If you are an individual or a small company, serving some markets directly with a product may not be as scalable as selling ads. The best type of ads to sell are overpriced CPM brand ads, but if you are in a high value niche you can also do well with affiliate offers and AdSense ads.

Most informational websites are monetized via selling ads. The most profitable ad any site can sell is an ad for itself, because there is already user trust and perception of control built directly into a person buying from the same trusted brand. If you don't believe that theory, track affiliate conversion rates while having a lead form on your site vs a lead form on a third party site. The on-site lead form will typically outperform a third party lead form sometimes by a factor of 2 or more. A friend of mine published a blue site about ringtones. He sent traffic to a green ringtone offer landing page that offered 15 bonus ringtones. He later tested sending the traffic to a blue ringtone offer landing page that offered 10 bonus ringtones. While offering less, the conversion rate was significantly higher because the conversion process felt more congruent from beginning to end.

If you must send visitors to another site for conversion try to pattern your site design and sales copy to match the end destination site design and copy. The more consistent the experience is the more money you make.

A few more tips to help boost conversions:

• Make the review look unbiased, even if it is highly biased. Use bulleted list and show stats. Make the sales information look more informational than salesy.

• Limit user choice. Make it sound like you already did all the review process and your recommendation is the obvious choice for the user's needs.

If your site is mostly an AdSense site, and you are getting a strong CPM, you might be able to make more by showing fewer ad units. Use the advanced AdSense reports to see if people are site targeting your website. If advertisers are site targeting consider pulling back one ad unit to see how that affects the CPC and CPM of the remaining ad units. Advertisers competing for less ad inventory should drive up the prices. If the gain nearly offsets the loss you are still ahead because you can replace that other ad unit with an affiliate ad, an ad for a branded advertiser, or an ad marketing your best content.

If many of your advertisers are thin affiliate sites, consider moving yourself up the value chain by cloning their offers and business models and improving upon them. You should be able to make more money selling directly because you keep the visitor, the supply chain is thinner, you can refine your offers over time, you can sell at higher price points, you can resell the customer, and your conversion rates should be higher because you are selling your own site and business.

The most profitable ad any site can sell is an ad for itself, because there is already user trust and perception of control built directly into a person buying from the same trusted brand.

Michael Mann founded BuyDomains, and numerous other companies through his WashingtonVC incubator. He also launched Grassroots.org and the Make Change! trust, and authored the popular ebook Make Millions and Make Change! for entrepreneurs and non-profits. After reading his book I asked him for an interview and he said sure.

Why is confidence so important when starting a business?

That is one of the ways we make our own luck, life is a self fulfilling prophecy. All leaders are believers, or there can be no followers/stakeholders, and therefore no competitive teams. All leaders who didn't believe turned out to be obsolete and the rest remained.

How do you balance confidence, ego, success, and drive while still having time for family life and charity work?

I don't balance it but people should.

Why is it so hard to create a business working part time?

Because your competitors work double time and they will have better information and ideas too, and take your customers, investors, and employees.

What made you appreciate the value of domain names so early on? How much more upside do you see in the domain market?

Someone offered me 25k for a domain that I had only paid $50 a year for, I was instantly sold. The domain market is really part of the overall Web 2.0/ecommerce market, which will boom indefinitely. Domains serve as company names and core ecommerce addresses, therefore any generic domain name that is high quality today will continue to rise in value. Names that are worthless today (the other 99%), will remain worthless.

For a new small business does it make more sense to focus on efficiency or scale?

Scale comes naturally to an efficient business following a plan and standard best practices. Attempting to scale without efficiency is a waste of resources.

What pieces are software are vital to helping you manage and grow your business?

SugarCRM, Salesforce.com, Yield Software, Apache, MS Office, Eudora (unsupported currently)

What books should every small business owner read?

Origin of Species, Darwin (is the essence of business fundamentals), Make Millions and Make Change, (an up and coming classic :), In Search of Excellence, Tom Peters, That Which You Are Seeking is Causing You to Seek, Cheri Huber (will help you manage success and charity work)

Does luck matter in business?

Not really, other than by birth. You make your own luck.

Why do you view obstacles as an asset?

Because all your competitors have the same ones. The more things to confuse them in dominating the market, the more things there are for you to understand and optimize. You are in the business of competing, you need items (obstacles) to compete on in order to express your superiority in the market.

Why should you start in a field that matches your experience and interests?

Because to win the long marathon you want to start better trained and miles ahead of the competitors if you have the chance.

When does it make sense to go high profile and when does it make sense to stay hidden?

When you have something to promote and when you have something confidential, respectively.

Your book said there is no reason to fear capitalism. You also support a lot of charities. Do you ever worry some business processes might have hidden costs? How do you stay so close to so many issues and stay upbeat?

Oy veh. Business process always have emerging unexpected costs, which is why you need a huge load of profit to pay for everything and need to be very efficient operationally. Close and upbeat?, I study, speak to lots of bright people, and take tea.

Market saturation tends to erode profit margins. What trends or signals make you avoid a market? What tells you when it is the right time to get in a market or to sell?

I only work in a few select complementary technology areas so I don't get diluted outside of my core competencies. Basically, have a plan and gut feeling when the stars are aligned.

Is the Internet making the typical model of business (employees in an office on certain set hours) irrelevant? What are the keys to keeping employees motivated and loyal, even if they are far away?

The market is international and therefore 24 hours, so hours are less important than doing a lot of them in an educated and motivated way. However, managing people is best done in person, not online for sure. People are motivated by working on a killer team, with a killer plan, and mostly bringing home the bacon. I like to hire only people who are so motivated and such high achievers and believers that they like equity or profit sharing to incentivize themselves even more than cash.

With the trends of cheaper technology, increasing communications, and globalization, do you think the Internet will end up causing a consolidation of wealth or will have the net effect of re-distributing it? Who stands to gain the most and who stands to lose the most?

The rich will get richer I'm sure unless and until they have programs to redistribute it like Grassroots.org and Make Change! Trust.

The Internet is making many things free, but many of them are free with hidden costs (such as destructively biased self serving advice). Do you think the move toward free will improve or decrease the quality of information being created?

Neither, its not really free, its ad supported, so ostensibly no different than pay content. To get better content pay more, like cash and not just 'ad' viewing.

How do you determine how well you can trust something you find in the search results?

I search for consensus. Unfortunately a lot of what passes as consensus is just one site regurgitating bad data from another. But I look for confirmation from experts and trusted online sources for everything I read.

With the web people may be more able to form groups and take action quicker, but many people may fight so much for certain causes that they don't see the downsides of what they create. Will media and ad personalization end up having a net positive or negative effect on society?

Just positive. Groups online learn to police themselves over time, or people flock to the sites that do. There are a lot of useless and otherwise lame sites, but they are a reflection of what people want, just like stores in the offline world.

How many charities does Grassroots.org help?

800 and ultimately growing to 10,000 that are each saving $10,000 per year, for a net benefit of $100M per year to the charity community serving the poor, sick, uneducated and otherwise needy. Grassroots.org is one piece of our charity work, whereas Make Change! Trust supports dozens of other 501c3 organizations like Grassroots.org

What percent of time and profits should go to charity?

There is no ceiling. If you ask me you can go ahead and be Mother Theresa and give it all away. Or as much of each as you can handle.

How do you decide if a charity is deserving of help?

For MCT, usually we know them personally or by reputation. For Grassroots.org they have 501c3 certificates and fit in to certain broad categories that we support. About half of all 501c3s meet our criteria.

What market today is as good to invest in as the domain market was when you started building BuyDomains.com?

The domain market. The web site market. The SEO market. The hosted or downloaded software market. Most of the best new Internet stuff. And Apple. Google. Wal-Mart. Dell.

I just got done reading Michael Mann's ebook. It contains a bunch of great advice for Internet entrepreneurs. It is quite wide ranging, but offers both practical and useful advice, explaining many business concepts in a way that just about anyone should be able to understand.

Traditional Publishers Are Wising Up to the Web

The WSJ posted an article about travel publishers wising up to the web, placing large chunks of their books online:

John Wiley & Sons, the publisher based in Hoboken, N.J., is offering an array of free travel tidbits and articles on the site of its Frommer's travel-book series. Not only can visitors to the site read blogs or listen to podcasts, they can plan and book trips -- generating commission revenue for frommers.com.

When you think of the authority of the Frommer's domain name (over 10 years old, PR7, 364,000 links), they must be able to get millions of pages of content indexed.

The first publishers to put their whole books online will see amazing returns because few people are doing it. The WSJ article stated that Wiley was already enjoying 10 to 15 million a year from 3 flagship sittes (Frommer's, For Dummies, and Cliff Notes). After hearing the early results, others will follow, putting all or nearly all of their content online. The lagging publishers will make crumbs, but their books will flood the search results with content that undermines the value of lower quality content.

Books Publishing is Fast Becoming a Vanity Industry

I was offered to get SEO Book published by one of the leading book publishing houses. I have made more in a day than what they were offering me as down payment for writing the book. And they wanted me to do all the book marketing as well, for no further compensation unless I sold enough books to make the hot books lists. It didn't help that my profit margins from a book sale would have been less than what I pay for a click.

I was unwilling to get published because I thought there was upside in the current model, in a growing market, and realized that the model of being published did not work unless I was interested in feeding my ego, in need of credibility, or was writing a book just to up sell more expensive services.

Ad Revenues Are Richer Than Book Profits

If I couldn't afford to buy ads for a physical book, that hints that the format and price-point lock in value in a way that is far from the potential returns if that value was unlocked.

I recently went on a book buying binge to get content ideas for one of my sites. I spent over $500 buying 30+ books, searching through them for their ideas, their structure, and their format. It was easy to do that because they are so under-priced relative to their value. I have an AdSense site that was far easier to create than many of those books were, but it makes about $1,000 a day.

If those publishers just put the content online they would make far more than I am from my AdSense site. My AdSense model only works so long as they don't put their content online, or I create a better known brand than they do.

Defending an AdSense Site's Viability

If your strategy is entirely long tail keyword oriented and you don't have a real brand your income will fall sharply in the next couple years. Site targeted AdWords will cause premium publishers to get paid more for similar content, and position placement reports will trim back the ad buys on sites with limited exposure and few conversions.

Not only will many of these books go online, but many of them with serious distribution and authority will act as gateways or clearinghouses for related books. What is to stop a publisher from pushing 10 other economics books on the Freakonomics site? Why not turn Frommer's into an endless sea of travel information?

Whoever introduces an idea gets credit for it, but, as hinted by my book buying binge tip, most of the content on the web is just copied and repackaged. Packaging and formatting can make an idea or kill it before it has a chance to spread. Everywhere I look there are free tips on formatting and monetizing, numerous competitors testing and tweaking, and market feedback is near real-time if I change my format or offer.

The only way to avoid losing to big publishers is to create real brands, position them as self reinforcing authorities, aggressively monetized and reinvest in marketing, and get hundreds or thousands of subscribers to spread your message and do your marketing for you.

Momentum is a force. Use the force. ;)

This is a free flowing post based on interesting links of interest I recently came across. It compares online markets to offline markets. Those who preach free market virtues rarely follow through on them:

The misfortune, of course, is ours since the Fed also sold gold. We have to guess at that of course because transparency in capital markets, preached from on high, is merely pretence. ...

The answer to market direction lies with the Fed, which today reports on their decision and statement as to policy. The policy statement is, for the most part, useless as a guide to the market, and something I call a sham. Regretably, the Fed is not required to release their strategy and tactical plan, which is released to the banks via buy and sell orders from the FOMC trading desk.

The public is not privy to this Fed-HB&B insider trading, and so we have to wait for (i) the market action, and (ii) the spin from the bankers, to try to figure out for ourselves what’s happening. This juvenile process makes for difficult decision-making by the independent owners and managers of capital, and leads to accusations that the system is rigged.

Countries (and their laws) act as walled gardens around markets, representing and protecting those currently in a position of power. One day everything is fine then the next fish is bad. You should eat more cow. Mooooooooo.

I am guessing the prices of drugs in the legal drug market are nearly as divergent as they are in illegal markets, where cocaine has a 350X differential.

Search marketing in even some of the largest markets is behind the curve. Arbitrage opportunities that died in leading markets still might be wide open in lagging markets. Why else would Google kill Answers in November of last year and then open up a Russian version 7 months later.

On the web some platforms act as walled gardens while others pay developers for marketshare. New devices, new software, and new distribution channels open daily. Develop around the idea of an open and liquid market and go with the natural trends of the web.

Steer clear of the proprietary crap that loses money on every user if you want to build something lasting of value. Rely too heavily on any single partner, format, or platform and die.