For those of you interested in making money from home, this is accomplished by building a business from home.
Most people never accomplish making significant money from home because they treat their online making money endeavors as a “hobby” and never as a “business.”
Once you make that distinction and start treating your online endeavors and results as your primary source of income, you will see that the way you treat your time in front of the computer starts to become much more constructive.
So let’s start slow. What kind of a business can you build and work on from home to make passive income? One of the simplest ones is building websites designed to generate traffic from search engines that are monetized with Google Adsense.
Most people who have dabbled in home entrepreneurship have made at least a couple of sites like this.
So how exactly does this passive income website work? Well the first step is to pick a topic about something that interests you (something like photography, watches, gardening…it could be anything!).
Once you know what you’d like to build a website about, it is time to start doing keyword research. Go to the Google Keyword Tool and look up the global monthly search volume of all keywords related to your topic (make sure the setting is set to “exact” and not “broad”).
Then go to SpyFu.com and look up what the average Cost-Per-Click is for the main topic keyword. An example would be:
Photography Lessons: 5,400 global monthly searches per month
Photography: $2.00 average CPC
Once you have these two pieces of data for the keyword you’re researching, we can determine how much a website ranking in spot #1 for a keyword will make from Google Adsense Ads. How? By using this formula:
(keyword global monthly searches per month) * (average CPC of keyword category) * (0.42) * (0.64) * (0.04)
The 0.42 is the percentage of visitors that will land on a page ranked #1 in Google’s search results, the 0.64 is the percentage of the CPC that Google will give to the owner of the website that is monetized with Google Adsense, and the 0.04 is the average percentage of website visitors that will click on an Ad.
Therefore, when you multiply all those numbers together, you get a good idea of how much passive income a website will make for a keyword. So let’s take that same example:
(5,400) * (2.00) * (0.42) * (0.64) * (0.04) = $116.12
A webpage ranking #1 for “photography lessons” would make $116.12 dollars per month in passive income if it were monetized with Google Adsense.
The next step is to take that database of keywords, and find out which ones are easily rankable in Google through competition analysis. I analyze the top 4 current ranking websites for each keyword and determine if that keyword is worth targeting based on the current websites’ pagerank (there is more information about that strategy on my website). Any keywords that are too difficult to rank for are crossed off the list.
Next, take any keywords that will make less than $20 per month in passive income and cross those keywords off the list. Your goal for a website you are just starting out on is to find enough keywords where the total amount of income will add up to at least $500 per month in passive income.
Once you have that final list of keywords, you build out your website with each page of that website targeting one of the keywords on the list. Then you start your link building campaign with the goal of getting every single page on that website to rank #1 for that keyword within the next six months.
That is how you build a passive income business. Through calculated keyword research and competition analysis.
Once you have a portfolio of websites all ranking for several keywords, that is when this business becomes really exciting.
Your efforts to increase your traffic to your websites multiply exponentially because your websites are already somewhat established, and you can start experimenting with different monetization techniques that generally result in MUCH higher earnings per visitor.
What other tips would you share to develop a passive income website? Share with us!
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This is a good idea for someone who wants to…
1) Learn how AdWords works, including good ad copywriting
2) Learn how to build a web site and optimize its content
3) Be willing to periodically (weekly at least) analyze results and tweak settings
4) Be willing to work for a pretty low effective hourly rate.
Negativity aside, I do think this is a good idea to generate additional income for someone willing to put in the effort required. But I wouldn’t call it passive – Google periodically changes its search algorithm and it’s hard to keep your ads on page one without active management.
In addition to the formula for calculating potential site income, people thinking about doing this should calculate how much time it will actually take them to earn that income, then decide if it’s worth it or not.
Interesting formula on figuring out the profit a site would make from Adsense. There is good money in Adsense still, although the good ole days of earning big money on every click are gone.
You’re absolutely right that people don’t accomplish making significant money from home because they treat their online making money endeavors as a hobby and never as a business. The day I changed my mindset I was able to achieve freedom!
Thanks for the spyfu.com tip. I had never heard of it before.