Everyone knows that there is LOTS of money being made online by people all around the world on a daily basis. Every year the amount of money made online grows exponentially and hasn't showed any sign of slowing down, even during this terrible recession. And even though everyone knows that money is being made online, they don't understand HOW money is being made online.
So how exactly are people making money online?
To understand one method of making money online, let's examine one of the most profitable companies in the world: Google. Google commands the most search engine traffic in the world, and as a result is in a very powerful position. Why?
Well let's pretend that we are Nike. Because we are Nike, we want our website to rank #1 for shoes. If we rank #1 for shoes, we are going to get a lot of traffic for people searching for shoes to our website (roughly 42% of searchers to be exact). If we rank #2, we will only get about 25% of that traffic. At #3, about 10%. After that, the numbers start to get pretty low. You may as well not even exist on the Internet if you are on page #2 of the search results.
The exact search item "shoes" is searched for roughly 1,160,000 times per month. If Nike is at rank #1 in Google and getting 42% of that traffic, that is going to translate into almost 500,000 visitors to the Nike website that are interested in the word "shoes". That is going to translate into A LOT of sales. If it is sitting in spot #3, that would be a little over 100,000 visitors. Still a lot of sales, but MUCH lower. If they aren't in the top 10, they are missing out on a lot of action, and their company will miss out on a lot of potential sales.
And because Google controls where a website ranks, they are in a position of power. If they decide that Adidas is a more relevant search result for shoes than Nike is, Adidas will make much more money online than Nike does on the Internet. And Google has that power over every industry in the world!
So how does that ranking power translate into money for Google? Well, if you ever search for anything in Google, you may notice that the top two or three results have a slightly differently colored background. This is because those are paid search results (as opposed to the natural results below them, which are referred to as organic results). These top (differently colored) results are paid for by those companies so that their links can rank at the top of Google search engine results. Google is basically a lead generator to lots and lots of companies around the world. And whenever a regular searcher clicks on one of those paid links, the owner of that link pays Google for that click.
With millions of searches every single day, Google pulls in A LOT of money. And it makes sense that companies would pay for links, and this is why: Let's say that you are Nike and you know that 1 out of every 50 people that searches for "shoes" online will buy a pair of shoes if they land on www.nike.com. With this knowledge, you can calculate how much you could spend on a Pay-Per-Click (PPC) campaign with Google and be profitable. If the average pair of shoes makes Nike a $50 profit and each click costs an average of $.50, then out of every 50 clicks you pay for, at least one pair of shoes will sell, and therefore you will make a $25 profit (you paid $25 for 50 leads and made $50 profit off of the sale). In other words, if the leads from Google cost you less than amount of profit from those leads, it makes sense to set up a PPC campaign with Google and get your links on the top of the search results. And Google just pulls in the money from all the companies out there that are doing this, even if it's just a dollar or two at a time (don't forget how many searches there are per day on Google though).
So how does this translate to regular people like ourselves making money online?
Well Google has a program called Google Adsense which allows website owners to put those same paid links on their own websites. And when someone clicks on one of those links on one of those websites, that company pays Google, and then Google pays the website owner a portion of that money.
Therefore, the first step to making a passive income online is to make a website that generates traffic, and the most basic way to monetize that traffic is with Google Adsense.
This is the foundation of everything I teach on my video lessons blog: how to generate free traffic to your websites and how to monetize that traffic. The simplest monetization method to implement is Google Adsense, but eventually I will teach you other monetization techniques for you to test that can result in much higher eCPM (earnings per thousand impressions!).
Learn more at the Make Money from Home LIONS CLUB.
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