October 2010 archive
I was in Singapore’s CBD (Central Business District) today meeting up with a friend and bumped into Lee Chong Min, managing partner at CMIA Capital Partners, a private equity firm based here.
It was somewhat of a blast from the past, as I’d initially met Chong Min in 2000, when I was still a reporter covering the tech and Internet sectors.
At that time, he had been investing in tech startups, and two of the companies I covered: Pinnz (a Voice-over-IP play) and Aretae Interactive (a web design/development studio) were among his investments.
Following the bust in dotcoms in 2001, I left the field of journalism to help run the operations for a business owner I knew, and along the way, fell into consulting and later, Internet marketing.
It’s probably a matter of spotting trends that let Chong Min to invest in China plays. According to media reports, his private equity firm invested about US$600 million in more than 20 China growth companies. The firm’s investment yielded a gross internal rate of return of more than 54 percent on its investment capital.
The company seems set to continue investing in SMBs (small and medium businesses), better known as SMEs (small and medium enteprises) in the Singapore context.
It’s plans to co-invest in property and food-related businesses shows a shift from having invested in high-risk high-reward tech plays, to more conservative investments with more regular cashflow and stability of earnings.
With capital markets tightening up, it seems to make sense to build a portfolio around secure investments before adding higher risk tech/telco/media plays into its portfolio.
This isn’t the first post I’ve made on this subject and likely won’t be the last either.
UPDATE: I posted about a week ago that I’m working on a guide on Internet marketing, it’s still being worked on. A couple of projects have come up in the interim that have taken a fair amount of time (though they’ve been very rewarding). So my own project is moving along at a slower pace. It’ll come out soon.
But back to getting started.
Reality #1: There’s lots of money to be made on the Internet. Because when you say “Internet marketing” there’re so many ways to skin a cat, from investing in domains (domaining), marketing on classified sites like CraigsList, Kijiji, Gumtree, etc, to what I typically cover on this blog: affiliate marketing and product creation. The Internet is more a platform or a marketplace than one specific method. There’s no one “best” way to make money on the Internet.
Reality #2: Internet marketing is easy…if you’re prepared to fail a lot. I’ve had some gnarly internships where I worked with non-profits as well as marketing agencies and the work was pretty mind-numbing and would leave me physically and mentally exhausted at the end of the day. In contrast, I think Internet marketing is way easier (try flipping burgers for a day to experience the contrast), but it has a high failure rate. The best marketers probably succeed 50% of the time with their projects, you just don’t hear about the failures very often, unless you’re into consulting, accounting or have these guys in your mastermind. But the cost of failure is small (if you’re managing your risk sensibly). Just pick yourself up and get going again. My smallest loss has probably been a couple of hours for a failed project. My biggest loss has probably been about $10,000. Then again, I’ve made many times that with the successful projects.
Reality #3: Focus. This is an easy one to understand, but harder to implement. Just imagine going out on a warm summer’s day, the warm sunlight on your skin. Now imagine if all that sunlight was focused into a single pencil-wide beam of light. That laser could burn skin and bone and probably cut through industrial steel. That’s the power of focus. Most newbie marketers will try 5 to 10 projects and attempt to find 1 or 2 which work then focus on them. I think it’s ok if you’re testing various options for a couple of weeks (no more than a month). But if you’re still “testing” stuff 6 months down the road, then you’re looking at a heap of trouble later on. While it may seen unrealistic that you might create the next fark.com or digg or icanhazcheezburger, still being focused will have a better return on your time than trying out too many things. Being focused also means picking yourself up and keeping at it, even when you fail. Stop only when you hit a brick wall which you can’t bust through.
Reality #4: Books, courses, tools are a crutch. Unless you have the luxury of working for someone who’s been in the game for a long time and is willing to show you what they do or better you tell you step-by-step what to do, you probably need to invest some time figuring stuff out. I was just telling someone today that I probably bought about $1,000 worth of “stuff” – software, books, courses in my first month getting started in 2006. I still have my old copy of Adobe Photoshop sitting on my shelf in its shrink wrap along with this fancy teleconference equipment I bought off eBay. It’s probably better to understand how stuff works and if possible do it by hand before investing too much in courses and automation software, which blocks you from the real goal of building a business, marketing and selling products and services.
Making Money Online Action plan
So if you sent me an email asking about how to get started with Internet Marketing/Affiliate Marketing and I’ve sent you to read this blog post, here’s my advice:
1) Get started within 30minute of reading this post. Yes, you can go have your dinner, send the kids to school, pay some bills, but get started immediately. The biggest procrastination is before a project gets started. If you overcome this obstacle, you’re doing better than the other 90% of marketers who are hoping/dreaming for a big stack of money to fall into their laps.
2) Find a successful business model/strategy to make money. I check into a paid forum, PPV Playbook, run by David Ford, every couple of days. In it you will find other guys who were just like you, wanting to get started and are making $100/day, $300/day or $1,000/day profit about 6 months to a year from when they first got started. Take note, that some of them have spent as much as $1,000 or $5,000 to get to where they are. And if you’re asking if it’s worth spending $5,000 or even $10,000 to get to the point of making a measly $100/day profit, I’d say heck yeah. At $3,000/month, you’d cover back your $10,000 investment in a little over 3 months. More importantly, you will have the skills to grow your business from $3,000 to $5,000 then $10,000, then $1,000/day. But only if you’re willing to put in the effort to improve yourself and grow your business.
Even if you read about all these “business in a box” packages out there which claim that all you do is stick a web page on the Internet and start making money, the reality is that they don’t work unless you know how to generate traffic and have these Internet visitors convert into customers. It’s better to build a foundation in the necessary skills, and from there you can choose to either promote someone else’s products (ie: affiliate marketing or CPA marketing) or develop your own offer/product.
“What do you suggest I do next?”
This is a simple strategy, but it will only (more…)
If you haven’t been scammed or conned once in the course of running your internet marketing business, it’s probably a sign that you’re not doing enough.
A couple of weeks ago, Aden Mott posted about getting “ripped off” by Copeac (You can read the post here).
I think the fact that Copeac’s owner, Mike Krongel, posted a personal reply says a lot and based on my past experience in working with Copeac, I’m inclined to see things from Mike’s point of view.
My take on affiliate referral commissions is that you’re at the mercy of the network. I’ve had affiliate managers, and affiliate network owners suggest that I could get higher payouts by setting up a 2nd account and bypassing my referrer and get a higher payout in the process. I’ve not gone through this route and prefer to just give my referrer his due. If a campaign is predicated on being able to get an extra 1% or 5% to break even, then you might need to work on being more creative/innovative and moving away from the arbitrage model to creating more value for the lead.
At the same time, I’ve had referred affiliates whom I’d been getting comfortable referrals from, switch out of the referred account so they could earn a slightly higher payout (or so they were promised). I don’t think there’s much you can do about these situations, they’re a fact of the affiliate/internet marketing life. If you can’t stand the heat, get out of the fire.
The majority of CPA networks which had initially offered a 5% referral comm have since reduced the referrals to the 1% to 2% range. In a number of cases, they’ve either discontinued the referral scheme (but still pay out for referred affiliates) and in extreme cases, axed the program altogether. As an affiliate, there’s not really a lot you can do about this, so you can either focus all your effort on building and scaling out campaigns, or develop your own product where you’ll have control over how it’s marketed and its price point.
Being able to manage risks sensibly is part of being a business owner. It might seem fun to aspire to be a network owner, but most don’t see the risks and losses that come with it. Having advertisers who renege on making payment because of lead scrubbing or fold up without possibility of payment. Having to deal with fraud affiliates who stuff thousands of leads each month (which are eventually reversed by the advertiser). Dealing with advertisers who have offers which are obviously scammy or have done the old bait-and-switch with their offers. It’s not all fun and games at the top.
Another friend who markets products on the Internet, had a broker that he was buying products from, suddenly disappear and stop answering his email and phone calls. The amount wasn’t high enough to destroy my friend’s business, but it is still a pain because this issue is delaying a project we’re collaborating on.
I don’t see what’s the point in scamming a couple of thousand bucks each from a couple of people because you might have a little play money for a while, but the world and especially the online world is a small place and it’s going to come back to haunt you.
At the end of the day, integrity and honesty are two traits which will carry you further in this business, and if you choose to play in the murkier adult/gaming/pharma space, then you should be more diligent about managing your risks.
I talked with a friend today about strategies to grow our businesses.
The main barrier to how much you can earn is the amount of time you have each day.
Even if money seems to be your most scarce resource now, once you’ve got a decent amount, the main issue is how much you can get done in 24 hours.
Here’s one commonly-misunderstood way to grow your business: It takes money to make money.
This doesn’t mean that you should spend more on what you’re already paying. But do consider hiring someone whether it’s a freelancer, part-time employee or a full-time staff member to help you do your stuff.
I especially like to delegate/outsource stuff I don’t like – administrative work, working on my taxes.
Hiring an employee might give the highest ROI in your business.
I typically get a 200 – 500% ROI on my labor costs each month.
Couple that with software/automation and you up that increase by a higher multiple.
So there’s the fallacy that partnership/JVs are the way to go.
Most people forget that that works only if everyone is putting in their 100%, or at least 50%. The reality is that many “partners” will drop the ball and put in only 10% or in the worst cases, be deadbeats and do nothing.
If you’re stuck with such partners, you’d better run for the hills.
How do you avoid this? Simple, protect yourself.
Start with smaller projects. If the partnership doesn’t work for those, then don’t bother working on anything big.
Set specific goals and deadlines: Same logic. If a partnership which combines resources and is supposed to be greater than the sum of its parts can’t get its act together, then you are really in trouble.
If this all sounds too general, that’s because there’re many moving pieces in any partnership.
Trying to condense it into a 300- or 500-word post is just silly.
Here’s the synopsis:
1) Set tough, aggressive (and very profitable) goals.
2) Everyone has to pull their weight.
3) Get rid of the losers.
Now, get back to work.
A confession: I had planned to publish this post on 24th Sept on my 37th birthday, but I had been having so much fun that the days kinda flew by. Which is one of the advantages of this crazy thing we call e-commerce, internet marketing, or it’s subset affiliate marketing.
What this post was intended to be (and hopefully will end up as) was a retrospective on the past 5 years.
So here goes:
In mid 2006, I decided to leap headlong into fulltime Internet marketing. Before that I had a pretty successful career as a newspaper reporter, then a realtor as well as consultant for small businesses.
Money wasn’t the lure for me to do the “online thang”, it was time. The ability to call the shots when and where I did my work – whether it was doing a 16-hour grind for a week to get a product out, or to take three weeks off to go on vacation (or sometimes go on a two-week powerlevelling binge on a MMO or online game), then savor the rewards of immortality or highbie-dom before settling down on my next project.
There are lots of reasons to do what we do, but I think the strongest motivator is to have a strong reason – a raison d’etre – reason for existence, else whatever you’re doing online – whether it’s domaining, cpa arbitrage, ebay-ing will get boring after a while.
One of the reasons I’ve focused on creating my own products over the past couple of years has been the ability to follow my interests and I still get expressions of surprise when other marketers find out that I don’t use keyword tools or gauge market demand for many of my projects. I think being able to observe what people are doing in the malls, in the LAN shops/internet cafes, what they’re buying on the Amazons, eBays will stand you in better stead than buying a $500/month keyword or spy tool.
Warren Buffett mentioned that one strategy in determining whether to buy a stock like K-Mart or Wal-Mart or Coke, involved just standing in the company’s store and keeping an eye out for who’s buying what, how much and how many customers there were. If you’re buying based on a representative sample of consumer behavior, you might not be 100% correct, but you’ll swing the odds in your favor.
During my 5-year journey, I’ve had the opportunity to see many of the big forums and blogs now, in their infancy, getting to meet and get to know many affiliates, marketers and some who have a “guru” status in the marketplace. I’ve also had the opportunity to see how some of them have created this self-appointed guru title and built a business on a house of cards. It’s not surprising that business for a number of these guys have come crashing down, even as they continue to launch new products and courses, hoping to snag some newbies.
The operative word for being in the game for the long term has to do with creating value.
Another smart business person once said that with employees, you’ll have some that are working at the level you’re paying them.
There’ll be a greater number who’re working and performing at less than the level that you’re paying them.
There’ll also be the rare few that’re performing at a level way higher than what you’re paying them – these guys are the keepers and the ones who’re the first to get promoted.
In the same way, whether you’re an affiliate, a product/offer creator/owner, you’re also in the same boat, but the customers are the ones who’ll decide whether to fire you or to keep you around.
I’ve had the fortune of pursuing projects that I’ve been personally interested in and offering these products to the marketplace and have had an overall positive reception.
If the example of the past 5 years has been an opportunity to test different business models, different types of products and see what works and what doesn’t, the next 5 years will be focused on systematizing the business, automating elements which are manual and repetitive, and overall scaling the business.
The key driver for doing all this is providing even greater value than before.
And if I succeed in doing that, then the long game will take care of itself too.
The next lap:
The next phase will be more tightly integration the various parts of my business more closely together, I’ve been working on a new book on getting started on the Internet and although it was supposed to be ready at the end of this week, I might give it a little more time to add more value to it.
Expect to see something next week.
Till then, keep on working to reach the next level in your personal life and your business. I’ll be doing it too.