you have magically build a strong presence (traffic) and you only publish guest posts assuming that it will have no negative impact on your current readers/rankings.

  • Hi Yaro,

    For me, it’s definitely the vertical/deep approach.

    One market is already making my life busy and hectic, let alone several different totally unrelated markets.

    Nice post.

    Keep more coming!
    Welly Mulia

  • For me right now, probably testing both models is important to see which one will better suit me. Great post-thanks for the information!

  • Thank you for this insightful article. I’ve skipped around a lot trying to figure out how to make my blog profitable and enjoyable for me to write. Following some of the other internet marketer models always left me dissatisfied and frustrated. So now I’m learning how to blog for myself and others without killing my joy or becoming a number/SEO counter optimizing my life away. Writing about my passion is much more fulfilling than all the other things I’ve tried. Great advice!

  • Me too. Its a matter of own style maybe I will find myself first where is suitable for me

  • A successful business is required patient to build expecially in internet business, there are so competitive in the market and the information get outdated quickly.We must be serious on what we are doing not doing because other people are doing.

    Quality contents come from research,experience and etc.

  • Thank you for this heads up Yaro! Today, I found something that can make my business grow beyond my expectation.

    About the Filipino thing, I’m a Filipino and I hope this message qualifies your standard.

    Cheers,

    Andre Nievo

  • Verticals tend to suit startups but as Orgs expand, they typically can scale across Horizontals.

    Maybe it’s best to cut your teeth in Verticals and then consider others models. Neither is good or bad in itself.

  • Great Post Yaro! Personally I prefer the vertical method. I place value on building relationships, helping people, and creating quality content. I find that in the long run that will benefit me better than using the horizontal.

  • Hi Yaro, Thanks. I enjoyed reading this. It struck a chord with me as I ‘go deep’ on product sales (not information). Trying to be all things to all people makes it very hard to spend the necessary time to develop a site to an extent where you actually stand out as and expert. Being good doesn’t seem good enough any more does it?

    Basic niche sites worked fine 3 years ago, but now others have caught on. The only way forward is to focus on the best products and give ‘expert’ information, video, press releases and understanding of how to help the customer. I don’t have time to manage them, so I’ve got people to do it for me. The numbers are growing and we’re getting a bigger slice of the market.

    The best thing about going deep though are the referrals. Be great and people will come.

  • Great read!

    Vertical – quality content is what i’m working on!

  • Excellent article and great work explaining both the worlds of online business. It is all about how seriously you want to take your online income and how much time you can devote to your site. Each one has its own benefits.

    And yes in the 10th para from starting where you have contextual link “Nice Profit Classroom”. It should be Niche instead of Nice. :)

  • I’m doing horizontal and vertical, simultaneously. I have several topics in which I make money, and a few more on the back burners. Whenever I come up with an idea, I want to create a new site or blog. I also have one particular topic in which I create a lot of fresh content and try my best to provide value to the entire niche. This is the one that is the constant income generator.

  • Manny

    Hi Yaro

    Great insight, I think you have a good internal compass by the sound of your writing. I have only visited your site a few times but like a small number of marketers I trust your content is always real. Good to see a local Brissy boy going well too!

    For myself I think I am a pure marketer in the sense that I love to know why people buy, what their psychology is and how to crack that code. I guess i am also different in that I hate the cheapness that comes with pure affiliate marketing and always want to add real value for my customers and build scale but also love marketing and online marketing and eccommerce sites. So I guess I am horizontal but in a way that is different to what most internet marketers do. I like to build ‘real’ online businesses.

    Cheers for a great post!

    Manny

  • I joined Niche Profit Classroom after listening to the podcast from that interview. I actually did a niche site BEFORE joining NPC, putting my own spin on it, and it’s made a bit of money. HOWEVER, after joining NPC, and doing their method and their niche pack, I’ve made ZERO from their stuff, not to mention flooding the market with niche pack sites. After talking to several people who USED to be with NPC, I’ve confirmed my suspicions, no one is making any money from NPC except the people who run NPC. I did learn a few things from being there the few months I was there, but nothing to make me much money online. I had to change alot of things and refine things in order to make things work. If I were you Yaro, I would stop promoting NPC. It puts a bad light on you and people who have left are a little disgruntled.

  • It depends on the person, some get bored with a topic quickly, so the horizontal model would work best for them.

  • Filipinos today are slowly catching up with international standards. more and more BPO company’s are popping out like popcorn on key cities in the country. Outsourcing in the Philippines is profitable, a lot has done this.. just do it with the right team.

  • Joe L

    It is a pretty simple concept… the more niche you go, the more you corner yourself and depend on sources of leads/customers and if they dry up your down. If some big guy comes in and does it better or forms strategic partnerships where you cant… your done.

    The PRO here: Employees understand their roles better, the business is more automated and requires less time. Couldent we say these businesses have a higher failure rate than horizontal as well?

    Horizontal: You open a business up dealing with small businesses. You may provide business lines of credit, but if you have the opporutnity to build them a website, would you do it and make a few extra grand? Maybe you will net an extra 200k that year from doing web development for all of these businesses? Its not automated, it will require time, but its more stable and when things get slow with business lines of credit you can try to upsell customers websites…. and maybe while your there you get 100 businesses paying 30.00/m on hosting at almost 3k net profit per month. The problem is your not defining who you are and what your doing, you may not sell the business for much or get offers, but you can make more than one company just doing business lines of credit making 50k per year “trying” to be the biggest one until your dead.

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