If you Google “how to make money online” you’re going to come up with a bajillion and one different methods for earning a living on the internet – And almost all of them suck. I know, because I’ve tried most of them.

A lot of people I know have tried to make money online. Unfortunately, most of them are still in jobs they hate. There’s so much conflicting, misleading and just downright bad information out there on the subject.

Most people writing about how to make money online haven’t really made money online. Usually, they’re just paid writers rehashing what someone else has said. Really, what business does a journalist have giving advice about making money online? (No offense to journalism; a field I totally respect.)

Then on the flip side, you have the internet marketing gurus promising you’ll be an internet millionaire “almost overnight if you just buy my product with my super secret method that I accidentally discovered in my basement.” These products are extremely well marketed, with tons of testimonials and money back guarantees. But at the end of the day, most of these methods won’t work for the everyday person.

Here are seven of the most commonly touted methods of making money online. If you spend any amount of time researching the subject, chances are you’re going to run into one or more of these methods.

They all suck, especially if you’re coming at it from a beginner’s mindset. Avoid them like the plague. Here’s why.

Method #1 – The “Bum Marketing Method” (aka. Article Marketing)

This is one of the most commonly prescribed money making methods for newbies. Here’s how it works.

You use the Google Keyword Tool (https://adwords.google.com/select/KeywordToolExternal) to identify keywords that have at least 1,000 searches a month. You’re looking for highly specific keywords like “best blenders for carrot smoothies.” Low search volume, low competition is the idea.

You go to Google and type the keyword phrase in, in quotes. So you’d type it in exactly like this: “best blenders for carrot smoothies.” This makes it so Google searches for sites with those exact words in that order, rather than just websites that contain those words anywhere on the page.

If you have 20,000 or fewer total sites competing for that keyword, you move on to the next step.

You write an article around the topic. The title of the article includes the keyword. Typically the article is 350 to 500 words long. At the bottom of the article, you include a link to an affiliate product related to the topic. For example, in this case you might put a link to a blender on Amazon that you get a commission for.

Then you submit your article to one or more article directories, like EzineArticles.com or GoArticles.com. These sites will host your article for free and place your link on the bottom of the article.

The premise is that because competition for the search terms are low, your article has a high chance of getting ranked for that search term. When people land on your article and click the link, you have a good chance of getting paid.

Here’s why this method sucks. It’s not that you can’t make money with it – You can – But your hourly earnings are insanely low. Think about it. If you write one article for a term that gets 1,000 searches a month and you get to #3 position which gets 20% of the traffic, about 200 people a month will see your article. About 5% of those people will click the link to the affiliate product (10 people,) of which 2.5% will buy. That means you’ll make one sale every 4 months. If you’re earning $30 a sale, that’s $7.5 a month.

And that’s only for an article that ranks. Realistically, only one out of every three to five articles you write will rank. That means each article you write is worth $1.5 to $2.5 a month. Plus, the traffic will dwindle out and die within 6 months.

Can you make it work? Sure. There are people out there who can churn out 500 articles a month through sheer tenacity and make it work. But it doesn’t change the fact that it’s an insanely low paying method that’s not all that easy to learn that really just plain sucks. Not to mention the work is completely emotionally meaningless since you’re crappy content day after day. Thumbs down.

Method #2 – AdSense or Amazon Mini Sites

This method revolves around creating many websites around small, niche topics, hoping they’ll rank and placing either AdSense ads or Amazon affiliate links on them.

For example, you might create a website specifically around outdoor grills. You research the search volumes for keywords related to “outdoor grills” and write articles around the highest search volume keywords.

Then you build backlinks to each page on your site in order to boost your search engine rankings.

Here’s why this method sucks: By and large, the content on these websites are garbage. It’s written purely to please the search engines. And again, you put in a lot of work and the payoff usually isn’t worth it.

A successful site might earn $50 a month, maybe as high as $200 a month. But that’s considered a home run for a mini site. In order to get a site like this to be successful, you need to design a website, write a dozen articles, built 3-10 backlinks for each article and then sit and pray for a couple months that you get ranked.

Even then, because Google is constantly looking for ways to strip out low quality sites, you’ll never know when your site will get blown out of the water. The return on your time and your risk is very low. Thumbs down.

Method #3: eBay

Ahhh, eBay. There used to be a lot of people trying to make it on eBay. A lot of marketers used to tout eBay as the fastest way to make money online. Though the hype around eBay money making has subsided, a lot of people still try to get into it.

Here’s my take on eBay.

There’s a lot of money to be made on eBay. No doubt about it. However, it’s hard as well. I definitely wouldn’t put it in the beginner category.

Most other ways to make money online involve understanding the internet and maybe understanding a little bit of marketing. eBay is a whole different ballgame, because your success depends on product sourcing.

It doesn’t matter how well you can market on eBay, what matters is what products you can offer and at what price. If you can sell a 4 GB USB drive for $4.99 including shipping while everyone else is at $8.99, you’re going to make a killing. On the other hand, if you can only afford to sell at $8.99 while everyone else is selling at $4.99, you’re just not going to make it.

So the key to success on eBay is actually not on the internet. It’s in finding wholesalers and distributors. It’s in being willing to fly to China to work with a manufacturer to design a cheaper product. It’s in going to Toys ‘R’ Us, flipping through toys and looking for the manufacturer on the backs of boxes. It’s in buying items 5,000 at a time to get wholesale rates, stocking them up in your garage and hoping they’ll sell.

Dropshipping, where the manufacturer ships directly to the customer for you, is much harder than most people think it is. The per-item dropshipping fee really eats into your profit margins. You won’t get bulk rates either. These two things combined along with price competition from others sellers will eliminate your chances at dropshipping. Not to mention the customer service headaches if your manufacturer doesn’t ship in time – Something you’d have no control over.

The bottom line is this: There’s a lot of money to be made on eBay. But it’s not for beginners at all. It’s also not a traveling business. You’re in both the import export business and the internet marketing business at the same time. You really need to be committed, in one place to make an eBay business work.

Method #4: Fiverr

Fiverr is a website where you can offer a service and charge $5 bucks. It doesn’t matter what the service is, everything on Fiverr is $5 bucks.

The reason I don’t like Fiverr is simple: You get paid $5 bucks.

Common gigs on Fiverr include logo designs, graphic design, article writing, link building, voice overs and animation.

Many, many of the gigs I see on Fiverr are quite time consuming. It’ll take at least 30 minutes to complete most of these tasks, if not an hour. In my world, if you’re willing to value your time at $5 an hour, something is off. You’re seriously underestimating what you’re capable of.

There are a couple exceptions to this.

First, you can use Fiverr to feed into higher end projects. For example, an animator might offer a 30 second animation for $5 on Fiverr. Then if the client likes the work, he might land a $1,000 gig for a much more complex and in depth animation gig. The $5 isn’t the goal, it’s the feeder into the rest of his business.

The second exception is if you can do these gigs massively fast. For example, if you’re offering a drawing gig, if you can do four an hour you’re at $20 an hour. If you can do six, you’re at $30. It’s difficult to pull off, but it can be done.

By and large, I’d say avoid Fiverr. You’re more likely to get underpaid than not. However, it’s not impossible to make it work.

Method #5: Domain Buying, Selling and Flipping

You’ve probably heard stories of people who bought domains like “cars.com” or “sex.com” in the early days and made millions. (Actually, the “sex.com” domain has a funny story that involves the domain being stolen by a business partner, him getting sued and paying the original owner back in the form of a house. Another story, for another time.)

There are a lot of different ways you can make money with domains. You can go to domain auctions and look for cheap domain deals, then resell them. You can buy expired domains and sell them back to businesses who used to own them, or even their competitors. (A pretty cheap blow if you ask me.) You can buy typo domains and put ads on them.

There’s a common thread that runs through each of these techniques however: They’re all much harder than they seem.

For example, let’s say you wanted to buy domain auctions and look for cheap deals. My question to you would be: Do you know what “nachos.com” is truly worth? What about “aaev.com?” How about “XXTZ.com?” How about “prattling?” There is an answer to each of these questions. A true domainer could tell you off the top of his head what each of these domains is worth.

Learning how to value all the different types of domains takes a lot of time. And domain values aren’t written in stone. At the end of the day, a domain is worth what someone else is willing to pay for it. Often time’s you need to wait a long time for a buyer.

The golden days of domaining are over. You can’t register any single word domains anymore. Any news related domains are snatched up the moment the news hits the wire. (E.g. A tornado hits and all the domains like “KatrinaRecovery.com” are instantly taken.) All typo domains on major sites are taken. Automated registering programs constantly scan for valuable expiring domains and snatch them up immediately as well.

Is it possible to make money as a domainer? Yes, it is. There are a lot of people who still do it professionally and make a good living at it. But it requires a good amount of startup capital and has a steep learning curve. I give it my “it works, but it’s not for newbies” stamp.

Method #6 – Stock Trading, Online Poker

These two methods are a little bit of a landmine for me, as I have friends who are professional poker players and friends who are professional stock traders. Regardless, these are two methods that I don’t recommend either.

Let me be clear: If you love trading and study it with a passion or if you love poker and can’t get enough of the game, I’d say jump in with both feet. On the other hand, if you’re just someone who wants the freedom to work from anywhere or you just want to set your own schedule, I’d say poker or trading are not the best ways to do it. There are much better ways to earn money online.

So, why don’t I approve of these two methods? For three reasons:

1)      It’s a Negative Sum Game (Explained below)

2)      You’re Worst Than the Mean

3)      There Are No Low Hanging Fruit

Let me explain.

What is a negative sum game? I’ll start by explaining a zero sum game.

A zero sum game is where when one party gains, the other party loses. For example, if I bet you $1 that a coin flip will come up heads, we have a zero sum game. There’s no money added or subtracted from the equation, one of us wins and one of us loses.

A positive sum game is where there’s a net gain in the transaction. For example, I develop a new farming technique. I lease it to a farmer for $5,000 a year. I’m now $5,000 richer. As a result of the technique however, the farmer earns an additional $10,000 a year in produce sales. He’s now $5,000 richer as well. This is a positive sum game. We both have more. Most good business is positive sum; a win-win for both sides.

Trading and poker are both negative sum games. In poker, you’re trading chips with other players, but the house (the online casino) always takes a cut. That means even if you’re at the average point, where you’re not making or losing money through the game, you’re still losing money by paying the casino for each hand played. Trading is similar from trading fees. Even if you break even on trading, you lose money because of the trading fees.

So, you’re more likely to lose than to win statistically. Or, in other words, the statistically average person loses money in both of these games.

But that’s not all. Because you’re worse than the average. I know you don’t want to believe it, but you are.

In trading, your competition isn’t other small traders like you. It’s the hedge funds with a billion dollars in the bank and $10 million invested in computer technology. These guys have complex formulas that spot the slightest edge or technical pattern and instantly make a trade. You have nobel prize winning mathematicians and economists writing these pattern recognition systems.

Even if you’ve read 30 books on the subject or watched a hundred hours of videos, you really don’t stand a chance. You’re up against guys who’ve been at day and night for 30 years. I’m not saying you can’t make it, all I’m saying is that you’ll lose a lot of money in the beginning and it’ll take a long time to get the hang of it. There are better ways.

Poker is the same. All the low hanging fruit is gone. Low stakes poker and small buyin SnGs are dead. Any statistical edge in the game is sucked up. There are literally farms of kids in China and Africa who sit in a room full of computers and just play the mathematically perfect game of poker. Then you have the bots, who’re also programmed to play the statistically perfect game of poker.

The small and medium stakes are more or less dead. The majority of players are competent, if not highly trained. All that’s left are the high stakes or unique games like heads up. I’ve met people who’ve mastered these kinds of games and can still earn a good living playing poker online. But again, it’s extremely difficult – If all you’re looking to do is make money online, this is not the shortest, cheapest or easiest path.

Method #7 – Information Marketing

And to wrap things up, we’ll end with the #1 most commonly prescribed method of making money online: Information marketing.

This is where you create and sell a CD, a DVD, an eBook or some other form of digital information.

Here’s why it sucks. Again, I want to point out – I’m not saying it sucks for everyone. But if you haven’t made at least $10,000 online, I wouldn’t recommend starting here.

The world of information marketing is littered with failure. The number of skills you need to juggle in order to succeed in information marketing is huge.

You need to know how to create an informational product. You need to know how to package it, including designing all the covers. You need to know how to build a website. You need to know how to get traffic to the site, including how to buy advertising at a positive return on investment. You need to know how to write marketing copy that compels people to buy. You need to know how to entice affiliates to sell your product.

Even if you have all these skills, your chances at success are still quite slim. Again, the halls of internet marketing are littered with half-baked products, or even great products that just never took off.

Most industries are incredibly crowded. I’ll bet there are over 2,000 informational products in the “make money online” industry alone. Standing out in this crowd and getting people to believe you’re offering something of value is very tough.

I’ll end with an eye roll: There are tons of people who really just make money by selling products that teach other people how to make money. A very strange industry indeed.

These are seven ways I don’t advocate for making money online. There are tons of other ways you can do it that I’ve covered in one of my many other posts.

The key to succeeding in your first online venture is to pick a method that works, that’s newbie friendly, that has a direct cash payout and pays relatively high. That way you have positive reinforcement in the form of money in the bank right away. If you want to tackle a more advanced technique after you already have some success, more power to you. In the beginning however, going with proven and easy is the key.

Cheers,

-          Derek

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