This week’s Monday Question comes from Simon:

“I see several options to run web advertising on my websites, and it looks very easy compared to affiliate marketing. Wouldn’t it be easier to make money this way?”

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That’s a good question.

Your internet income is determined by your effort.

The level of engagement (the time and effort you put into your marketing efforts) generally determines the type of return you get.

Here’s a listing of different monetization techniques with payouts listed from lower returns to higher returns:

Web advertising -> CPA (cost per action) marketing -> pay per sale (or what’s traditionally known as affiliate marketing) -> product creation

Web advertising refers to programs like the Google AdSense publisher program, Yahoo Search Marketing ads, WidgetBucks or programs like Chitika and Kontera.

I’ve found that web advertising generally provides a low rate of return UNLESS you pick a very hot niche, for example Transformers (during the launch of the movie), or perhaps a Batman-themed site in conjunction with the next movie. A “Gears of Wars” niche site for the XBox360 game wouldn’t do too shabbily either.

You’d probably know that all it takes to get paid is to have your visitors click on the ads.

Your payouts generally range from $0.05 per click and can go up to about $10 per click.

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CPA Marketing provides a higher payout, however, the level of engagement is higher too.

In many cases the “Action” element in “Cost Per Action” involves submitting their name and email address, or requesting for information, or paying a nominal fee for a product.

Beyond just being a publisher, you need to have some marketing knowledge to create an incentive for visitors to complete the offer. More importantly, you need to know how to select offers that will convert.

Payouts generally range from $0.50 per action and can go up to $100 per lead.

There’s several affiliate networks you can join to check out CPA offers. I’ll update my resources page with a number of them.

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Affiliate marketing requires active marketing on your part because you’re paid a commission only when the prospect buys the product or service. It’s also known as performance-based marketing.

With physical products (like a TV or computer or furniture), the commission generally ranges between 2% and 15% of the product price.

With digital products (eg. ebooks, podcasts, certain types of DVDs, home study courses), it can range between 50% to 75%. In some cases, the payout can hit 100%.

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With product creation, you’d invest a one-time effort to develop the product, then decide how you want to market it. You could either market it yourself and keep all the profits, or recruit affiliate marketers to promote it, or run a PPC campaign and recruit publishers to run your advertising.

Beyond just “creating a product”, the key skills needed include being able to conduct market research, assessing product demand, managing product development, planning your marketing strategy, setting up your order fulfilment infrastructure, executing the campaign and customer service. If you’re a newer marketer, you might want to gain experience as an affiliate before trying this.

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Your first assumption might be that everyone should be an affiliate marketer for digital products.

It can be immensely successful provided you’re willing to invest time to understand your market and create the appropriate marketing campaign.

Most newbies will create a blog or website, do a product review along the lines of “Is Product XYZ a scam? Read this review to find out” then drop their affiliate link in there.

There’s many problems with this approach [which I might go into in a later post] that it will not work for many newbies.

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The bottomline is that if you’re totally green to Internet Marketing, you might want to start off with web advertising, and gradually move up to CPA marketing and affiliate marketing.

If you’ve already had some experience under your belt, you might like to check out my Wealth Ninja affiliate marketing product, or Anik Singal and Jeremy Palmer’s PPC Classroom.