A few of my friends run a niche search engine called The Trendy Purse. It’s an affiliate based niche search engine where revenue is generated by pulling lots of disparate product lines and online stores into a single shopping experience. Over the last few weeks I’ve been studying the dynamics of the purse/handbag shopping experience to try to help them out a bit.

One of the most interesting things we’ve discovered since starting our analysis is that there seem to be three primary methods of shopping. There is brand based search shopping where the person already knows exactly what brand or product they are looking for. This type of shopping tends to have the highest conversion rate. If someone knows they want a 2010 Ford Focus, and the walk onto the lot at a Ford dealership with the intention of buying one, they are very likely to come home with a 2010 Ford Focus. Compare that to someone who is looking for an sub-compact economy car. Such a person would probably visit several different dealerships from several different car manufacturers. Which is an example of our next type of shopping behavior, the generic brand, specific keyword shopping. A person may not know the exact product they are looking for, but they’ve got it narrowed down. Finally, there is the eyes-wide-open browsing method – someone looking for that perfect product but not knowing it’s features until they see it. Not only is this the hardest type of customer to convert, it’s the hardest type of product to build a niche search engine around.

So let’s get back to The Trendy Purse site. Upon doing an analysis, we’re seeing evidence that while there’s a little a bit of brand based searching and a little bit of generic phrase searching, the overwhelming majority of people are in eyes-wide-open browsing mode.

After talking to several women, we’ve discovered that this is indeed the way women like to approach purse/handbag shopping. Women enjoy browsing handbags until “the one” pops out and just says “buy me!”

So, the big question for the guys at The Trendy Purse now appears to be: how do you use a niche search engine to best capitalize on a niche that is primarily about browsing?

The solution: translate browsing into search.

In other words, create browse-able search units and work as hard as possible to build a solid set of browse-centric entry pages.

Well, I can finally offer this report: I am now employing 2 full time employees (car freaks) on the site. Both employees receive a nice salary plus profit sharing. Plus, the site is ranking for some solid terms like: how to break into a car or 2009 Nissan Skyline GTR.

Moral of the story: quality publishing, by niche experts…works. It’s that simple.

The plain fact is that the most successful businesses are the ones that use their money to make more money. So how do you use your money to make more money? Here are some tips for that I’ve found effective. Just remember that I’m coming from the bootstrapping method for starting a business, and these may only apply to that method. What’s bootstrapping? Well, it’s all about building equity with lots of sweat and hard work, motivated by nothing but the promise of future rewards.

But to move beyond bootstrapping, you need to have a plan to put profits to work, and to expand operations beyond your own limited efforts. Here are five ways to effectively re-invest your profits into your online business.

1. Purchase Assets for Leverage

Let’s say that you’ve started a blog that focuses on “Green Homes” and that you’re making $3/day after 6 months of hard work. A next step might be to go out looking to buy an established website in a related niche. Maybe your initial blog is all about planning to build a brand new “green home” – you might try to find a couple additional sites to compliment and reinforce your current site. For example, “Green Home House Plans” or “Building a Home from Scratch” or “The Economics of an Energy Independent Home” or “Green Retrofitting” or even “Finding Cheap Land in the United States” – Assuming that the new site has been around more than 12 months, it’s definitely worth looking at for acquisition.

Buying established sites to help reinforce your new blog can pay huge dividends and start you on your way towards niche domination.

2. Pay Writers/Bloggers

Around January of this year I learned that my business receives a lot more value from my effort when I limit the time I spend writing. Successful entrepreneurs should spend most of their time strategizing and executing plans behind the scenes. Full time blogging is exhausting and often frustrating. Contract out your writing needs to experts in the field in which you need writing done. The best place to look, in my opinion, is not to full time bloggers, but rather to people who have never blogged before! Sounds weird, but probloggers take shortcuts that diminish the value and passion factor of the content. A search on Craigslist can net you someone who loves the topic so much they’re not really in it for the money.

3. Find a good SEO

The fact is that in today’s search engine world, you need your site to be perceived as an authority on its topic. You can make a lot of progress simply by buying older, more established sites and then linking into your newer sites, but, for better or worse, that is no longer sufficient. You need dozens, if not hundreds, of content level links from other reputable and relevant websites.

But beware: Not just any link will do. Some SEO can have negative affects. Especially if your SEO just tosses up run of the site links. Your SEO should know what it takes to turn an average site into an authoritative site. So the most important thing you can do is have your SEO discuss his or her philosophy, and determine whether it is thoughtful and strategical.

4. Diversify Your Investments

When you start making 4-5 figures per month, it’s time to diversify your revenue sources. Even if you don’t have what it takes to start an online store, consider looking for website owners or bloggers who are looking for investments. I put a post up over at Performancing announcing my interest and receive at least one inquiry every month, several of which panned out.

What many people don’t understand is that when you invest, you are letting your money do most of the work, instead of you. So put your money to work in as many profitable places as you can for ultimate diversification. Lately, I’ve been investing most of my money to help bring offline businesses online. But I’m not the one bringing them online. I’m letting others do that for me. My investment is simply an attempt to expedite business growth and to move it beyond the bootstrapping phase.

5. Become part of an investment group

Now more than ever, success on the web directly reflects a site’s perceived authority. Most young entrepreneurs don’t have the financing available to gain the leverage and exposure they need to dominate a niche. That’s where the idea of an investment group comes in. Pool your money together with other likeminded entrepreneurs, setup a corporate structure that allows for share-based ownership, and then execute the first four steps that I’ve listed above, only this time as a group of shareholders with equivalent interests in seeing success.

Creating strong, authority websites can be accomplished more easily and effectively from within the context of an investment group then by a single individual trying to bootstrap her way to success. But becoming part of an investment group is only possible once you’ve bootstrapped yourself into a position of having significant cash on hand to invest.

Conclusion

So those are five ways to reinvest money for your online business. To end, I’d like to ask question of the College Startup readership: how much profit do you re-invest in your company and how much do you pull out as salary?

Over the last few years I’ve analyze the value of a reader over the course of time. From the time they initially found my sites — until the time they no longer continued coming back. The value of an average reader to one of my average blogs was around $1.75 a year. The average reader acquisition was via Google. That’s the world of publishing. Our product is our content. Our value to the universe is in ad sales.

Let’s step forward. I’m a rookie at eCommerce. But even with a new site. Let’s take an average sale of doors from our door website. If we sell 10 doors at retail cost of 200 dollars that’s 2,000. The average door purchase so far is not nearly that high but the potential is there. Let’s take a pending sale. We sold 5 doors at 200 a piece that’s 1,000 for one search. One acquisition brough 1,000. Minus out costs and the value of this search is around $100.00 to me and $500.00 to the other parties involved. All of a sudden the world of SEARCH just got a whole lot more appetizing. However not every search becomes a buying customer thus bringing down the value a bit. But so far I’m very intrigued and excited to learn more about Ecommerce. I see a lot more real world value to having a product and a lot less reason to resort to tucking my tail between my legs and spending more time in publishing online again.

To me products are a far better way of monetizing your time than ads. But hey that’s just me. And I’m a newbie in this brave new world.

Let’s head over to one of the review pages on the site. It’s called The Log Siding Guide, the section I want to point out is a specific competitor’s review. You might wonder how in the world I could get a competitor to link to one of my sites. And this is exactly how. I set up a review site with my top 10 competitors. I put up basic information and solicit reviews. Some of these will be real, and some will be gleaned from their own website.

I then turn around and email them the url. And bang many of them —- WILL link to this site. Now just a quick note. All outbound links on my site are NoFollow. I know. I know exactly what you are thinking. This is evil. And it is. But it works.

And folks this is what is called The Ultimate WordPress Link Silo. Basically you will have relevant inbound links coming in. if you only get a few that’s ok. All of them passing pagerank, and all the outbound pagerank passing will be headed into my actual ecommerce website and the link quality will be hugely golden passing that third party pagerank from El Competitoro.

Ladies. Gentleman. Stand aside. This is what is called Smart (almost Unethical) SEO. It’s a fine fence we must not cross. And the site will rank well and be a genuine adsense money maker if done right for years and years to come. On top of getting links from the competion we are also getting their marvelous ad dollars. This is the part I’m not sure is ethical. It’s like the competition is basically handing us Our Living without us doing any work.

This is what I get for spending to much time over at Blue Hat SEO.

1. Buy Domain
I like to pick my domains up at Dynadot cuz it seems less evil than GoDaddy.

2. Get Hosting on separate server.
I have a few different servers with unique IPs. Just for seo purposes.

3. Create Content
One of the ways for me to create content on the fly is to head on over to Aaron Wall’s Keyword Tool. Find the top 10 searches for a niche write a quick 150-200 word article on the subject and be done with it.

4. Build Links
Best thing to do is submit the site to delicious,and any social bookmarking hubs, I use a third party network of sites to grab instant authority then I sit on the site.

5. Drop Adsense
The number one surefire way to monetize a site is adsense. So here I am. Using adsense.

6. Walk Away
Once I’m done. I’m done. No need to keep working on this site.

I will be wrapping up this site after dinner I will let you know how it does in a future post.

Well, I’m fortunate enough to be working for a British company called The Watch Group Company, which specializes in watch repair, watch tools, vintage watches and all kinds of uber-cool watch related stuff.

Let me just say straight up that this is one of the cool-ass things about doing SEO related work. You get to work for awesome companies with awesome products. You get to help them succeed, and best of all, you learn a whole lot.

When my company started working for The Watch Group, they were just starting out as a single online Watch Part store. From the beginning, one thing struck me about this company which made me know they’d eventually succeed: watches are their passion. This isn’t a bunch of twenty somethings trying to pull a fast one on the public by pretending to know what they’re talking about. They really know their stuff. And they love it.

One of the keys to running a good online business is establishing yourself as an expert in your niche. Customers need to believe that they can trust you. There are a lot of ways to demonstrate your expertise. You could write a series of articles. But you could also do something as simple as picking unique, quality products to sell. Another option is to micro-niche (specialize) within your niche. In other words, anyone can sell watches, but how many American teenagers trying to make a quick buck could tell you what a watch movement is?

What I’m trying to say here (it’s late, and I’m just arriving home from an all day business meeting) is that The Watch Group didn’t have to say a thing to me and my company for us to know that they were the real deal. A company that we could feel comfortable trying to promote. We knew, simply in virtue of their product offerings, that these guys knew their watches.

It’s not surprising that less than six months after we started working with them, they’ve branched off several new businesses (micro-niched) to further establish their authority as horologists (a word I didn’t know until I met these guys!). For starters, they’ve launched one of the premier watch tool and repair sites on the web. But take note: they launched in the proper way; as an official Bergeon distributor of watchmaking tools. Bergeon Smirdgeon you say? Well, for anyone who knows anything about anything in the world of watchmaking and watch repair, Bergeon is top of the line and becoming an official distributor is quite rare.

Do you see what this company has done to ensure success? They wear their expertise on their figurative sleeve (their website). If you know watchmaking and watch repair, and you show up at their site, you have no doubt that you’re working with a legit, specialized watch company. A watch company with something unique to offer the watch professional or hobbyist.

But they didn’t stop there (say it to yourself: “keep on micro-niching – keep on digging deeper into your area of specialization – don’t stop”). So what did The Watch Group do next? They launched a forum for watch hobbyists and watch repair. What a great way to dispaly expertise by offering free help and advice to customers. Communication with customers, at any level, is a fundamental strategy for gaining their trust (and money!).

So there you have it. The Watch Group is off to a great start. They’ve become a successful online watch company fairly quickly. How’d they do it? They flaunted their expertise with a combination of micro-niche, specialized product selection and offering useful information.

That’s a great model for how to do micro-niching the right way.