Importance Of Diversifying Online Business 
56 Comments
A little while back there was a major shakeup within the financial blogging community. The root of the problem was text link advertising which Google hypocritically does not allow.
I say hypocritically because Google happens to run the biggest text link advertising network online. The big difference though is that their text links do not pass PageRank or affect search engine rankings.
On the other hand, direct text link ads are often purchased with the intent purpose of helping search engine rankings. Despite pretty much every commercial website doing some form of search engine marketing, Google has decided that this particular practice crosses the line.
It was quite disappointing to see many blogging friends getting penalized for such a common practice. It just didn’t seem unfair. As someone who’s had more than my share of problems with Google, I could definitely relate.
In the blink of an eye, your online business can get turned on its head.
Now these bloggers are realizing something that I’ve learned many times over in my years of online business experience. They are learning the importance of diversification with an online business.
Diversifying Online Income Sources
It’s a simple fact that online income can be very unpredictable. Even without the threat of getting penalized by search engines, you never know when the random numbers will work in your favor. Some days you might happen to get traffic that is interested in your ads. Other days your traffic may have already visited those advertisers via other websites. Or some days your most popular advertiser could decide to cut back their advertising budget. Too much is out of your control.
To remain resilient and add some stability to your online income, the key is to diversify your income source. The more you rely on a single source of income, the more risk you are in.
If one income source drops, you want to have other sources of income to balance it out. This applies to your day to day variations and in tough times when one source of income hits a brick wall. You always want something else to fall back upon.
In extreme circumstances you can shift your entire focus over to those other sources of income. At other times you want to be trying to build up all of your main sources of income.
With blogging, a lot of people were heavily relying on private text link ads. It was just such an easy way to make money and many didn’t realize the risk they were taking. As a result many were neglecting exploring other income sources such as contextual ads, affiliate promotion, creating their own products and offering freelance services.
Even with these other sources of online income, unforeseen circumstances can happen. You may think your source of online income is secure, but are covered if something happens to your main income source?
Diversifying Marketing Strategies
In addition to using a mix of income sources, you also need to develop multiple sources of traffic. Your traffic can be even more unstable than your income. Search engine rankings can jump around, websites can change their link policies or websites can get penalized.
I’ve personally been in situations where I was heavily relying on Google traffic only to suddenly lose my rankings. Without sufficient backup traffic, I really suffered. Luckily I usually had some remaining traffic from Yahoo, Bing and other sites, but it paled in comparison.
So don’t be content with just 1 or 2 strong traffic sources. Always keep looking for more ways to generate traffic. The more sources you have, the more secure it all becomes overall. Perhaps you can generate more traffic from social media, forums, related blogs, directories and elsewhere.
The great thing about diversifying traffic sources is that search engines take note of this extra exposure. The more sites you have links from and the more social media exposure you have, the better your rankings usually are.
If you have the time and resources it may be a good idea to even branch out to starting additional websites. Since I have multiple websites, I sometimes switch focus to another niche when one niche faces problems. Not everyone has the time to run more than one website though.
Essentially you have to keep pushing and never be content with current traffic and income. Keep worst case scenarios in mind and always try to have some kind of backup.
So what are you doing to diversify your online business? Are you properly covered in case something happens to your main source of online income or traffic?
56 Comments
Great article. Being an full-time online marketer I relate well with this. It is extremely important to diversify. I have multiple websites and projects ongoing and I make sure that I traffic from a bunch of different sources. Things can dry up so you need to have a backup plan in place.
Good to hear that you have already learned the importance of diversification. Those multiple projects will be quite useful if anything bad ever happens to one of them.
Right now I’m making minimal money off my blog by volition, but later on as I monetize more I’ll have to keep this in mind.
femmefrugality recently posted..How to Become a Mystery Shopper
Yes it’s tough to do much about this early on as you are still developing one income stream. It is something to keep in mind though. As that one income stream builds up, see what you can do to build up other income streams.
I’m glad to see you’re finally sharing your online money making techniques with us. Knowing my luck, I’ll probably get busted on the first text link I sell. My question is: How can they tell? For example, if I put a link to your site or to CNN, how do they know I wasn’t compensated for either of those links? And really what is the difference between an in-content text link that you sell versus an affiliate link? Don’t both do the same thing?
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Most of the time they cannot tell that you have placed an ad on your site. It seems what happened with other financial bloggers recently was that they were all promoting a certain website that somehow triggered a red flag. This got these sites all hit at once. You might be a little safer by focusing more on sponsored posts instead of sidebar ads, but when you sell text link ads it all carries some risk.
Affiliate ads usually go through a redirect server making them not pass PageRank. Google doesn’t particularly like affiliate ads, but they don’t penalize for them when done in moderation.
Really though, search engines have no way of for sure knowing whether a link is paid for or not. They just jump to conclusions based on various factors. It’s an imperfect system, but when you run the game you can make up your own rules.
Want to know how green I am at blogging? I had to look up text link advertising! Haha. After figuring out what it was, I have to agree, it sucks how google handles it. But like your post says, it’s important to diversity. THe internet and our business is changing so freaking fast, you gotta stay on top of it and stay diverse so that no one change will sink you.
TB at BlueCollarWorkman recently posted..American Graffiti
At least you now know the dangers out of it. I think some of the people who got penalized had no idea that it was even against the rules. Since the rules are always changing, you really do have to stay on top of it all. You need to be one step ahead so that any rule changes cause minimal impact.
Back in the good ole days, a lot of bloggers and online businesses heavily relied on Google traffic as their main or sole source of traffic. However, they later learned about the necessity of online income diversification after that Google Panda fiasco.
Since then, I think most of us are a lot wiser about online traffic and income diversification. Excellent write-up, Jeremy. Thanks for posting it.
People are starting to learn the importance of diversification, but with new people trying to make money online, there’s always someone who doesn’t realize its importance. Lots of people end up putting all their eggs in one basket and then are shocked when that basket gets dropped.
I’ve been really frustrated with this whole Google Penguin update. I seemingly have done everything right (at least to my knowledge) and I got whacked down somehow.
It’s vitally important to diversify income as well as traffic sources…too bad Google controls the majority of it all though. :/
That’s too bad Jason. Perhaps that burst of social bookmarking traffic negatively skewed your user metrics too much.
With blog marketing you also have to realize that most links you get quickly get pushed deep into a site. So unless you stay on top of your link building efforts, it is easy for rankings to slip. Also remember that blog comment links are among the least effective links you can build. So don’t get overly focused on that.
I feel your pain Jason, mine got disconnected this morning. I’m just gonna move on and focus on other forms. Great post Jeremy
Jeremiah Brown recently posted..How to make QUICK MONEY–Part 3–GET PAID FOR SURVEYS AND MORE
I guess I’ve been lucky with the penguin update since my google traffic keeps building lately. It’s always frustrating when google stops liking your site though.
Really great post Jer! Just with any type of income or investments, we all need to diversity. Diversifying online tools to help your business/website is even more important these days with the ever-changing terms and conditions companies place upon us. The web is the last place where we will be seeing regulatory changes but it is definitely coming, and we all need to be prepared! Especially if someone relies solely on online businesses for income.
Currently I am trying to get more exposure and trying to diversity my marketing strategies. I have google analytics, I use social spark, and I am searching for more opportunities everyday. It’s hard when your website is still not as low in Alexa ranking but if I keep working at it, I’m sure I’ll get there soon!
Great post
From Shopping to Saving recently posted..How to Get Along With Older Coworkers and How It Helps You
It is a little tougher to diversify when your blog is still in its early growth stage, but the earlier you start spreading out your efforts, the more you can build up each traffic source. Just keeping working hard and I’m sure your blog will keep growing Erika. In your case you’ll really have to think long term since you’ll soon be busy with full time studies again.
I agree that it’s important to diversify your income sources when you’re a blogger, otherwise you’ll run the risk of having a big problem if/when one of those sources dries up.
At one point in time when I was a newer blogger I relied on text link ads far too much as well. I don’t think it was any secret, however, that allowing those types of ads on your site was frowned upon by Google – it was just a balancing act of deciding how much risk you wanted to take on by accepting them – and getting some nice income every month, versus whether or not you’d be hit by a penalty. Luckily I got out of the text link ad game early because i just didn’t want to risk it (I still did lose some page rank in the process), but as Google’s algorithms and indexing has evolved, they’re getting better at detecting these types of links – and penalizing people who accept them.
In the last couple of years I’ve been able to diversify my income away from text link ads and adsense only, to a spot where I now also have privately sold ads, CPM network ads, affiliate income, and more.
The only thing is I’m still pretty reliant on Google for traffic, and to some degree I’m not sure there’s any getting around that for most folks. Google is a huge source of traffic – so you’d better do your best to stay in their good graces – otherwise a lot of your diversified sources of income could start to dry up as well.
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Good point about how dominant Google is. It is very hard to avoid having them as your biggest source of traffic. That can work out if you manage to stay on their good side, but you have to realize how unstable it can be. If possible, it would be a good idea to try to build up your other traffic sources more. While you’re unlikely to get as much search engine traffic from anywhere else, you can build up a lot of traffic via social media and other blogs.
Great article Jeremy.
It’s very important to rely on more than just text link ads.
I’ve been fortunate enough not to take a hit, and have been bringing in more private advertising and freelancing income.
It is a bit hit and miss who gets penalized and who doesn’t. Some people will manage to stay under the radar for a long time. Meanwhile others can sell only one ad and get penalized. So you are lucky to avoid the penalties. Regarding freelance income, I’ve decided to pursue that a bit more and even added a page promoting this: http://www.modestmoney.com/website-marketing-services/
Great post. I haven’t gotten that organized yet to even think about “monetizing” my site. All kinds of things to keep in mind..
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Now is the perfect time for you to learn all these lessons. The better prepared you are before you start monetizing, the better you can setup things. Feel free to e-mail me if you have any questions of how to proceed on that front.
What are your other niche sites? Can you share?
I am hesitant to share my other urls publicly on here. Since some of my other websites aren’t in google’s good books, I’m trying to keep them separate from this blog. If you wanted to discuss it in private though, I don’t mind revealing that info via e-mail.
Jeremy,
This is a very important post. We rely solely on Adsense and we are looking at alternative revenue models but ultimately we never want to charge our readers. Facebook has made is easier to acquire information and it is really important to have that as a major traffic source.
We also rely heavily on Pinterest and StumbleUpon.
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A lot of sites get stuck relying on google adsense. Since they are the highest paying contextual ad network, that can be tough to avoid. I know of a particular website whose original business plan was to rely on adsense, but they eventually started their own ad network specifically for their site. Sometimes affiliate income is a good alternative too.
It sounds like your traffic is somewhat varied. I wouldn’t be too worried about that setup since you could easily transition that to new social bookmarking or social networking sites. Sometimes you do have to target where the big traffic is.
Just as Shopping to Saving mentioned, diversifying is important in finance all around. We all know the old saying, “You shouldn’t put all your eggs in one basket” and that certainly holds true in many facets of life! One hopefully wouldn’t put all their money into one investment so the same should be applied here – if you’re marketing your blog or website to make money then you’re investing in yourself so do whatever you can to have back up plans!
Shannon-ReadyForZero recently posted..Monday Shout Outs: The Green Edition
Yes it is just like investing, which makes it somewhat ironic that many financial bloggers wouldn’t diversify more. I guess it’s similar to when you get caught up with a particular investment or two that is currently performing very well.
You’re right. It’s easy to forget to branch out when one or two things are going very well. Important lessons to think about for all of us!
Shannon-ReadyForZero recently posted..Monday Shout Outs: The Green Edition
As a new blogger, I appreciate this kind of posts, thanks! I’m not don’t know how paid links works but seems lime it’s something I need to stay away from so as not to get in trouble with Google.
No problem MaryAnne. I really should do more marketing/advertising related posts, but with my limited posting schedule I have to spread it out. I know this kind of topic is really only relevant for bloggers and other online business professionals. Do be careful with text link ads as it can be tempting to take the risk and make a quick buck.
Yeah.. There is no doubt that the Penguin Update caused much turmoil in the blogging world and has even forced some top bloggers to re-think their ‘quit my day job to blog full time’ strategies. It is sad really…
But your advice is very sound, Jeremy. You have to diversify in this online world, because there are a few folks that have so much influence into how the money is spread around.
They are fortunate that they got the wake up call before making the move to actually quit their jobs. In my case, I had my most important websites penalized on my first Monday of working for myself again. Unfortunately my situation wasn’t as simple as removing some ads and asking to get back in Google’s good books. It really makes you realize how unstable it all is and what needs to be done to avoid such a situation.
It sucks that Google penalizes people for text link ads. I want to eventually make money from my blog, but I want it to be relevant ads. I’m still to new to monetizing my blog to know what direction to go with it.
Hi Katie. You can always e-mail me if you want some advice about that. Since Google makes most of their money via advertising, it is one area that you have to be particularly careful. Google knows full well that money going to text link ads is money out of their own pocket that would instead be going to PPC.
I’ve had a number of online businesses take a turn for the worst over the years. In addition to preventing loses for diversification, it’s also important to recognize that other opportunities do arise and you have to be persistant in generating new ideas.
Wayne @ Young Family Finance recently posted..Buying the Best Car for Your Money
You’re right about those other opportunities. Sometimes by trying something new you discover a much better traffic or income source.
Big Brother Google makes the rules. We have to play the game their way because they control the traffic.
For the most part that is true. Still, you can develop decent traffic & income via other sources. It is just a lot tougher without that huge traffic source.
I like the idea of diversifying because, not only do you not know what business will unexpectedly dry up, you can never really predict what venture will succeed or fail.
Yes, by trying different strategies you are much more likely to find one that works well for you. It’s not just about limiting the risk, it’s also about increasing the chance of success.
The one thing I lack for diversification is TIME!!
Savvy Scot recently posted..Why You Should Become a Toastmaster
So true. It takes plenty of extra time to properly diversify. When you have limited time you do get stuck relying on fewer options.
I think diversification is key in life in general, not just with a blog. The more areas we explore the better equipped we are. We can learn all sorts of skills and knowledge that can help us in more and more situations.
I have a combined income approach with the blog and it works well. Between sponsored posts, text links, ad sense, etc. things have been going ok.
Miss T @ Prairie Eco-Thrifter recently posted..Using Nature’s Bounty
Just be careful to not overdo it since some of those income sources go against google’s rules. Diversification that still includes such options is maintaining risk that might not be worth it in the long run.
True. Fair point. I haven’t gone crazy yet and I plan to keep it that way. Everything in moderation.
Miss T @ Prairie Eco-Thrifter recently posted..Using Nature’s Bounty
My blog wasn’t penalized by the Google change recently, only because I wasn’t doing much advertising in the first place. I am hesitant to jump right into things, and I wanted to establish my brand/blog before I pumped it up with ads and affiliate marketing. I feel diversification is important with investing, businesses and other areas of life. You definitely want to have a back up plan, and something to rely on in case the current plan falls through. Great post!
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I had also been waiting to build up my blog before getting too aggressive with monetization. I don’t have plans for pursuing text link ads though. My focus will likely be more on affiliate promotion and freelance income. Eventually I’d also like to create my own product to sell. With the amount of time I spend on this blog, I don’t want to take any unnecessary risks.
Diversification is the key in any thing in life. Diversify your retirement, diversify the food you eat. Sometimes it is hard for us to diversify our revenue streams. I have a job and i used the online venture/blog as a way of diversifying my revenue stream. I would love to further diversify but when time is just not there, I dont know how much diversification I can do on one site. So ultimately big brother (google) will have his way with me…
Good luck keeping google happy Chris. It is a little stressful knowing that one company ultimately controls so much of your traffic. With the way Google likes to release sudden updates that cause major shake ups, it’s one source of traffic that is tough to really trust.
I wonder how much longer we’ll have to wait for Google to receive the kind attentions of federal government trust-busters.
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It would be nice if they regulated it more, but I suspect they don’t have much control over it. It’s kinda like telling a store what items they have to stock on their shelves. They are basically free to make their own rules with their store. Plus, as long as the government keeps getting big tax money from Google, I’m sure they’re happy.
Hey Jeremy, love the post mate. Diversification is definitely the key and something that I have practice both in my online business and my offline one, when I had it.
It’s like the old saying about not putting all your eggs into one basket because if you drop that basket you’re pretty well screwed.
I’ve learned long ago how ficke Google can be and it used to stress me out no end. The one day, after Google penalised one of my blogs because it didn’t like the domain name, I decided I wasn’t going to worry about them anymore. If I get a good PR all well and good if I don’t then I don’t let it worry me.
I do a fair bit of paid posts on my blogs and as long as people are willing to pay me for them I will continue to do them. I’m also more than happy to take their money for displaying their ads on my blogs. Heck, that’s what business is all about and the only reason the Big G gets so upset is because we’re cutting into their market.
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Yes that is exactly why Google doesn’t like it. If people aren’t buying paid ads that way, they are going to be buying AdWords PPC. I’m still reluctant to take that risk though. I’d like to try to stay on Google’s good side with this blog since my own websites usually end up in Google’s bad books. Ultimately a blog or website is a lot more profitable if it can maintain that huge source of traffic.
Oh, I still get the traffic on those blogs, I just lost the PR which has reduced the advertising revenue but you can’t have everything
Sire recently posted..How To Turn Your Blog Into A Cash Machine
I hadn’t realized that a site that loses its PR doesn’t necessarily lose its traffic. I do wonder why Google takes that approach. Perhaps they realize that it is a tricky issue where they don’t want to make themselves liable.