If you decide to use this monetization method, you need to sign up with an advertising network and paste some code snippets on your website. The network will provide you with contextual ads (either text or images) relevant to your website, and you will earn a certain amount of money for every click.

The profitability of PPC advertising depends on the quality of your website’s traffic, and most importantly, on the click-through rate (CTR) and cost per click (CPC).

The CTR is mostly influenced by your ads placement and your traffic source. A good ad placement can seriously increase your revenue (See 5 Tips to Increase your Ad Placement).

The CPC, on the other hand, depends on the nice of the website. Mortgages, financial products and college education are examples of profitable niches (clicks worth a couple of dollars are not rare), while other niches tend to receive a smaller CPC (sometimes as low as a couple of cents per click).

The most popular option under this category is, of course Google AdSense, but there are also others like: Yahoo Publisher Network, Chitika, Clicksor.

2. CMP

CPM stands for Cost per Mille, and it refers to the cost for 1,000 impressions. Basically, CPM advertising networks behave pretty much as PPC networks, except that you get paid according to the number of impressions (i.e., page views) that the ads displayed on your site will generate.

CPM rates vary with the network, the position of the ad and the format. The closer you put the ad to the top of the page, the higher the CPM. The bigger the format (in terms of pixels), the higher the CPM. You can get as low as $0,10 and as high as $10 per 1,000 impressions (more in some special cases).

Some popular CPM advertizing networks are: Casale Media, Advertising.com, Tribal Fusion or Value Click.

3. Text Link Ads

After Google declared that sites selling text links without the nofollow tag would be penalized, this monetization method became less popular.

Many website owners are still using text links to monetize their sites, some using the nofollow tag and some not.

A website owner can sell text links directly through his website or use specialized networks like Text-Link-Ads and Text-Link-Brokers to automate the process.

4. Selling Your Own Advertising Space

Selling your own advertising space is one of the most lucrative monetization methods, because it enables you to cut out the middleman commissions and to determine your own rates.

The most popular banner formats on the web are the 728×90 leaderboard, the 120×600 skyscraper, the 300×250 rectangle and the 125×125 button. The price also varies from a few dollars to a few thousands, depending on the website’s popularity and the quality of your advertisers.

5. Affiliate Marketing

As an affiliate you have to recommend on your website other people’s products. Each time a visitor on your website buys one of the products you recommend, you earn a commission.

You may also earn per lead (meaning – when someone subscribes from your link to the site you are affiliated with, you get paid).

There are commissions of $50, $75… $500 or more. How much you will earn depends on various factors like the products you choose to promote, the niche you choose, the traffic you will get etc.

6. RSS Feeds Ads

Feedburber already has its own publisher network, and you can sign-up to start displaying CPM based advertising on your feed footer. Bidvertiser also introduced a RSS feed ad option as well, with a PPC scheme.

7. In-Text Advertising

The in-text adverting network will place sponsored links inside your text. These links come with a double underline to differentiate them from normal links, and once the user rolls the mouse over the link the advertising will pop. If the user click on it the site owner will make some money.

Such in-text adverting networks are Kontera and Vibrant Media.

8. Monetization Widgets

The latest trend on the web are widgets that let you monetize your website. Examples include Widgetbucks and SmartLinks. Some of these services operate under a PPC scheme, others behave like text link ads, others yet leverage affiliate links.

Their main difference, however, is the fact that they work as web widgets, making it easier for the user to plug and play the service on its website.

Companies that provide monetization widgets: WidgetBucks and SmartLinks.

9. Audio Ads

This advertising method was introduce by Net Audio Ads and it’s also called PPP (Pay Per Play). The concept is pretty simple: play a small audio advertising (usually 5 seconds) every time a visitor enters into your website. The user should not be able to stop it, creating a 100% conversion rate based on unique visitors.

10. Premium Content

Some websites and blogs give away part of their content for free, and charge for access to the premium content and exclusive tools.

EOMoz and Compete.com are some good example. EOMoz have a very popular blog that gives advice and information on SEO. Their visitors can decide to become premium members. A premium membership costs $99 monthly and it grants them access to guides, tools and other exclusive material.

Another good example is Compete.com, which also gives some free information, but for the rest of the content you need a premium membership. A premium membership with less features costs $199/mo, while an advanced premium membership costs $499/mo.

I personally prefer to sell ad space on my own, but for those who use AdSense, Kontera, Clicksor, Text-Link-Ads and so on, here are some tips to increase your ad revenue.

1. Improve ad placement

When trying to increase your website’s revenue, a very important step is the placement of your ads. A small change can significantly increase your CTR and thus, your ad revenue. In the image below listing different ad placements, the best ad positions are colored with red, so if you opt for one of those your CTR should be quite high.

2. Write about higher paying topics

If for example you have a website or a blog about insurance, to find out the higher paying ‘insurance’ related keywords, search for ‘insurance’ in Adwords Keyword Tool and click ‘Show Estimated Avg. CPC’.

After looking at the list you will see that ‘home insurance’ costs an advertiser $7.04 CPC while ‘auto insurance’ costs the advertiser $32.76 CPC. If you have the choice of writing a page about ‘auto insurance’ or ‘home insurance’ go with ‘auto insurance’ since those ads pay more than 4x as much as ‘home insurance’ ads.

3. Don’t use more than 2 ad programs at a time

There are 2 big disadvantages if you use many ad programs on the same page.
1. some visitors will click-through the low earning programs when they could have clicked-through a higher earning one
2. each ad program will give you an external javascript file. Just imagine how drastically would 5+ separate javascript files increase the page loading time.

4. Find the programs that work the best for you

There is no guarantee that an ad program that works very good for your friend will work good for you as well. For example there are websites that earn very good with AdSense, but, on the other hand, there are websites that earn way better with Text-Link-Ads or Kontera.

You should test multiple programs to see which work better for you, but test them one or two per page. Test them for about a week or two, compare the results and stick with the best ones.

5. Target good traffic sources

Another important factor is your traffic source. The best type of traffic in terms of conversion is by far the search engine traffic.

For example, if a visitor arrives at your site after searching on Google for ‘Ways to Make Money’ and he/she sees an ad for ‘Make Money Online’ that person is quite likely to click it, but if your visitor arrived from StumbleUpon, MySpace or Facebook and sees the ad for ‘Make Money Online’ he/she will most likely ignore it. So, this is just another reason to focus on SEO.

I would definitely recommend BigCommerce. Why?

Because it’s very easy to setup (you’ll have a professional-looking online store in less then 5 minutes!), your store will be SEO optimized by SEO experts and of course, they offer lots of features like 50+ payment methods, 12 shipping methods, PayPal and Google checkout support.

When creating an online store it is very important to make sure your web host provider supports as many payment methods as possible, so that your customers will be able to pay with the method they want.

It is very frustrating for a customer to find the product he/she wants and when he/she wants to pay….SURPRISE! The online store accepts only PayPal when he/she doesn’t have a PayPal account and wants to pay with credit card. That customer will go search for another store…

Another thing I like about BigCommerce is the fact that they provide affiliate conversion tracking, so that you can create your own affiliate program to promote more effectively your store (an affiliate program can increase your sales with more than 300%).

They offer 50+ store designs and 28 built-in marketing tools. With their drag and drop design customization, your store can be “ready” in less than 5 minutes.

You can try their 15-day FREE trial here.

Many people try to set up an online business, but only few succeed… Why? Because many of these people fail to treat their online business like a business.

This article makes a note of the 5 most common mistakes people make when starting an online business.

1. Not having a business plan

Many people are ecstatic when starting an online business, but soon they realize they don’t know what to do next. This causes them to waste a lot of time.

So, before setting up your online business, make sure you have a business plan and set up your business objectives and goals. This will make your work much easier and you will gain time.

2. Expecting not to make any investment

It really amazes me to see there are still people who want to start an online business without spending any money. An online business is not different than an offline business.

People invest when starting an offline business but they don’t want to spend any dime when starting an online business. It’s true it’s way cheaper to start an online business, but you would still need to make a minimal investment (to pay at least for the web host).

You can’t expect people to take your business seriously when your web address is something like www.freewebhost.com/membername/homepage… instead of www.mycompany.com. Plus, you only have a few options with a free web host: you might not be able to add a shopping cart, an order form, you may not be able to add Google ads (because they are displayed by the free web host…so they will earn when somebody clicks on them).

3. Selecting the wrong products

When choosing the products you will promote on your website you have to make sure those products are worth to be promoted. They have to be quality products so that you don’t lose your credibility.

Another thing you focus on when choosing the products you want to promote is the commission they offer. It would be great to choose products that offer high commissions of 45-60%.

Also, don’t try to promote too many products on the same page…you will end up in confusing your visitors and eventually they won’t buy anything.

4. Thinking you will get rich overnight

There is no such thing as “quick money”. Nobody gets rich overnight. You might see successful webmasters who earn million $, but you can rest assured none of them made his/her money overnight.

Also, avoid getting involved in pyramids and other get-rich-quick schemes as they won’t bring you any money… you’ll only waste your time.

5. Giving up too soon

Don’t be afraid to make mistakes. Always learn from them! Many potential successful online businesses fail because their owners don’t have patience and give up too soon.

If you can learn from the mistakes other people made you are on the right track to starting a successful online business.

More information on starting and developing an online business on my website – Starting an Online Business