Your belief that blogs make money just from ads is outdated. Here’s how several million dollar blogs are actually making their money and how you can employ these techniques for your own blog. A tutorial on the four major monetization methods. Part one.
After I published the article How Much Can You Actually Make Blogging?, I got a huge response from readers talking about how surprising those numbers were and asking for more details. How exactly did they make money if it wasn’t all ads? How does one go about finding programs that offer affiliate commissions? I thought I’d try and tackle those questions today. If you are excited about starting your own blog, you can get set up very easily with Bluehost. As a special for Money Habit readers, you’ll get pricing on the basic package of only $2.95/month, lower than what you’ll find on the site directly, and they’ll include the registration of your chosen domain name for free with any package. You can be up and running in 10 minutes.
Alright, let’s go.
I am not a million dollar blogger myself, but I’d like to use case studies of extremely successful blogs to show you what’s possible at scale. What I can also tell you, which is perhaps even more exciting, is that I’ve personally found that these monetization methods scale down very effectively. It’s not a case of ‘you have to have a million visitors a month for any of these methods to work for you.’ It works all along the spectrum, even for smaller blogs like yours and mine who want to make $20k-$100k a year.
This blog makes several tens of thousands of dollars a year even though it’s been in operation for less than a year, and I work on it 3-5 hours a week. I’m now convinced that blogging is one of the best ways to earn a side income for most people. It’s a great way to accelerate your progress toward financial independence and make you less dependent on your job.
So let’s study a few blogs which are generating over a million dollars a year, and the ways in which they monetize. We’ll cover each category in more detail below.
As you can see, the main four methods these guys use to generate revenue are:
- Affiliate Income
- Selling Their Own Product
- Advertisement
- Sponsored Content
1) Affiliate Income
We’ll start with my favorite method, and the one which I think is friendliest to new blogs – affiliate income. You will notice it is the top contributing revenue stream for two of the three blogs, and it is the second highest contributor in the third and final case study.
As you talk about your favorite subject on your blog – video games, boating, career building – there are doubtless products you’ve come across and loved, products which you think would benefit your readers just as they’ve benefited you.
As luck would have it, many of those companies are actively seeking ways to find new customers, and a lot of them have what’s called an affiliate program. If you are able to help them generate new sales, they will share a commission with you, at no charge to your readers. Generally this is accomplished by providing you a unique link, so that the company can track which sales were generated by you. When a reader of yours clicks on the link and makes a purchase, the company will then write you a commission.
Example: Amazon
A very good example of this is Amazon’s affiliate program.
Through the Amazon Associates portal, you can select any product in their catalog and generate a unique affiliate program which you can include in your blog. Users will be taken directly to that product page. The nice thing about Amazon’s program is that if your reader clicks on an affiliate link, anything they purchase in the next 24 hours will be credited to you. Maybe they click on a link to a $10 ebook from your site. They end up buying the ebook and also a $300 tub. Good for you, you just got credited for both sales. Depending on the category, you will make somewhere between 4-10% on any sale with Amazon, though there are details on exclusions if you’d like to check out their program.
Where Can I Find Affiliate Programs?
Some large companies often have their own independently-run programs, like Amazon. To sign up for Amazon’s affiliate program, you can type in Amazon Affiliate Program in any search engine and you will be taken to their separate program, Amazon Associates.
Most companies, however, run their affiliate programs through a network. Major networks include FlexOffers and CJ Affiliate (formerly Commision Junction. You simply sign up to for one or more of these networks, and you receive instant access to hundreds of affiliate programs. You’ll see programs from very reputable sites like Booking.com and Hotel.com, Macy’s, Nordstrom, big banks like Chase looking to find new checking account customers, everything under the sun. When you see something you like, you apply through the portal for that individual program. The process is very straightforward and takes under 60 seconds per program. They generally ask you to provide a link to your blog and answer a few questions about it. They want to determine that you aren’t a scammer or running a shady program where you provide kickbacks to your reader to purchase through your links, things like that.
Note: Here’s a sample from FlexOffers’ sample images in their intro materials. I’m not sure it’s kosher with terms of use for me to screenshot current offers, so this gives you a sense of what it looks like.
What Exactly Do I Do Once I’m In the Affiliate Program?
Affiliate program managers make your job dead simple. You simply insert a link to the product you want to promote in your next blog post or email, and let it do its thing. Often when you click on these programs’ pages they will offer you creative you can insert into your own posts – they might be screenshots, banners, or other images that will help you promote the product. Now sit back and count the sales.
How Much Do Affiliate Programs Pay?
There are two major program payment models.
Percentage Commission
Offering you a percentage of the sale amount is the more common of the two. The going rate differs by category. The percentage for most categories is somewhere between 4-10% of a sale.
- If you help secure a four-night booking for $1000 on a major site like Booking.com or Hotels.com, you could be paid something like 3.5%, or $35 just for that one sale.
- If you help Nike sell a pair of $80 shoes at a 5% payout, you’d make $4.
- If you help Udemy sign up a student for that cool online photography class you took and loved, the one that cost $65, you might get 40% of the sale, or $26.
Fixed Commission
The second type of program offers a fixed commission per sale.
- If you are a high-volume, mobile game review site, you can make 80 cents to $2 per install. That means anyone who installs the free game on their site triggers a payout to you, just for giving the developer a chance to win a customer over.
- Your blog focused on tips for small businesses points a reader to an insurance comparison site like SimplyInsured to check out their options for small business insurance. For every completed application, you could receive a commission of maybe $80-$100.
These are just rough approximations – you can check out the details for specific companies when you sign up for a network.
As you research the different programs, you will want to look at two pieces of information. The first one is obviously what the payout terms are – how much you’re paid and when. The second is the tracking terms. Obviously not every purchase will be completed immediately, particularly for larger purchases that require some mulling over. Sellers recognize this, and their programs wouldn’t have any takers if they didn’t give credit to site owners for the fact that a sale to a user two days after the click on the link is probably attributed to your site. So each program will tell you how long they will attribute each user to your site. You may have 24 hours in the case of Amazon. You may have 60 or 90 days in the for other programs.
How do they companies track this? You’ve probably heard about cookies on the internet. When a visitor clicks on something, they download images, content, etc. that render on their screen. One of the thing that can be included for download is a cookie that sits temporarily on the user’s computer. That’s how advertisers track who went to their site and then target them with banner ads as they go to different sites. It’s how they will be able to attribute a visitor who visited 7 days ago and just made a purchase to you. Cookies are everywhere on the internet – you probably have seen notices about them on every major news site. Google uses cookies all the time to remember your search preferences and make it smarter in answering your queries. It uses cookies to help it figure out what to advertise to you, things like that. It’s pretty cool stuff.
How Do You Decide What To Promote?
I think this is a very important aspect of your planning. The trust between a reader and a blogger is important. I didn’t start my blog to make money, so I have extremely stringent requirements for what I promote. I generally think about what products I already use, and look for any programs that are established for those products. If something exists, great! If not, whatever. Occasionally a reader will ask me a question about some aspect of finance I haven’t had to deal with (for example, student loans) and I might go into research mode for what options are generally well-regarded, and talk about those in an article. I think it’s very important though to stick to only products you personally use, or if you’re going to promote something that you research it thoroughly and be very explicit with your reader base that you have not used the product but have heard good things about it.
If you’re looking for inspiration on what products to research, the networks offer great tools in their portal to discover new programs. You can search by categories like clothing, electronics, education, etc. You will also be able to filter based on best payout rates and which programs have been most effective for your fellow site owners.
Affiliate Programs: The Upsides
I highly recommend it as the first source for monetization on your blog. There is very little ramp-up time as you are not building your own product, and you have maximum flexibility to find the perfect products for your community via access to hundreds of programs. You can also switch your focus quickly as you learn more and more what your audience likes.
Affiliate Programs: The Downsides
Be careful to only recommend products you have used and can vouch for personally, or be explicit to your readers about the fact that you haven’t actually used them. There is a temptation to get link-happy, and this can ruin your community if you are too impatient to make a quick buck.
Additionally, since you are promoting others’ products, you are subject to the vendors’ whims. Your favorite affiliate program may shut down, leaving you without your main revenue source after months of threading it through your posts. To combat this, you will notice that most bloggers a) make sure to diversify their affiliate relationships and look regularly for new ones and b) diversify their income streams with at least one of the other methods such as their own products, advertising, or sponsored content.
Overall, affiliate programs are my favorite method of monetization and the only method I currently use on my site.
2) Selling Your Own Product
This is one of the next most popular methods to monetize amongst the new wave of bloggers. Whether it’s books, ecourses, or paid seminars and one-on-one sessions, the beauty of creating your own product is that you often make vastly more per transaction, and you can tailor a product to fit the exact tastes of your audience.
The opportunities in creating your own products are endless. You might think there is only opportunity in big traffic categories like travel or parenting. In some ways, the opportunities for niches are even more pronounced when it comes to developing your own product.
There’s one extremely successful blogger who makes his money helping other online entrepreneurs build their sites. But before he hit it big (he makes $300k a month), one of his earlier sites was geared towards a very niche group of folks studying for and wanting to pass the LEED exam. He built a site which – because it was niche and he was an expert – ranked at the very top of Google, and began selling a $20 e-manual. He made over $7k a month regularly from that site with very little ongoing work. He went on to replicate that success with other niches like food trucks and security guards. You can read more about that here. I’ve included a screenshot of that site below – not the prettiest given it was his first site, but that didn’t seem to stop people from piling and pulling out their credit cards.
You could build a course about how to budget, learning to quilt, or how to fish. You can build materials on how to generate side income, like this successful blogger:
Selling Your Own Product: The Upsides
Because you have complete control over the product – unlike with affiliate relationships – you can guarantee your community has a good experience by tailoring the product just for them. In addition, your funnel can be a lot smaller in order to sustain a healthy business. Say you only have a few thousand hard core fans, but 20 of them a month want to buy your $200 ecourse on (Insert Topic You’re Both Passionate About). That’s $4,000 a month, or $48,000 a year.
Selling Your Own Product: The Downsides
Building a product is a lot of freaking work. You also run the risk of building something without doing your homework and finding out that actually, people don’t really care to have that kind of product. Fortunately, you can mitigate your risk by doing some upfront research. Once you have a healthy traffic base, you can email your readers and ask how they feel, maybe even send them to a sample sign-up page which will send them info when your new potential course is out.
You can use a service like LaunchRock or Leadpages to capture this info, or even just create a special newsletter box using your existing email campaign provider. You can tally the interest, and decide to really start building the product when you get X number of folks who have indicated interest.
Finally, you will have to be very active promoting your own product. You are the only person making folks aware that it exists. So you don’t get to avoid all knowledge of marketing just because you build product. If anything, you will have to get better at it than with other methods because there’s no marketing department creating banners and images and text to promote your product for you.