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Secret to Success – Josh MacDonald

At age 17, most of you were probably busy playing video games after school or planning the next party. Josh MacDonald on the other hand, took his online marketing experience and turned a personal need into a business solution used by the masses through his SEO research tool Keyword Scout. At only the age of 17, he has been able to generate over $100,000 in revenue, all while being boot strapped and self funded at the same time. We invited him here today to talk about how he’s done extraordinary things yet being an ordinary teenager.
How did you get started in internet marketing or affiliate marketing?

I initially created a service on a search engine optimization forum because a friend gave me the idea of selling pre-made AdSense websites. The entire process was automated with staff, except the keyword research component, which had to be done by me. I needed a tool to automate it and there was nothing on the market so I created Keyword Scout.

Tell us a little more about this service for Adsense sites…

Customers would order a package of 1, 3, 5, 10, or 25 websites and could say what niche they wanted but usually, they didn’t so I would just do keyword research, make a basic html site, add five articles, zip it up into a folder, and send it to them. They would just buy the domain I suggested and upload the files. For example, a five-article website was about $50 so the profit margins weren’t that big at all, maybe 20%.

Since you were young, did you run this service entirely by yourself?

I started doing it myself and I started with nothing, really. I didn’t put any money into it. The first investment I had was what my mom gave me on her credit card to buy an ad on eBay and I ended up getting scammed. The ad was for one of the forums I was trying to start. I continued freelancing when I started the service basically and wrote articles myself. After I had enough money, I started hiring others to start doing it and then sales just picked up. I didn’t want to write anymore so I let someone else do it.

micro niche site
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josh macdonald
micro niche site

As someone young, did you have any mentors for guidance?

You meet people in the industry. They give you a small word of advice and it changes everything. An example may be when a friend informed me of the importance of affiliates on a product like mine. I didn’t even know what an affiliate was when I started. One of the big guys who I’ve got to give a thanks to is Thomas. He’s a big mentor I would say. He’s a broker. He helps with a lot of things. He knows a little bit about everything, as he’s sold almost every type of internet business. When I started, I actually added a number of people I met on forums, on Skype. From what I remember, not many would put up with a 14-year-old that knew next to nothing about internet marketing, and just wanted to ask questions. Thomas and I still talk to this day. I talk to him almost every day about new ideas. He always has a lot to offer.

With all your experience and background, why didn’t you just become an affiliate marketer?

Affiliate marketing is too risky. I would rather have a reliable income. Right now, I’m focusing on monthly recurring software. I’m trying to get something reliable so I can say I’m making $10,000 a month or $15,000 a month instead of earnings that sky rocket and drop to almost nothing, every couple of months. I want to be constantly growing. I don’t want to have any slow times.

The only time when I got close to affiliate marketing was when I sold Adsense sites, which could have easily been sold as Amazon, Clickbank or any other sort of affiliate-earning website. I did have a run at Adsense when I started marketing and one of the things that I understood well was how to get a high click through rate (CTR) which was about 10%-13% click through rates at times and by showing proof of that CTR, they help me sell a lot of sites. Most people have a CTR under 3%.

How did you get such high click through rates?

No real secret actually. I have told it plenty of times; just try to make your ads blend in like it’s just a link to another page on your site. You’ve got to follow terms of service but to a certain extent, you’ve got to make it look like it’s a link to another page in your website. I have a certain template that I use and I don’t use WordPress. I haven’t had luck with WordPress but what works for me is a simple 2-column template. It’s all white, along with one feature color. So I’d have blue filling along the left side/column, blue on the top where the title is, and directly below the title, I had a link block, the one that’s 15 pixels tall. They always click those. They look like a link to another page in your website. The key is to just match the ad colors with the blue and white on your site. It works well.

So you are known for your software tool Keyword Scout. What is that?

My software is called Keyword Scout. It’s a search engine optimization (SEO) tool. In SEO, finding keywords relating to your website, that are not used by your competitors is very important. My tools helps you find thousands of keywords from 4 different sources, including Google Adwords Keyword Tool, Amazon, Google search suggestions, and LSI, or better known as related keywords that appear in a Google search.

I started this software because when I was 14/15, I ran a website creation business, as I explained earlier. I created sites for marketers for the pure purpose of putting ads such as Google Adsense on them, to generate revenue. To get traffic to those sites, you need low competition keywords that you’ll appear on Google for. At that time, Market Samurai and Micro Niche Finder were the only real competition. None of them did what I needed for my sites in my service. At first, Keyword Scout didn’t have a name, and I was planning to make it for personal use only. However, after telling a few people, they were looking for something like it too. So after hearing that I took the plunge and had my programmer create a license system, and proper update system. I created a sales and support page along with a support email system. On April 24, 2011, I registered the domain name and Keyword Scout became our brand.

I started it about six months after I started the micro-niche service. I started it with a recurring price of $40. The sales started slow and about halfway through the day, I thought I would be getting more sales by now. A lot of people were enquiring about a lifetime license. So I opened that up. I put it for $197. Compared to the $40 per month, it was a good amount of money. I think I had five sales that day so I made $1,000, I still remember telling my dad. I think I was 15 years old, maybe turning 16 right around then. So $1,000 was, for me, impressive. That got my parents off my back for a while. Sales died down a little bit. A few months later, I listed on Warrior Forum, and learned about affiliates. That made some big numbers.

Aside from just telling keyword volume and exact match domain availability, what other features are there?

One of the extra features is called Profit Potential. It’s basically commercial intent but takes into account the relation between the cost per click and the relation between the global monthly searches. I just basically put them into ratio. I forgot the exact formula but basically, a keyword that has 500 searches and $5 per click is more valuable than a keyword with 1,000 searches and 10 cents per click. Basically, it takes the relation, you just sort it or filter, or however you want to use it and that will give you the relation. It calculates instantly because you already have the data for the cost per click and global monthly searches, so it’s just quick multiplication and division.

I needed something that could show me everything. I wanted something that combined all of my keyword research needs and there was no other software to that date that did. I’ve got all the search criteria that Google gives you then all in anchor, all in title, all in URL. We added something new recently and this is just another simple feature that averages the data so maybe you want a high cost per click, high local searches, and high global searches. You just take the average of all three of those, and you sort them. Then also again, you could take the average of all in anchor, all in URL, and all in title, and from that average, you’d want a lower number. Then we added the exact phrase, which is another variable used in my program, you can find this number by putting the keyword in quotes and searching that string on Google. The number of results is a rough representation of the amount of competition. Another simple factor we have is the number of words. I can’t remember if anyone has that but it just counts the number of words and you just sort it. In SEO, you sometimes want keywords that contain many words, known as long tal keywords. Competition score, is the last one and it explains the onsite SEO for the top 5 or 10 websites ranking on Google for that keyword. To calculate that, we check each page to see if the keyword appears in the description, the title, the URL, and how many times, etc. To turn that into a number, we use a little secret formula we have for that.

Who are your customers?

My first step to taking this to market was promoting it on a few related forums and discussion boards. Next, I decided to try another forum. This forum was known for its wealthy and strong affiliates, but to promote your product, you had to give the members a discount, so I sliced the price in half, to $97. Most product owners out there, pick out a launch date, find affiliates, have everything prepared and make a big buzz about it. I didn’t know any of this, I just listed my thread. I was told by many, that I did it all wrong.

The odd person gave a tip, and I eventually discovered that I needed affiliates to attract sales. After contacting a few, I struck luck. I had no idea who I was contacting, but I contacted some of the most powerful affiliates in the industry, and they also seen the need for my product. Everyone made money. I had affiliates take a check home from $5000 to $30,000+, and all they did was email their email list. December 2011 was my first 5 figure month. Now-a-days most customers come from the referrals of other happy customers.

Did you actually develop Keyword Scout yourself or hire someone?

I do everything and anything I can to find the right programmer. It’s like one in 25 or one in 50 programmers that I interview can handle programming what my tool does because of the methods we use to access Google keyword tool. There are different methods that you can use to scrape those 800 keywords. We have the fastest method so it’s the hardest to upkeep. It costs me like $200 a week just to keep this tool running, but when you do a search, it returns it in like 4-5 seconds. Meanwhile, all the competition, they use another method. It costs less money but it’s terribly slow. I only know about four guys in the past year or so that I’ve met that can actually do this. Once I find someone, I got to hang on to him because it’s pretty advanced stuff. Google isn’t dumb so you’ve got to have the best.

I do all of my interviewing on Skype. These days, my only requirement is that you have to have worked with Google keyword tool in the past. There are a lot of programmers who can say, “I can do this. I can certainly do this.” Then they are going to try it and five days later, waste of time. They can’t do it. Right now, all I want is someone who has worked with Google keyword tool before and is familiar with it.

How much did it cost to build Keyword Scout and how long?

I would say about three, four, maybe five months, but right around that, 3-5 months. Cost wise I would say around $2,500-$5,000. But then when Google updates come around, it gives me a headache and things pile up pretty quickly. I’ve easily spent 5 figures in development on the software to date.

Since you got no investments or loans of any sort, how did you fund Keyword Scout?

First I started with freelancing by writing articles after school for people. It gave me a few hundred bucks. That gave me enough to start my AdSense service so after I made my AdSense service, which added more capital. I was doing pretty well. I was getting to the thousands and then I had enough every week to pay my programmer and eventually got the project complete. I don’t take a salary bigger than $5,000 a year, as I put most of my profits back into my business and my other businesses.


keyword scout lite

How were sales off the bat when you first launched Keyword Scout?

I didn’t know much about what I was doing and got some advice from one of my friends and he said I should start getting some affiliates on board. I had no idea what I was doing so I just took his advice and started mass messaging a whole bunch of affiliates and ended up getting a whole bunch. That was about Christmas time and by Boxing Day, I made like $5,000 or something in a day.

How did you market the product or get traction to it initially?

There was no official launch date. It was whenever my threads got approved on the forums so whenever a program was done so I just put it up there. The first real official launch out there for Keyword Scout will be coming up probably in the next few months, for the Lite version. I will be building hype for that.

Forums and affiliates played a huge role initially. They bring in most of the sales. I had affiliates bring home over $10,000 paychecks for themselves. Other than forums and affiliates, my appearances in search engines may drive some sales but not many. I have been getting into YouTube marketing a lot lately. I have sales people commenting on keyword research videos, answering questions and helping marketing find resolutions to their keyword research problems. I’m not sure how good that’s working. I don’t think too well but it’s just another example of me putting my ideas to the test.

How much revenue in sales have you got so far then?

About six figures in sales and revenue. I’m not sure about pure profit but it should be approaching half way to 6 figures. I don’t check my books too often, unless someone’s looking to buy the company. All of my numbers are recorded in Clickbank and 2Checkout, and they’re not going anywhere. Sometimes I get people that want to potentially buy Keyword Scout from me. As you know, a website is worth roughly 12 months of profit. So I’ve had a couple of offers in the $30,000 range but I know things are just getting better from here, so as long as my other business venture don’t distract me, I’m likely looking for offers a bit higher. I almost accepted an offer around that price range, but the buyer decided to withdraw their offer because he found out that I’m 17 years old.

A popular online marketing forum is Warrior Forum. How did you utilize that to generate sales?

Listing a for sale thread is $40 and I’ve learned that bumping your thread is almost useless because a lot of the traffic to Warrior Forum is not coming from the forum itself but the buyers are actually drawn in from an email blast or linked in from an affiliate partner. The misconception is, people think, “I’m going to start a Warrior Special Offer, and I’m going to get rich.” Well, there are tons that don’t because $40 is a lot and they think, “Oh it was just a bad time of the day. I’m going to bump it again for another $40 and then I’m going to bump again for another $40.” They just keep going and it’s $300 later and they haven’t made a dime, and since they quit their day job, $300 is a lot of money to lose. They don’t realize that Warrior Forum doesn’t bring traffic but rather the affiliates that link to your offer. Warrior Forum is just a place to send your buyers. Customers feel safe because if they have a bad experience, they can leave a comment.

There’s many misunderstandings on Warrior Forum. One of them is, when you post a reply it doesn’t actually bump your thread at all. You can post as many times you want but it won’t bump your thread to the top of the first page until you pay. When I launched Keyword Scout, I didn’t have much of a reputation on the Warrior Forum so one of the things I said was, “What do I’ve got to lose, I’m going to give out 50 review copies. 50 is pretty big so I’ve got to create some buzz by people leaving reviews.” I got tons of rave reviews, complete rave reviews. I’ve got a whole bunch of them and once the affiliates saw that, they were more interested in promoting.

You had some horror stories using Paypal to accept payments. Tell us about over coming that.

I remember it well. I was sitting on a patio in a restaurant in Florida and received an email from PayPal. When I saw the title, I though “Oh yeah right. This is just another spam email since my email is all over the internet.” Every time I get an email from PayPal, I just make sure it checks out. If your email is written to customer or user, it’s fake. If it starts with Josh MacDonald, it’s real and this one started with Joshua MacDonald and I was shocked. Things were bad. I could no longer process through PayPal, for an undisclosed reason which I still don’t know to this date. Every time I went to call Paypal, I only got a voice mail every time. They’ll never call you back. PayPal is just another corporation I’m not too fond of. PayPal gave me all these problems so I went to 2Checkout and I have no problems with them. I love them.

How are sales going these days?

Things have really slowed down right now but that’s what I’m trying to do. I’m just trying to slow down until the Keyword Scout 2.0 is here. To buy Keyword Scout right now, it’s a heck of a deal. In two months, it’s going to be $49.99 a month or like $300 for license so basically, I’m trying to keep it on a down low. I want to bump the price up so I’m not really promoting it to anyone right now or looking for affiliates because in a month or so when we get 2.0 going, prices will go up and we’ll start promoting hard again. Really right now, I’m slowing down sales as I prepare.

Are you ever worried about Google changing things and making your product useless?

Yes, so basically, we actually don’t use Google API. It’s really, really expensive so we don’t really rely on that. There are a lot of keyword research tools out there, and if anything happened, we’d just switch to another keyword provider besides Google. I do worry about how the future will have an affect on the tool. Exact match domains seem to be in less demand after recent Google changes. I’ll still keep that feature, as there is still a chunk of the market that wants it. I know that the exact match domains are getting a penalty by Google. I know that but I’m not going to argue with the customer. You want exact match domains, I’ll give it to you. If it means a sale, what the heck, I’ll give it to you.

Will you be buying any fancy toys like our other young successful entrepreneurs?

As much as I’d like to drive or even ride in a Lamborghini Gallardo, I decided to hold out for at least another 6 months. Spending that much money will put a strain on me financially and could jeopardize the growth of my ventures. Until then, I’m going to just keep reinvesting the earnings.

We want to thank Josh MacDonaldfor sharing his story with us. Make sure to visit his blog and websites at:

Josh MacDonald – Josh’s personal website
Keyword Scout – Official website for Keyword Scout
Elite Web Enterprises – Josh’s company website

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josh macdonald
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