Obviously there are more ways of making money, especially on a short term basis. Take a successful concept and copy it and milk it until there’s no value left. Promise people the world, but don’t deliver. Con and deceive them, and be gone when they find out. You’ll make money, sure (you may get arrested), but you’ll never build a lasting business on these models. That’s because you’re sucking value out of things, instead of creating value and giving it to others. These are models of destruction, not models of creation.

The only lasting way of making money is by creating value for others. Creation…not destruction!

Subjective profit

People want to make good deals. They want value for money, and they want to get more value than they think their money is worth. A good deal is a deal that gives you a subjective profit. If you feel that you’ve gotten more value than you paid for (in money), you will feel you’ve made a subjective profit. You’re better off after the deal, than you were before the deal.

Although this may feel like a psychological trick to make people feel good about a bad deal, it in fact is not. People differ, and as such have a different appreciation of value. Something that’s very valuable for one person, may be substantially worth less to an other. The difference needn’t be great for people to experience making a good deal, and in fact actually making a good deal. Buying a blu-ray player won by a person that doesn’t own an HDTV, for a discount compared to the retail price is a good deal for both (provided you do own an HDTV).

The same goes for the age-old scarcity vs. abundance mindset. To the shepherd with a hundred thirsty sheep, the woman that owns a well but no warm clothes is rich. He would happily trade a sheep for water for his herd. For both this is a good deal. The shepherd has a herd of 99 that will survive and the woman has a sheep that will provide wool for warmth. The water is more valuable to the shepherd than the one sheep. For the woman the one sheep is more valuable than the water consumed by the herd. Both are better off, so both make a subjective profit from this deal.

Even when combining talents this mindset still stands. The awesome guitar-player with the mediocre voice is better of working together with the awesome singer with mediocre instrument skills, than both are competing against each other. In competition they make mediocre music and won’t feel awesome, in cooperation, they make awesome music and feel great. And they’ll provide awesome music to the world, instead of mediocre music.

Not the everyday make money online scam artist

A lot of the make money online websites out there, are not based on providing real value. There are more variations to this theme than I could ever make up. I know I’ve fallen for some of them, and it sucks. People know when they’re getting conned. But to a lot of these site owners, that’s not a big deal, because they already have your cash! After that: screw you! They don’t care about you, or your money making abilities. They already cooking up some other scheme of getting your cash.

That’s not how I want to earn a living. I’m all in favor of the value creation model. I believe that it’s the only lasting way of making a living. I hadn’t updated Scraping Pennies, because it left me feeling like one of those make money online scam artists. That’s just not congruent with who I am, so I’m transforming this blog into an outlet for my thoughts on creating businesses based on the value creation model. It’s the only model that works. It’s also the hardest to set up, and the hardest to maintain. Yet it’s the most gratifying model of all.

Creation!
Not destruction.

(Of course the only reason is to get even more sales, but who cares? Discounts are good!).

Ittybiz has several great value products, yet I don’t own all of them. In fact I only own one: the SEO School eBook. And I recommend it for anyone serious about starting an online business that could use a nice steady flow of search engine traffic.

I learned quite some things from the book and I applied it to my other blog and for my ebook (have work to do on this blog though). My ebook definitely would’ve sold better if I had read this SEO School before writing it. Anyway, you can get it now for just $19 which is great value for the money.

I decided not to enroll in the Online Business School or the Marketing 101 course, for two reasons. The main reason being the lack of time due to my wife’s difficult pregnancy. And in case you would like to use some one-on-one time with Naomi, that’s on discount too.

To sum it all up:

• SEO School – $39 now $19. Use discount code “wood” (without the quotes).
• Online Business School – $397 now $197. Use discount code “wood” (without the quotes).
• Marketing 101 – $188 now $94.
• Consultancy / Brainstorming – $250 now $150 an hour.

The offer is valid until February 5, so if you want to get the discount, you’ve got about a week to make up your mind.

P.S. Yeah, I’ll write posts with real content soon. But you know…discounts are good. Especially on products I own and recommend

P.S.S. Yes there are affiliate links in there, they don’t hurt your discount (the discount does hurt my affiliate cut though…). Read about how and why I hide the affiliate links.

Profit is an illusion, cash flow is fact. ~ Unknown

As you know I work with a $200 budget to reach my goal of getting an income from online activities. One of the things I’m doing is monetizing this blog, but there are more ways I will be exploring. In the early stages though, you’ll want to focus on cash flow, no matter what tactic you’re using.

Cash Flow

Cash flow is a term that refers to the amount of cash being received and spent. It’s what you see on your bank statements. Money comes in, money goes out. Earnings and profit are not the same as cash flow. Cash flow is what happens now, earnings and profit are what might happen in the future. Earnings turn into cash flow as soon as someone pays you.

Cash flow is exactly what I’ll be focusing on when directing my energy to making money online. I want to see that cash coming in. I don’t want to see some virtual profit accumulating on some site, without the cash flow associated with it.

The fact that cash will flow out is a certainty for me. For instance, every month I need to pay my hosting. And every year I need to renew my domain registration. Both aren’t really expensive, but on a $200 budget, they nibble away the budget in a steady pace.

Using Cash Flow Characteristics

Some ad programs have several restrictions that hurt their cash flow attractiveness factor. Google Adsense for instance has a payment threshold of $100. If your earnings balance at the end of the month is below the $100, it is carried over to the next month. Month after month after month, until you finally hit the $100. When that happens, they wait another month before issuing a payment. If you’re in one of the countries that’s elligible for electronic funds transfer, it’s only a couple of days before the money hits the bank. If you’re not, you have to wait for the check to come in the mail and then wait before the bank decides to clear the check and deposit it to your bank account (while deducting their processing fee). From the point of cash flow not very attractive at all. Kontera has similar characteristics.

Other ad programs like Text Link Ads and LinkWorth offer better terms. Low or no payout limit, payments to PayPal in the week after the previous month ended. Affiliate programs like those offered at e-junkie or Web Warrior Tools show similar characteristics. From a cash flow perspective this is a lot better already.

And if you provide private ad sales, you get the money in your account instantly. This is what makes OIO Publisher so attractive to me, the money you charge for advertisements is deposited instantly in your Paypal account. This is cash flow heaven.

When you dedicate a part of the layout of your website to show ads, it’s worth checking out the payment terms for the program you intend to use. It could take many months before you actually see any money. For me it’s a deciding factor in the early stages, and it might even be in later stages as well.

I only mentioned a couple of programs in this article, but I’m working on a big list of programs, comparing their cash flow characteristics and more. Subscribe now and be among the first to know about that comparison.

Traffic comes from various sources:

• Referral Traffic
• Search Engines
• Social Media
• Direct Traffic
• Ad Traffic

I’ll cover each of these sources in this article.

Referral Traffic

Refferal traffic are visitors that found your site, because another site linked to you and they used that link to visit you. One of the best links to get is when someone else talks about you and recommends you. That way they are actively promoting you. But there are various ways of getting links to you on other sites. And as they are important for search engines and advertisement networks too, I will cover them in another article in the Early Stage Strategy series.

Search Engines

Search Engines sent targetted traffic. Someone entered keywords in that little search engine box, and they suggested your site. So the people who come to you in this way are more likely to like what you offer, because it fits what they were looking for in the first place.

Search Engines can be a major source of traffic! So much so, that an entire industry evolved around them. It’s called SEO, Search Engine Optimization. The subject is way too elaborate to fully cover here, but it involves both technical aspects (being friendly to the search engine spiders) as the content aspects (making sure the right keywords score).

The biggest factor in a high ranking in the Search Engines are incoming links, and it’s hard to get those in the early stages. But as I said before, I will talk about those in another article in this series. Two good places to investigate the subject further are the SEO Book by Aaron Wall and SEOMoz.

Social Media

There are a lot of Social Media sites around. Social Media in short are people sharing content with other people (read more about it at wikipedia). Some of these sites can really cause a large influx of visitors when an article gets popular.

The better known sites are StumbleUpon, Del.icio.us and Digg. But there are a lot of other sites out there as well.

Having a strong profile on any of these sites is not necessarily to be used to stumble, digg or vote for your own articles on these sites. But, as they are all about making friends, it’s about building a community (or a pack) to rely on to submit them for you. Although every once in a while it’s not a problem to do it yourself.

Actions you can take right now:

• Make an account on StumbleUpon and start stumbling. There are many strategies to build your account, read more about this on DoshDosh.
• Make an account on Digg and start digging. Read here how you can become a power digger.
• Make an account on Twitter and start building a network. Add me as a friend and send me an @ message so we can talk. Read more about how to build a twitter presence.

This is a strategy I’ll be using for Scraping Pennies as well. I do have a headstart, because I’ve build profiles already on some sites. They’re not nearly as strong as they can be, when you use the tips in the articles I linked to, but it will help.

Direct Traffic

Direct Traffic are visitors who key in your address into the address bar of their internet browser. They knew your address beforehand, either because they’ve been to your site before or because they heard about it somewhere on- or offline.

These people are best helped by having an address that’s easy to remember. For Scraping Pennies I have already set this up. It’s easy to remember, because it’s an existing expression, only two words, regular spelling, no dashes and on a .com domain. If you don’t have a domain yet, and need some help figuring domains out (it can be very frustrating), you might be interested in Daniel Scocco’s e-book Killer Domains. I haven’t read it myself, but I hear it’s helpful.

To increase your direct traffic you need to get your address out there. People need to know about it. This may not be your biggest source of traffic, or the one you can grow the fastest, but it in the beginning of a blog or website getting any traffic is welcome. And you are definitely reaching different audiences, than the other methods will.

Actions you can take right now:

• Set a signature under your email messages with the address for your blog.
• Tell your friends and family about your new blog.
• Print (free) business cards with the address and pass them along.
• Print (free) stickers with the address and put them up around the city.
• Place (free) ads in a local (door-to-door) newspaper.

Ad Traffic

You can buy advertisement space on other blogs, websites or even search engines. When used effectively this can be a good source of targeted traffic as well. There are various forms you can choose to advertise, varying from Adwords at Google to banner buttons at similar blogs.

At this point I’m undecided whether to go ahead with buying advertisements. After all the budget is tight, but on the other hand traffic is necessary for monetizing Scraping Pennies.

One thing you can factor in is the benefits of choosing a host that offers credit for advertisements when you sign up. I host Scraping Pennies at GoDaddy and they offer a $25 value of credits for Google Adwords. I’m going to use those soon and report back here, on how to set them up and on the results.

Next article in the series will be about getting links to your blog.

My aim is to give full transparency on Scraping Pennies, and I call upon you to ask me questions when things are not clear. One of the main things I’m disclosing right now, is the monetization policy. In fact it’s pretty short and simple:

“If it can be monetized, it WILL be monetized. Unless…”

The “Unless…” part is my escape. It’s a highly subjective part, and I will define it along the way, as I encounter situations in which I choose not to monetize.

This can happen for instance when terms and conditions prevent me from giving any transparency. There are some advertisement programs who state that you can’t disclose any part of their service. Text Link Ads for one, has a service that has this condition. I declined it, because it goes against the spirit of Scraping Pennies.

On the other hand I know Google Adsense prevents the disclosure of some metrics in their program. While this doesn’t give full transparency, the amount of transparency I can give is enough to align with the aim of Scraping Pennies.

I can also imagine that there are opportunities that clash with my personal values and ethics. I don’t want to promote scammy, spammy, sneaky and shady activities. In those situations I will go with my gut feeling and report my decision here as well. Scraping Pennies is as much about what I do to make money online, as it is about what I choose NOT to do.