For the newbies, social media, sometimes called Web 2.0 refers to interactive websites where people can communicate with one another on just about any topic and for any reason.   Blogging, forums, Facebook, Twitter, MySpace, and YouTube are the major players.   Social media has been around for several years now, and internet marketers have been trying to use it to make money since it started.

Perry held a webinar last night (which I missed) to up the ante prior to the launch of his new service.  It was indeed a very large turnout; billed as the biggest webinar thus far in internet marketing history.

I am going through his free ebook, How to Monetize Social Media, and will post my H2MIW thoughts on it soon.

Anyways, the concept goes like this:  Find a profitable niche and monetize the heck out of it with information products, membership sites, and/or continuity programs.  A niche is a narrowly-defined market; for example:

• halitosis (bad breath) sufferers
• people who have obsessive compulsive disorder
• model train collectors
• German cuckoo clock collectors
• Civil War buffs
• Halo gamers

In a profitable niche, people buy things related to the niche, making it monetizeable.   Now, the reason why niche marketing is so talked about is that, being a narrow topic, it: (1) is easier to market to because it is so narrow (think easier Google rankings); and (2) isn’t that crowded; i.e., not as many people selling to it.  Therefore, according to overzealous gurus, finding a profitable niche market is the key to a successful internet marketing campaign.

But hold on.  Let’s put our thinking cap on for awhile.  Can an outsider actually pass himself off as an expert in a particular niche?  Can some regular Joe, not knowing a thing about, let’s say, model trains really write and sell an ebook on How to Make Model Trains to people who have actually been doing it most of their lives, in some cases?  There is only so much you can teach yourself about a niche you’re not familiar with.  The rest of it comes from years of experience.  Only those who are true members of the niche market will be familiar with the terminology, the slang, the history, the leaders/authority figures, and other fine details.  An outsider posing as an expert is probably going to stand out as an outsider 8 times out of 10; whether it be revealed in his product, his email autoresponder messages, his forum postings, or website.  They will reflect either incorrect information, or shallow/ generalized / useless comments.

I’m not saying it can’t be done; I’m just suggesting that it’s not as simple as the gurus make it out to be.  You can’t just pick a niche as an outsider and expect to teach and sell to real members of the niche by slapping together some cheap ebook or making a generic mini-course.  You are better off entering a market that you are active in yourself, primarily through your career (job) expertise, or one of your hobbies or interests you participate in.  If you try to pick a topic you are not at all familiar with, you won’t be convincing, and you won’t be as motivated.

Something to think about before jumping on the “niche craze.”

I’ll use Google AdWords PPC service as an example: you create an account, contruct your ad (you can make a text or image ad), add all the search keywords that you want to trigger your ad to show; and bid a maximum amount you’re willing to spend per click for each of these keywords.   There are more settings available to fine-tune your ad, but this is the core concept.

So, someone who is looking to buy baby toys goes to Google, types “baby toys” in the search box, and sees this:

The listings you see in the cream colored rectangle and the ads you see to the right are sponsored ads; the rest are natural, organic listings for the keyword “baby toys.”  If you can’t see the highlighted number in the top right corner, it says there are about 60.9 millions results for this keyword.  If you were to click any of these ads, the owner of the ad will be charged what he bid to get his ad to show.

Originally intended as a service for “regular” business owners that would allow them to get immediate exposure on Google (as opposed to the long turnaround time of organic, natural listings) PPC has morphed, and continues to morph, into an internet marketing playing field.   Originally (the years 2003-2006), it was a gold mine as quick  thinkers noticed the opportunity before them, put up ads and drove cheap traffic (1 to 10 cents per click) to affiliate offers they signed up for (offers where they would get a commission if they made a sale).  So if their sales commission was $2.00 and the click cost $.05, multiplied by 100+ sales a day, you can see how it can add up considerably.  In fact, $10,000 a day pay days were possible back then from PPC if you were good at it.

But now, things are very different.  The almighty Google (and other search engines) caught on to what was happening, and changed the rules.  Now you need to work 10 times as hard to have a successful PPC business, and because many people are doing PPC marketing, you’ll be wasting lots of money on useless clicks as your competitors click your ad to “compare notes.”  You’ll need to have a clean, optimized website or landing page with great content; a good standing in your AdWords account, preferably an aged domain, and the cojones to outbid your competitors for several weeks to push your ad to the top 5 spots.  I mean $1.00 or more a click, for most worthwhile keywords like insurance quotes and any electronic gadget like iphone.  You will have days of a $250++ AdWords bill and one sale for $5.00.  The idea is to keep spending so that your ad matures, and stays on top even as you lower your bids.  But you have to weather the storm and pay the piper; and even then, it’s not guaranteed that your site will get to the top 5 even after two weeks of bleeding money.

And it doesn’t stop there.  For some unbelievable reason that I don’t understand to this day, Google actually allows queries into its AdWords system and discloses advertisers’ strategic PPC information to those interested.  Greedy, opportunist software developers create “spy” applications that identify successful AdWords ads (there are hundreds of thousands on the Google network) by tracking how long the ads show up on Google for certain keywords.  The assumption is that older, aged  AdWords ads are generating a lot of money, otherwise the owners would have taken them down.   The software then STEALS the campaign settings:  the exact ad text, all the keywords, all the bids, just about everything.  You then create your own AdWords Ad by copying a “successful” one, changing the ad text slightly, saving you (supposedly) a TON of money and time testing one of your own.  In other words, these applications allow people to ride on the backs of others and cut in line.  This is not my cup of tea.  The spy software applications I know about are Google Cash Detective by Frank Kern, PPC Bully, and Hexa Track.  I list these to prove my point; you can check them out at your own peril.  I don’t want to provide the link because I can’t stand what these guys are doing, and I hope you agree with me.

In the end, what these applications do is create more intense PPC competition, and you know who the winner is?  Google.  More competition = higher minimum bids (this is just like supply and demand in economics– as demand goes up, the price goes up until a new, higher market level is established).   So instead of being charged $1.00 a click, it’s now $1.50 a click– cha-ching! for Google.  This is probably why Google gives out peoples’ PPC information; it makes PPC marketers fight over each other for its business.  The affiliate payout remains the same, but the cost for acquiring the sales rises.  Not a good thing for any type of business.

I complained to Google about this when I was big into PPC, but got no response.  After all, it is essentially stealing proprietary information, because it takes a lot of time and effort to make a successful PPC campaign.  Especially finding the high-converting keywords and key phrases that result in sales.  I would be extremely pissed if someone used one of these applications to steal MY PPC campaign, especially if it cost me several hundred dollars in PPC costs to test and tweak.

So, you can probably guess what my opinion is of PPC as an internet marketing business.   I may dabble in it here and there if I see a new opportunity, but I won’t spend the majority of my time doing PPC.  If you want to try it out, visit the PPC page on this site for general guidance.

What the majority of people don’t know is that there are OTHER angles to internet marketing besides e-commerce stores.

You can create your own “electronic format” information product and sell it through a long sales copy website.   Electronic format means eBooks (like .pdf format), videos, and mp3 audio files.  Products in these formats can be downloaded on the internet by the purchaser, saving you shipping expenses.  The exciting thing about the information product  model is that you don’t have to carry inventory and you don’t have to fulfill orders yourself– it can be totally automated.  These days people love instant gratification, so the ability to get the product in a few seconds after purchase is one reason the model works so well.

The information product model is good for niche markets; i.e., very narrow, highly specific topics; for example, “How to Buy Distressed Property.”  The topics that do really well are those that offer a solution to a strong, emotional need; one that the potential customer is already searching the internet for to find a solution.  An example of this is “How to Avoid Divorce and Rekindle Your Marriage.”    There are people who literally make tens of thousands of dollars a month selling such targeted, psychologically intriguing information products!

You’ll need to have an extremely effective sales copy to get people to buy; one that has psychological triggers and is written in a way to make the reader think he/she would be a fool not to buy it.  The smart marketers in this arena use convincing video testimonials of happy customers, include substantial free bonus products to the purchase, and offer a no-risk, money back guarantee.  There are even more complex strategies to get the sale like upsells during the checkout process.

If you want to tackle this business model, I highly recommend checking out Alexis Dawes’ Desperate Buyers Only eBook.  Alexis has come up with a guide that teaches you how to “mine” the internet for people who have a pressing, urgent need that they are trying to find a solution to, and are very willing to break out their credit card for instant gratification,

So, in summary, the information product model is simple in concept and powerful, but demands a great product and even greater sales page which will take time (and money if you hire someone) to construct.

Happy Marketing,

Dan