Why many niche site owners may soon be dominated by competition…
I had a meeting with an owner of a site today that sells a niche product and is currently doing over a million in sales per year. His site has been around for about 8 years and he got into the Internet game early on. He doesn’t have much competition, but even niche markets are starting to see an influx of competitors as people realize these untapped markets exist and capitalize on them (why do you think I was meeting with him ). His site has barely changed or evolved in all of this time, and he hasn’t really seen the need to evolve because he is doing well and his sales have continued to increase steadily year over year. Could it be so? Could you make a million dollars a year with a site and not know a thing about Internet Marketing?

I met with him to explore a drop-ship or affiliate relationship and the conversation eventually evolved into possible taking him on as an Internet Marketing client. Anyway, the conversation inspired me to write about some of the misconceptions this person and other uninformed people tend to have regarding Internet Marketing, and how even successful people out there may not have a clue about how to run a site effectively.

Natural vs. PPC
He wasn’t too concerned about not having great rankings because he feels that the overwhelming majority of people click on paid ads rather than natural results. This of course is not the case. Most people click on natural results, and if you have a listing in both places you have an even greater chance of capturing a particular web searcher (3 times as likely according to Google).

Why do PPC if my affiliates are doing it?
He pays his affiliates a 20% payout and the terms he would have to bid on are quite cheap and convert well. Why would he rather pay a big commission to an affiliate if he could get sales at a cheaper cost? Also, having an additional listing in the paid results means he has a better chance of getting the sale. Think about it, if he is listed naturally, also has a paid listing, and has one or more affiliates with paid listings, then he is dominating the results for that search.

The other beauty about PPC is that it can be tracked down to the sale and down to the keyword. Why not build out a campaign of a few hundred keywords and see what the cost per conversion is and whittle it down to the ones that are the most profitable and in your budget?

Not having relationships with affiliates
Affiliates are like salespeople for your company. Would you ignore your salespeople? Would you not attempt to help the less successful salespeople or reward the top performers? Would you not keep them aware of new offerings, specials, product changes, market changes, etc.? If you want them to be effective and work hard for you, you need to help them, educate them, and reward them. This particular site owner had no relationship with his affiliates, they may as well have been strangers!

Keeping ties with original webmaster(s)
He currently has relationships with two individuals that maintain and market his site, and have been doing so since the beginning. It’s nice to form lasting relationships with people, but sometimes you outgrow people as your business grows, much the same way a small business usually outgrows their accountant once their business expands and gets more sophisticated. The people he is working with haven’t updated the site in years, don’t seem to know the first thing about Internet Marketing, and in fact have given him bad advice in regards to certain SEO techniques and tactics.

Oh, wait I forgot, everyone and their mother claims to know SEO and Internet Marketing now…

Making Assumptions when Real Data Exists
The beauty of the Internet is that EVERYTHING can be tracked. Beyond basics like traffic, visitors, and sales, any site owner should know key performance stats like conversion rate, cost per conversion, number of orders, average order amount, percentage of repeat vs. new customers, etc. This person didn’t know any figures besides total sales and total orders, and those figures were obtained through a notebook!

Web analytics are the most powerful weapon in a site owner’s arsenal. Once you have a steady flow of traffic and business, you really need to make the most of that and dive deep into user behavior to understand how your site is living and breathing and how your customers are interacting with it. Google Analytics should be the bare minimum, but once established one should make the investment into something more sophisticated like Omniture Sitecatalyst to really get a handle on what’s going on.

Email Marketing, or lack thereof
Expanding on the above topic, I asked this person if he does email marketing. He said no because he didn’t think he had many repeat customers. First, how do you know how many repeat customers you have if you aren’t tracking it. Second, maybe you would have repeat customers if you did email marketing and sent them special deals to entice them to come back and place another order. Email marketing can be a beautiful thing because again, it can be tracked. You can get a bottom line number on how much revenue each campaign generated to see if you are getting a return on your investment. You can do subject line testing to maximize open rates; you can even see where most people are clicking in the actual email!

Not being aggressive
When a small company like this gets some success on the Internet, they have a hard time changing their mindset from thinking small to thinking big. They are reluctant to spend money to hire trained professionals to work on their site. They keep the ‘mom and pop mentality and are not aggressive in trying to make their site work harder for them. Sure, he’s making a million dollars per year. Not bad… What if he invested 50k a year and made another 500k per year, would it be worth it? I think so! Besides, even the niche spaces on the Internet are facing increasingly fierce competition. Him and many others have a great head start and that history gives them an edge, especially in their ability to rank well naturally, but that doesn’t mean someone who is savvy in Internet Marketing and E-commerce couldn’t come in and overtake them in due time.

Not wanting to get as many customers as possible
This builds upon the previous topic, but there are many different ways to get customers on the Internet. Some cost money, some do not, but it can all be tracked down to the sale. Why not experiment with every shopping engine, every PPC engine (not the low-end shady ones) and see if you are getting the ROI you want? Him and many others assume things are not going to work or don’t realize how sophisticated tracking has become.

The shame of it all
I have witnessed others that fall into this category who made a smart move and got on the Internet early, only to see their success slowly dwindle until they didn’t have much of an Internet business at all.

One example is a lead-gen site I ran for a number of years with a few business partners. It was a very clean business with all revenue coming from sales of leads and sponsorships. At it’s height it was making just shy of a million per year with the vast percentage of that being profit. I left the company several years ago to take an executive management position at a large Internet Marketing agency and they never replaced me. They left the site as is, did no marketing, and just relied on existing natural results to drive traffic and leads. This was another niche industry which has now been targeted by some heavy hitters, and as a result, the company I left is making under 200k/yr now and may be closing up shop soon.

The game has changed. The barrier to entry has grown considerably, and to be successful now you need to be constantly working on marketing your site, making it convert better, and trying to maximize revenue from repeat visitors. This requires an investment, but an investment that is essential to survival and success in this new age of the web where things are getting more professional, and e-commerce is getting down to a science. It’s a war out there, treat it as such!