Horizontal Or Vertical Business Models: Which Is Right For You?
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
How Stable Is Your Online Income
I’ve made some form of income from the Internet for the past ten years. That’s incredible for me to consider, as I look back over the years how for such a long time I felt very insecure about where my next paycheck was going to come from and whether there would be another one the following month.
For the first five years, roughly from 2000 to 2005, my income from the Internet varied, reflecting the choices I had made and my own variable focus. It went something like this…
- I made spare change money selling stuff from around my house on eBay
- I played a card game called Magic: The Gathering and began selling the cards I won at tournaments in online trading forums and newsgroups
- I built a website focused on the same card game, eventually earning a few hundred dollars a month from banner and newsletter sponsorship
- I started an e-commerce card shop from the website and continued to sell my winnings from tournaments, and began buying product at wholesale prices to sell online at retail (until credit card fraud forced me to shut it down)
- I started a proofreading business, which after a slow start, eventually earned enough income to pay me a full salary, equivalent to a first year university graduate
This is a list of the projects that I made money on during those five years. It doesn’t include the websites I built that shortly after I abandoned, my brief experiments at AdWords arbitrage and other various false-starts because I was so easily distracted by new methods to “make millions” online.
During this time I finished my university degree, held a couple of casual jobs and traveled too. I also watched, often resulting in plenty of self-doubt on my part, as my friends entered graduate jobs, which looked a whole lot more secure than what I was doing at the time and often paid them better as well.
Looking back over those five years the money I made proved surprisingly reliable, even though at the time my confidence in the income stream wasn’t there (good old hindsight). I had enough time to work on new projects because I focused on ideas that didn’t need too much personal time from me once set up, for example getting volunteer writers for my card site and using contract editors for the proofreading site, so I could easily manage them both at the same time.
The end result was a diversified online income stream that continued to grow as long as I did a few key activities (like put up posters to promote the proofreading business), plus I was creating assets that I would later sell.
The Era Of Rapid Income Growth
X-Factor Video: Gideon Reveals The $13,000 Webinar Formula
The “X-Factor” is a term Gideon and I applied to blogging, where you use multimedia and/or social media to enhance your blog’s growth.
The idea is that “standard” blogging practices may not be enough to make your blog stand out, and since it’s so easy today to make use of multimedia and social media, why not leverage these technologies to increase your traffic and blog performance.
The latest X-Factor training video was just released for free on the Become A Blogger blog, which you can go and watch right now here -
X-Factor Video: How To Make Money With Online Webinars
This video shows how Gideon recently used Webinar software to create an entire product and generate over $13,000 from literally just a few hours work. Webinars are great teaching tools, which can be recorded and distributed on your blog.
If you don’t know what a Webinar is, have no idea what software you can use to make one and how they can be turned into a product creation tool to generate a nice income as Gideon did, go watch the two videos on the Become A Blogger blog and Gideon will reveal everything to you.
Make sure you leave a comment there too, as Gideon loves to get your feedback.
When Is The Right Time To Launch Your Product?
During the last coaching call I did with my members the question of when is the right time to launch your product online came up repeatedly from different people.
The question isn’t about timing in terms of day or night, or what day of the week, or time of the year you should launch, rather what conditions need to be in place to expect a successful opening campaign. Here’s what we’re talking about…
- How many subscribers do you need on your email list?
- How many RSS subscribers on your blog should you have?
- How many unique visitors to your websites do you need?
- How many affiliates do you need?
- How many sales should you expect given certain numbers?
All these questions and many more make up part of the answer to the overall question of when you can consider yourself ready to launch.
It is difficult for me to answer this question with anything concrete because every market is different. However I understand the need for ballpark figures and some sort of reassurance from someone who has launched before, especially if they are your coach and mentor.
What Are The Benchmarks?
Inside Membership Site Mastermind I alluded to the number of around 5,000 subscribers as a good target to aim for before launching, which ideally should be email subscribers if possible.
You can include RSS subscribers, Twitter followers, Facebook friends and fans too, but generally these contact points are less responsive and less targeted than email. Email subscribers, especially when they come through from a targeted incentive like a free report or email course, are more qualified, hence more likely to buy.
Another metric you can look at that is relevant is the open and click through rates of the emails you send. While it’s nice to have 10,000 email subscribers, in most cases you are lucky if 25% of them even open the emails you send. If you’re getting 10% or more of them clicking your links, you’re doing very well.
Given that opening an email is easier than clicking a link, which is easier than making a sale, you can see why it’s important you understand the reality behind the numbers you currently get.
If you don’t track the open and click through rates on your emails, you should start. Outside of this data you can look at unique visitors to your blog or website as another estimate of how much traffic you can expose to your offer, but understand knowing how many people read your blog content is difficult to correlate to how many people will buy from you.
What Metrics Should You Analyze?
Who Makes More Money – Authors, Bloggers or Internet Marketers?
I suspect after reading the headline of this article one of the first things that crossed your mind is how can I possibly distinguish the difference between an author, blogger and Internet marketer?
Nowadays most published authors have blogs, and bloggers use Internet marketing techniques and write books too. Internet marketers also publish books and use blogs, so how can we determine the difference?
In this case rather than look at the person, who can easily encompass all three of the personas we are talking about, let’s look instead at the different mediums themselves and how effective they are as money making techniques.
In other words, can you make more money publishing a book, or writing a blog or selling things online as an Internet marketer?
Why Ask This Question?
I was thinking today while reading an article – a good article – on a blog how the ideas within the content where also present in two other mediums – inside a popular print book and a course I studied, which was a recording of a live event by an Internet marketer.
The blog article was given away for free. The print book probably costs about $10 now since it’s not new, while the live event cost $10,000 to attend and the recordings I studied were at least $2,000.
The blogger in this situation was basically summarizing and filtering some information he read in the book. The author is an expert on the subject who had no doubt spent years accumulating the knowledge and experience to produce the title. The Internet marketer who ran the event had read the book too, and included the most important points, again filtered for his audience, in the live event.
Three different people, all using the same information and getting paid vastly different amounts for it. This prompted me to wonder, which person would I rather be – the blogger, the author or the Internet marketer?
