
My First Passive Income Project, One Year Later - toumhi
http://www.sparklewise.com/my-first-passive-income-project-one-year-later/
======
ma2rten
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?

~~~
toumhi
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 :-)

~~~
ma2rten
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.]

~~~
HeyLaughingBoy
_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.

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

------
unreal37
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.

~~~
jQueryIsAwesome
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.

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rmc
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.

~~~
tnorthcutt
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!

~~~
toumhi
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!

~~~
patio11
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.

~~~
tptacek
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._

~~~
patio11
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.

------
handzhiev
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).

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nikcub
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?

~~~
nicwest
<http://www.projectwonderful.com/>

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

~~~
mquinlan
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.

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richardw
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."

------
espinchi
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!

~~~
toumhi
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
;-)

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

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

<http://www.giftcertificatefactory.com>

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j45
Nice to see a bootstrapper getting some love.

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

------
raphinou
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.

~~~
toumhi
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.

------
citricsquid
can you add your traffic details to the post?

~~~
toumhi
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

~~~
meric
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.

~~~
toumhi
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.

~~~
meric
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...](http://textbookcentral.com.au/26/university-of-new-south-
wales/buy/69897/acct1501/?query=)

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.

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

~~~
toumhi
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.

------
TeeWEE
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 :-)

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Nesterov
Way to go!

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twinturbo
Not bad money for ads. That surprised me.

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galt
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.

