My First Passive Income Project, One Year Later | Hacker News Reader

My First Passive Income Project, One Year Later

sparklewise.com

229 pointstoumhi51 comments

Disclaimer: The author is an ex-colleague of mine.

Congratulations, Tommy, even though I think you had bigger ambitions of this project initially.

I am curious what your lessons learned are. Correct if I am wrong, but I would say that initially your niche was gift certificates for businesses, because it would be much better to monetize than personal ones. Now you are also doing personal gift certificates. Is this because actually business owners also don't want to pay for gift certificates or is that market just too hard to address?

Would you do it all again (doesn't sound like it from this post)? If you would do a project like this again, how would you go about choosing your niche this time?

Hey Maarten!

True, I had bigger ambitions for this - in retrospect, I think I should have talked to spa owners, golf course owners etc. to see if they would buy it (what everybody says about customer development)

I think it's a bit hard for non-native english speakers living far away from the US to do this - in general, I think doing customer development for a different market that you don't especially know or have easy access to is tough (or maybe I'm just rationalizing to avoid being uncomfortable)

What I'm thinking at the moment is addressing a market I feel connected to: for example developers, entrepreneurs, bloggers but then, there's lots of competition :-)

It's ironic how "what everyone says" is often still the right advice. Maybe this is one of the things you need to learn from experience, no matter how smart you are and how many blogs of smart people you read.

I am thinking maybe the reason that there is so much more competition in these markets you listed, for a big part is that they are much more addressable. We "technology people" almost have a reflex "I have a problem, I am going to google the solution.". That reflex might be much less developed with spa owners and other small business owners. They might be more inclined to ask a fellow business owner, how they handle problem instead. Maybe you would need to run ads in spa-owner-magazines (I don't know if that exists) to reach them or something like that.

EDIT: I don't know if you agree, but maybe another lesson is: just because a market is big (US), that does not mean it's the best business opportunity. Maybe you should have started this in France first and then scaled to other countries when and if you had a working business model. [I am just thinking out loud, I think if I would have worked on the same idea, it would have turned out much worse.]

ads in spa-owner-magazines (I don't know if that exists)

This may seem like a trival remark, but I'm making it because many people don't know: magazines exist for everything. No matter how small a niche seems, I have always been able to find a magazine or trade journal, either online or offline, that addresses it. Spa Management Journal: http://www.spamanagement.com/

One of the first places you should look when trying to understand how to reach a new set of potential business customers is a trade journal search.

Yeah, these magazines exist mainly so that people can place highly specialized ads in them.

> I think doing customer development for a different market that you don't especially know or have easy access to is tough

That's exactly the point. It's hard to serve a market you don't know, so get to know it! Thanks for sharing your experience =)

Congrats on the income. It's nothing to scoff at.

But what that means is someone else is able to monetize your traffic better than you. Someone is willing to pay 10 cents (or whatever) for your visitor and presumably they make more than 10 cents from that person to make it worthwhile.

So you need to reduce your ad income by increasing your own conversion rate. A/B testing. Find out what terms people who come to your site are searching. Find out what terms you are ranking well in Google for.

High ad revenue means lost opportunity IMHO.

Absolutely not; those persons that _may be_ making more than you probably have a more bast experience about their business than you. They are also investing much more time which (hopefully) you use in something that you consider more relevant.

Congratulations. Good job, I wouldn't say no to a few hundred a month with no effort. ☺

Have a look at some of the stuff patio11 is doing for SEO & content creation. Might be helpful for you.

patio11's blog, in case you're not familiar with it: http://kalzumeus.com/. Read everything there. No, really.

I'd imagine you could benefit from doing some industry-specific content creation. One that comes to mind immediately is spa/massage gift certificate templates. I have no idea what search terms business owners are using to find these things, but you should be able to determine if industry-specific keywords will help with a trivial amount of research.

Good luck!

I think I've read every single of patrick's posts :-)

What I've done is to have a blog at www.giftcertificatefactory.com/blog - Each blog post was made after keyword research and attracts quite some long tail traffic.

However, I must say it's quite a boring job to do that (I'm not THAT passionnate about gift certificates, to say the truth). You might be fine outsourcing content creation, but for this first site, I wanted to know what it took to do it.

If I'd do additional content creation, I'll most probably outsource it :-)

Thanks for the additional ideas!

What's your number one traffic generator, then? The blog? If so, kudos to you!

No, it does add some long tail traffic, but most of the traffic comes from people typing 'gift certificate template' (goes to the homepage) or specific templates, like 'spa gift certificate template' (from where I'm sitting, the first 3 results point to my website).

Ah I see, thanks for clarifying :)

You know how many bingo activities I've ever written? SQL query Eight, out of the 1,000 or so on the site.

I strongly, strongly suggest you spend one week writing a custom CMS which hooks into your certificate generation backend and then pay somebody $10 to $15 an hour to write boring copy about [pet care gift certificate], [massage therapy gift certificate], etc etc etc. All you need is an underemployed American recent graduate. They exist in spades and many of them are trivially reachable online.

This will 10x your business.

Hey Patrick, thanks for the comment. I've already got a backend for a designer to create new certificates, but not for creating new articles.

I had postponed doing additional work on this website because at the time it was doing very little revenue. Now that traffic is up and I tweaked the ads, it might be worth it to spend some time as you suggest.

As someone who had to have this explained to me several times in person before it clicked and I said "Holy Sh%t":

You seriously do not understand what Patrick did with BCC until you understand where the bingo activities came from.

Story in a nutshell: I wrote CMS to make pages about bingo cards, got a teacher to use CMS to create pages and attendant bingo cards, used this as bait for long tail searches. They look for very specific things, I generally have exactly what they are looking for. This is my Rumpelstiltskin machine: in goes straw, out comes gold, or at least a modestly successful business selling niche software to a few hundred thousand visitors a year.

Close variations of this technique have worked for businesses with diverse interests not limited to elementary education. (Their stories are not generally mine to tell, but Thomas has shared on HN that this was a win for Matasano.)

The reason this is motivational for non-toy businesses is that a one-time software investment plus minimal management overhead plus money equals scalable customer acquisition, and money to scalable customer acquisition is a very motivational formula.

Tip: Instead of writing the articles via your keyboard, get a good voice-to-speech machine (like the iPad) and simply free-talk about the topic. In 30 minutes, you can write on quite some topics. Totally unique content.

Great idea! Does anybody know if there are any good dictation apps for Android that would work while driving in a car? All of my attempts at doing voice dictation to Google maps while driving have failed miserably. This would be super productive to do while driving around town.

One workflow is to create audio files which you later process with a speech rec application.

Interesting. I think getting few hundred bucks per month from a single passive income project is pretty good. I have quite a few of these and only a small portion of them exceed the hundred bucks mark.

I see just one basic problem with your project: you are horizontal, not vertical. Seeing that you are able to do that well in horizontal market, I think if you focus on a vertical you may do much better.

Oh yes, and ads are pretty good revenue stream. I have a site that makes more from ads on a couple of care-free pages than from selling paid software that I put a lot of efforts on (to support customers, to release new versions, to market, etc). Ad/affiliate income can be the easiest and the most passive you can imagine (although it doesn't bring the same personal satisfaction as earning from something good that you have built and marketed yourself).

Congratulations. A related question, and something to open up to others here in the thread, what is the current state of ad networks for low-to-medium volume sites?

I am still mostly using adsense, and haven't had a chance to checkout other options. Are there any other networks worth investigating or implementing or is adsense still the gold standard?

AdSense is still probably the best bet for lower traffic volumes.

Depending on your niche, there may be some boutique ad networks that could bring in more money at lower volumes (for instance DogTime Media for pet sites: http://dogtimemedia.com/).

Adsense is the only Network that works consistently for me. The others simply don't have the volume of advertisers, especially if your visitor base is not US/UK. Other ad networks rarely seem to venture beyond the bigger markets.

http://www.projectwonderful.com/

never used it personally but it was recommended to me by someone that had for a mid volume site.

The majority of sites that I've seen using Project Wonderful gave been online comics, and since that's a big market for the site, I personally couldn't recommend it for just anyone. While I do think the idea behind it is really nice and a great way to promote smaller advertisers, I've only been able to sell ad space really cheaply since a lot of markets are just underrepresented. Makes me sort of wish PW was a bit bigger.

That's a phenomenal foundation considering how short it's been since you started putting ads on. Seriously, continue tweaking the site for a year or two in your spare time and it could do really well. You're already doing the content-creation stuff, so ramp that up 1000x and you're sorted.

One thought - maybe integrate with Facebook somehow to get gift certs marketed for birthdays. "Bob's having a birthday, click here to create them a personalised gift cert."

Congrats, Tommy.

If you don't mind me asking, what CPM do you get from the ads? Which are the ones that work the most, the horizontal visual banner on top, the textual ones in the right, or the squared image in the bottom?

I'm quite surprised that you managed to have such high number for such a small niche. That's great!

Hey man, thanks!

I'm the first surprised here! As I said in the blog posts, RPMs are way higher since I started tweaking the ads.

RPMs were 9.75EUR last month ($13).

The best performing ads are the one in the template gallery (horizontal banner) at http://www.giftcertificatefactory.com/templates/personal/

People on french forums didn't actually trust me when I gave them the numbers ;-)

I'd like to see the version of your site which displays ads.

That's the one operating at the moment :-)

http://www.giftcertificatefactory.com

Nice to see a bootstrapper getting some love.

Congrats, hope it keeps gaining steam while you get to keep tweaking it.

Numbers are quite good, but I wondered: is this official income on which you pay taxes? How do you declare this income? How much taxes do you pay? And, if applicable, is this still worth it after you pay taxes?

Even though it will be very country specific, I'm very interested in your experience.

yes, I have to pay taxes :-) Right now I don't pay many taxes, it's about 20% (it's a new special status in France for sole entrepreneurs who are just starting out). So remove 20% of the gross income, and that's it. Still worth it if you ask me.

can you add your traffic details to the post?

what do you want to know? For example in February it was:

- 16.391 visits

- 14.579 unique visitors

- 67.485 pageviews

- 3.99 pages/visit

- 3:00 average visit duration

- 33% bounce rate

Thats impressive. Would love to know how you went about promoting the website too. Did you do any SEO / link building / other kind of marketing?

thanks - I taught myself SEO by doing it for this website:

- keyword research to know what people are looking for

- creating content that answers specifically to these keyword searches

- link building as in article marketing (ezinearticles, goarticles...) and guest posting on a few small business blogs (example: http://www.marketingbestpractices.com/marketing-articles/off...)

I made a website here: http://textbookcentral.com.au/ Like yours it fails to solve the business problem. I managed to broker, so far, dozens of textbook trades out of tens of thousands of visits and thousands of buy/sell interactions.

Do you (or anyone else) think it's worth it for me to put Ads on my website? I have resisted so far because I thought the revenue would be insignificant.

- 2000 - 4000 visits (higher during semester breaks, lower in mid-semester)

- 2000 - 3000 visitors

- 20000 pageviews

- 6 page/visit

- 1:20 visit duration

- 8% bounce rate

Once upon a time patio11 suggested I become a part-time person becoming the other side on any textbook sell or buy transaction. I didn't do it because I figured to make a loss of at least $5-$10 on each transaction to make it worth while for the other person to buy from me to make it worth it for them instead of from the store. I would've bankrupted myself doing that for the 1700 textbooks requested/offered. (Also got to know someone who had more headway into this same problem my website was solving; he owns a real book store near a university).

Looking at your example I think maybe I can make income from ads instead... but I'm not sure if a quarter of visits can equate to a quarter as many ad conversions.

Your book listings seem to be missing big time on SEO potential, no? I think you should have individual pages for each textbook, with proper on-page optimization (title, H1, small paragraph of text...).

That's probably a lot of work, but can you test it on a subset? Then you see if it's profitable and you could hire someone to write the remaining descriptions.

That brings us to the monetization: you should do the math - traffic levels, CPC, CTR (for that you could try to have ads on a few pages).

I don't have that much experience with ads but from my experiments with a few websites, ads might make sense in a situation and not in another... So you have to test.

Almost all my traffic comes from searches for "<coursecode> textbook", and heads to individual pages that look like

http://textbookcentral.com.au/26/university-of-new-south-wal...

That doesn't look like an individual page but it actually is; there's a unique link for every dialog. I'll definitely follow your advice and test some ads on small number of pages and see how that goes first.

It sounds like you could look into charging people for listings, but charging them a very small amount e.g. a 55c standard text message.

I would also recommend Amazon affiliate linking, this is a big one because it doesn't matter if they buy the textbook, anything they buy over a 24 hour period on Amazon you get a cut of.

It was a great day when someone bought a $24,000 watch on one of my links!

Oh wow so it's not just the while they're in the same session. That's pretty cool. I'll have to think about it though because a lot of the times Amazon is not willing to ship textbooks to Australia.

re: Charging text message. Not enough volume yet, I've looked at many text message subscription vendors and all of them have fixed monthly fees of $1,000 and up.

So there's a 6 year old post about selling a Bulldozer through Amazon here: http://www.problogger.net/archives/2006/12/12/whats-the-weir...

(And it's obviously stuck with me -- because I posted a link to it on HN 3.7 years ago: http://news.ycombinator.com/item?id=237779 )

Very nice and solid base to build on! You mentioned your income, but what is the cost structure (both monetary and timewise)?

I did a lousy job of tracking my time for this project. I worked on this website from February to June, but nowhere near full-time of course (it's still quite small). I did spend lots of time on SEO which would have been better spent outsourcing to someone else on oDesk.

I wish I had solid statistics about time invested to give you but I don't :-(

I outsourced creation of the certificates, and parts of the site design for a couple hundred bucks.

Tommy nice article man! And you're on top of hackernews. Why dont you create an app to send gift cards with? Apps are hot, and its quite easier to rise to the top i think....

However i might be biased :-)

Way to go!

Not bad money for ads. That surprised me.

Now I realize why Internet are full of stupid sites full of Ads. They´re money collect only. Start build a site that you proud of and you will never aloud shit ads pollute your creation.

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