Tuesday, May 4th, 2010

The Myths Of Monetizing Your Blog

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Many people wonder how to make money blogging.

I started blogging on April 22nd of last year and I just reached my 100,000th visit with around 200,000 Web pages viewed (e.g. each visitor is looking at two articles I’ve written).

Since I started my blog I’m amazed how many people have asked me:

“Can you make money from blogging?”

Indeed, one of the reasons I began my blog was to study the different monetization models used to make money from blogging.

I’ve looked at two ways to monetize my blog so far:

1. Advertising (through Google AdSense) and
2. Affiliate marketing (mainly through Amazon’s Associates program and some through Zazzle)

Two Myths of Monetizing Your Blog

Myth #1: You Can Monetize Your Blog Through Google AdSense Ads

If you want to make money with a blog through selling AdSense, you’re going to have to have a lot of traffic…a LOT of traffic.

You can expect to make a CPM of $.25 to $1 in selling your ads through AdSense, according to my own numbers, and those of friends of mine.

What does CPM mean?  CPM stands for cost per thousand (this is an advertising term as in an advertiser is willing to pay $X in cost per thousand of some audience metric (readers in magazines, viewers in TV, etc.) — interestingly, on the Internet the metric is page views.

For example, when I say that you can make up a $.50 CPM on a blog, I am saying that an advertiser (in this case many advertising bidding through Google’s AdWords system) is paying you $.50 for every 1,000 “page views” that your site generates.

So, back to my blog…if I were to receive a $.50 CPM, I would make:

• $.50 for 1,000 page views
• $5 for 10,000 page views
• $50 for 100,000 page views
• $500 for 1 million page views

So, if I were to have put Google AdSense ads on my site since I began, I would have generated a total of around $200 (The $1CPM ($.001) times 200,000 page views = $200).

Myth #2: You Can Monetize Your Blog Through Affiliate Marketing

A second way people try to earn money blogging is through affiliate marketing.

What is affiliate marketing? Affiliate marketing is just another form of selling ads: you put a link on your blog promoting another company’s product.

The difference is that you ONLY get paid if a person clicks on the affiliate marketing ad on your site and then buys a product from the site (the affiliate marketer) they then visit.

For example, I joined the Amazon Associates program (arguably the largest of its kind) and I include links to many products sold by Amazon (mostly books I review) here on my blog.

If someone clicks on my Amazon link, and they visit Amazon and buy any product (not just the one I linked to) during that visit, Amazon will pay me anywhere from 4% to 8% based on the volume of sales I help them generate.

In the year I’ve been testing out monetizing my blog through Amazon affiliate links, I’ve sold 51 products for Amazon, generating $1,048.31 in sales for them and $50.02 in commissions for me.

Basically, I’m making around $1 for every Amazon product I help sell — I’m converting .05% of my visitors to becoming a customer.

I could move that conversion number up to .25% immediately if I put more affiliate links up.

This .25% conversion number is fairly common for a content-oriented Web site like mine (and like most of the blogs of the world).

However,  if you had a Web site that was focused exclusively on commerce (as opposed to advice like I do), I estimate you could move your conversion up to 2 or 3% of visitors buying something.

So, in total, I’ve learned that making money blogging (Google AdSense and Amazon’s Affiliate Marketing Program) has been very tough: I’ve generated just a couple hundred bucks from the 100,000 visitors who’ve come to my site in the last year.

Don’t Fret: There Is Some Good News About Monetizing Your Blog

So, we covered the tough part. For your blog to make money, you’re gonna need enormous traffic.

But in addition to enormous traffic, there are many other ways to earn money through your blog. Here are some:

• You Can ByPass Google AdSense — You can acquire much higher ad rates if you increase your traffic to the 100,000 visitors per month level and beyond (in my estimation, you could sell ads yourself for $1 to $10CPM at that range. That’s up to 20X as much as you’d make from AdSense!
• You Can Earn Higher Affiliate Commissions — You can earn 100X+ higher affiliate commission fees than you get through Amazon by doing some research on what types of affiliate marketing offers would be most relevant to the content that you write about (for example, the relationship advice company I work for will pay $15 or more to you if you generate an ebook sale for us.)
  • Go search “affiliate marketing offers” on Google or visit AffiliateTips where as of right now some poker sites are offer more than $100 if your blog generates them a customer. That would be about 100X higher than the $1 commission I’m generating for each book I’m helping Amazon sell.
• Endorsed Relationships — This is a new term that a few of us have been using lately. It’s the same concept as your putting up an affiliate link but in this case you go directly to the company selling a product you believe in and you write up an endorsement of it. Steve Pavlina writes in his book Personal Development for Smart People that he selectively chooses certain products to promote through his super-popular blog (only ones he believes in) and sometimes receives a share in the sales for it (some of you may recall that Steve Pavlina used to monetize his blog through AdSense).
• Sell Your Own Product — You can earn even higher amounts of money if you sold your own product (e.g. if you were to write a book or manufacture some product that you sell directly through your blog). You have to figure out what type of product would be of value to your audience but if you did figure out how to create such a product (a book, ebook, audio or video program, piece of art, software, etc.) cost-effectively, you can generate much higher amounts of money through your blog that way.
• Collect Email Addresses & Market To Them — You can often charge higher CPMs for emailing advertisements than you could for selling the same ads on your Web site. It’s not unheard of to charge $25 CPMs for sending out an email promotion to your list (that would be $25 for every 1,000 people on your email list).

I hope these tips on monetizing your blog were helpful.

I’ll be writing in the future about effective ways to monetize your blog or Web site and, as always, welcome your input.

If you like this article, you may also like MySpace & Other Examples of E-CPMs.

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Tuesday, May 26th, 2009

MySpace & Other Examples of E-CPMs

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I recently finished reading Stealing MySpace, an interesting “inside-baseball” look at the building of MySpace and eventual sale to Rupert Murdoch’s News Corp. for $750MM.

While the MySpace story had a happy ending for most, it also reminded me of the surprisingly low e-CPM (effective CPM or cost per thousand) of many Web sites that either sell through third-parties or have ad inventory that’s difficult for advertisers to understand/value.

MySpace earned an e-CPM of about $.20 in its early days (November 2004).

To put an eCPM of $.20 into perspective, that means that MySpace had to generate 500,000 page views on its Web site to earn just $100 in advertising revenue…or 5 million page views to earn $1,000… or 50 million to earn $10,000.

Now, MySpace charged much higher CPMs (up to $2 or so) on many of its pages, but the average it received for all of its pages was closer to $.20, according to the book.

For those of you thinking of selling advertising on your Web sites, I thought I’d add a few other less-known e-CPMs or CPMs for you:

• Mojam (a music Web site I founded and sold) — Mojam had an e-CPM of $.91 while I was running it.
• PlentyOfFish (free matchmaking site) — This innovative online matchmaking site had an e-CPM of $.75, in my estimation, during 2006 when various articles about their results (fueled when POF Founder Marcus Frind showed pictures of his giant Google AdSense checks (the calculation I’m using is $375,000 in monthly revenue divided by about 500MM monthly impressions).
• StevePavlina.com — This useful personal development site had a Google AdSense CPM of around $2.80 in December 2005 when he shared some stats on his site (note: I used the term “Google AdSense CPM” for this one because Steve Pavlina generates income from other sponsorship/affiliate-related sources that he didn’t disclose) (interestingly, Steve Pavlina appears to have taken down all of his AdSense ads since then).
• A Colleague of Mine’s Tips Web Site — Someone I know has a site currently (as of this month) generating 250,000 page views per month and about $200 per month in ad revenue; so his e-CPM is $.89.

Now, interestingly, while all these e-CPMs and CPMs seem low, all of the companies mentioned were profitable. That’s because their cost of delivering 1,000 page views was very, very cheap.

Hosting CPM

MySpace, for example, spent only $.07 on what I call “Hosting CPM” (i.e. delivering each of its 1,000 page views) in its early days (November 2004); and since they had minimal other expenses at the time they were able to break even at that point.

My colleague’s Tips Web site (in the fourth bullet above) spends only 3.5 cents in Hosting CPM and minimal other costs, so he makes a profit.

To see the other costs in running a Web site check out my How Much to Pay for a Customer article.

Your e-CPM Scales as You Scale

The economies of scale work in your favor as you are able to command higher CPMs as your volume of page views (and brand value) increase.

For example, MySpace is now reportedly generating $75MM per month through about 40 billion page views for an e-CPM of about $1.88, according to this Silicon Alley Insider article.

So, they almost 10Xed their e-CPM from their early days!

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