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Is Your Internet Business Going To Be Around 5 Years From Today?

If you’ve been to Greenland or the Antartica (especially around the North Pole), you’d have seen numerous icebergs, some as big as a house, and many that are many times the size of an apartment complex or even bigger.

That’s your internet business. Get it?

iceberg

Picture if you will your internet business as represented by the iceberg.

It could be huge. It could be imposing.

Or it could be just a couple of ice cubes floating about in the water, blown all over the place by the wind.

Here’s the kicker.

Ice is about 90% of the density of water. So what you see is the “tip of the iceberg”. There’s another 90% of ice attached to what you see above the surface of the water.

Or is there?

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Here is the problem facing 90% or more of pure-play Internet marketing efforts today…

They’re focused solely on lead generation, and often there is little longterm viability built into the business.

Some may say that CPA affiliates are pretty short-sighted because they’re selling leads (the majority who fill in email and zip submits and sell them to CPA networks for between $1 – $5 a lead).

But are affiliate marketers much better?

In most cases, affiliate marketers are only paid on the initial sales. Eg: a lead buys $200 worth of merchandise from Amazon or Overstock or Buy.com, and the affiliate earns from 2% to 10% of the sale value (depending on whether you’re getting bumped up payouts/are a top performer, etc).

In many cases, once the payout is made, the relationship with the lead ends.

The second time he or she makes a purchase, you don’t get any cut of the sale value (ie. zero residual income), the exceptions being a handful of affiliate programs in the Rx, gaming, adult, network marketing, and a couple of the more progressive merchants.

You’ll just be getting credited for the front-end sale (which could still be a very decent couple of hundred bucks per lead), but will be getting nothing from the backend sales and future sales.

Yes, you might still be making good bank based on generating leads, but an affiliate pretty much has to watch the market, decide when a niche is hitting it’s plateau and start developing another niche.

Industry insiders have been mentioning that cellphone ringtone downloads have slowed significantly since recent legal developments and a plateau-ing of the industry and an increasing number have been moving towards developing products centered around mobile content – horoscopes, love compatability calculators and the like.

If you want to stay ahead of the curve, you’ll need to continue to keep evolving and decide if a market is about to tank, and continue to operate the business or exit it – either by selling the business or in some cases, giving away an entire network of sites.

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Back to the iceberg analogy – most people will get fascinated and possibly obsessed with what’s happening “above the surface”,  I think what’s even more important is “what lies beneath”. – not just the backend operations behind your business (in terms of following up with leads, cross-selling, upselling and even selling those leads to other competitors, especially if they don’t buy your product), but you need to have an idea of what the business represents (typically referred to as your “brand”, and how you’re building a viable business with longterm assets within it.

  • Branding:

Branding is important, but often there’s too much emphasis placed on a brand. Remember the ads shown during the Superbowl that creates awareness (especially the 1984 Mac ad), but does it translate into bottomline results? If everyone out there knows that you have pineapple-flavored cola, but they don’t go buy it, is it a flop?

There’s a reason why Internet Marketing is often referred to as “performance marketing” (briefly discussed by Lisa Picarille in Sam Harrelson’s recent live Affiliate Fortune Cookies podcast) .

Performance marketing: If you don’t perform (convert leads into sales), you don’t get paid.

Some of the best known blogs and forums in the “cloud” are well-known, have a large base of users, generate a fair bit of buzz and hog more than their share of airtime. So they have a great brand, great mindshare and they’re doing well, right?

I heard the same thing during the dotcom period of 1999-2001, in many cases many of these startups went belly-up 6 months later (also accelerated by the CEOs preference for buying Hermann Miller Aeron chairs, overpriced LCD monitors (in the early 2000s), and a penchant for the occasional Ferrari).

  • Tangible Intellectual Property or Human Capital Assets:

If your internet business were to be stripped of it’s online brand today, what would you have left?

A content site? A database of 100,000 leads? Solid intellectual property (either an information product, a unique software, platform)? A solid marketing or programming team?

If you’re left with nothing aside from just a brand, it could be time to start hard thinking and start building some of these elements into your business.

If nothing else, you certainly won’t want to end up like the Titanic, dead in the water.

But without a longterm game plan, you could very well find yourself in that position.

1 comment on Is Your Internet Business Going To Be Around 5 Years From Today?

  1. Mike Peters
    April 16, 2008 at 7:17 pm (4582 days ago)

    Couldn’t agree more!

    Too many affiliate marketers are strictly focused on the front-end getting paid for the initial sale part, instead of building IP and brand awareness.

    Affiliate Marketers are either too busy or fail to understand the bulk of the customer’s LTV is extracted after the initial lead to paying customer conversion.

    More about this here: http://www.softwareprojects.com/resources/the-basics/t-what-is-the-essence-of-internet-marketing-1494.html

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