When I was 25, I was $80,000 in debt and working both a full-time job and 25 hours at Starbucks on nights and weekends just make a dent in my bills.
Despite a grueling schedule, I wasn’t satisfied with how quickly I was making progress. Which is why I also spent hours every week building this site — not only as a cathartic outlet during the difficult task of overhauling my finances, but also as a new stream of income.
Over the last nine years, the site has grown from a small source of additional income to a full-time business with employees.
This is why I advise readers to go out and find new ways to earn more money.
That can be as simple as picking up some odd jobs on the weekends. Or it could mean starting your own online business. Now, this site is about personal finance, not online entrepreneurship, but for those interested I’ve put together a cheat sheet of information to get you started with a blog or online business, if that interests you. Throughout the article I provide links to sites that take a much deeper dive into the fundamentals of growing an internet business.
- How online businesses make money
- How to choose a profitable idea for your online business
- The tools you need to start an online business
- Where to learn more
How online businesses make money
There are three primary ways online businesses make money:
- Advertising and affiliate marketing
- Paid subscriptions or selling information products
- Selling physical products (e-commerce)
Let’s take a look at the pros and cons to each.
Advertising and affiliate marketing
This is how Money Under 30 earns revenue. You’ll notice Google AdSense ads in the sidebar and under posts, but these ads actually earn very little. This is why even large mainstream publishers with tens of millions of page views per month still struggle to stay in business — it’s hard to survive when advertisers pay you fractions of a penny per reader.
Fortunately, there is an advertising marketplace that makes it possible for small online publishers to make a living: It’s called affiliate marketing (also known as cost-per-action (CPA) advertising, performance marketing or lead generation).
With traditional online advertising, an advertiser pays a publisher per 1,000 page views or per click. With affiliate advertising, an advertiser only pays an affiliate publisher when it refers a paying customer. When this happens, however, the advertiser is happy to pay the publisher a much greater sum than for a single click because the advertiser just got a guaranteed sale.
Affiliate marketing works especially well for online businesses that are laser-focused on a particular niche. For example, I know entrepreneurs who run 6- and even 7-figure online businesses with niches like “swimming pool equipment” and “wedding linens”. If you can create content that people want to read on a very specific topic, you can find advertisers that are trying to sell products to those readers. And that’s the birth of an affiliate marketing relationship.
The upside to advertising is that you don’t have to do much other than put the ads on your site. The downside its that you need large amounts of targeted traffic to make any money.
This is why, if you’re starting a blog and visit any number of blogs on blogging, most of the gurus will offer up the same advice: “If you’re starting a blog to try to make money, quit right now.”
No, it’s not that we bloggers are trying to discourage competition. It’s because very few blogs ever do make money from advertising, and for those that do, it takes a long time. Possibly years. (It took over a year before Money Under 30 earned more than $100 a month, and that was back in 2007).
That said, I’ve made this model work, and it’s working very well for me. I wouldn’t discourage anyone from trying it; just understand that it may take a lot longer to see a return on your effort.
Paid subscriptions or selling information products
Monthly unique visitors to Money Under 30, March 2006 – March 2011.
But despite the very slow ramp up, I kept blogging because I like writing, I like tinkering with Web sites, and I saw the potential to be useful. To this day, there’s not a lot of content out there about personal finance for twentysomethings. (More than there was five years ago, but there’s still a gap).
The fact that I kept at it is rare (most bloggers—even those that achieve decent results—give up sooner or later). And honestly, persistence is probably the biggest contributor to my success. The others are luck, and to a smaller degree, talent.
Although I think persistence and luck may be larger factors in my success, I can’t say I haven’t done a few things right. And I think the biggest thing I’ve tried to do—although I know I can always do better—is to help others, both readers (to build an audience) and advertisers (to build monetization). To that end, I’m always trying to:
- Write articles that answer readers’ questions.
- Write articles that can create customers for businesses.
Takeaway #2: Success takes talent, persistence, and luck. But in the words of Thomas Jefferson: “I find that the harder I work, the more luck I seem to have”.
HELPING THE READER
Blogs typically become well-trafficked in one of two ways:
- Developing a clan of devoted readers who come back again and again.
- Publishing unique content that is frequently searched for, and drawing visitors from Google.
(A few brilliant bloggers, of course, might do both.)
Although I’m working on the clan of devotee part (wanna subscribe? nudge, nudge…) I’ve been successful attracting searchers on a variety of topics—from how much people have in their 401(k) balances by age 30 to understanding bizarre rules of credit scoring.
Yes, I know a little about search engine optimization (SEO), the black art of seducing Google’s supercomputers into thinking your Web site is more valuable than all the rest. But for the most part, I’ve tried to focus on simply writing on topics that are unique, helpful, that answer specific questions. (It’s easy enough to be helpful, I think, but with billions of web pages out there, being unique is a never-ending challenge).
Fortunately, this strategy has paid off. Money Under 30 now gets about 150,000 unique visitors a month, 80% or so coming from search engines.
On the downside, this puts me at the mercy of Google. When the search giant decides to change the way it ranks search results, my traffic can take a hit. (I felt a little bit of this earlier this year when Google rolled out its Panda algorithm changes). Fortunately, however, I wasn’t impacted nearly as badly as some other blogs I know. Why that is, I may never know, but I suspect it’s because I’ve written my content for readers (albeit with the search engines in mind) rather than just for search engines. In blogging, it’s a subtle but vital nuance.
How I’ve tried to structure my content explains how I’ve been able to attract so much traffic, but as many bloggers discover: it’s possible to have a shitload of traffic and not make a dime.
HELPING THE ADVERTISER
There are a number of ways to take a successful Web site and begin to make money, and they all have pros and cons. Below, I’ll talk about some of the different methods available and which ones I use. Lastly, I’ll get into why my most-used method actually helps advertisers directly, which contributes to why it’s been so successful for me and other bloggers.
Most Internet advertising doesn’t pay. When you visit a big news Web site and see banner ads on the top and sides of the page, advertisers are probably paying the site $1 or $2 per 1,000 impressions (times the ad is viewed). That means the Web site may have to show that ad 1,000 times to earn a single buck. It’s no wonder newspapers are going out of business.
The ubiquitous and sometimes sketchy-looking Google Ads are only slightly better. With those ads, a reader has to click them before the Web site makes any money. Depending on the ad, a site might earn $0.5 up to a $1 or so per click. Of course, most people don’t click those ads. So you might earn $5 or $10 per 1,000 impressions.
There are ways to improve upon both of these advertising models. For example, as a niche site (personal finance), the banner ads I run here are more targeted—most are for banks and credit cards—so advertisers pay considerably more than they might on a general news site.
Still, in order to earn a decent income from blogging, I had to look at other business models.
Some, I rejected, like any sort of pay-for-content model (subscriptions, e-books, training courses). I do hope to write a book some day, but I’d rather do that through a traditional channel.
I also think there may be some value in a specific seminar series, but to feel good about selling them I would need to give the project 200% and ensure they’re worth 10x whatever I charge. And I simply don’t have that kind of time right now.
Along similar lines, lots of bloggers are successful using their blog to launch speaking careers or personalized consulting. Someday I would love to start speaking on personal finances, but one-on-on consulting doesn’t really fit my chosen niche unless I want to become a financial planner, which I don’t have plans to do at the moment.
The model that’s left, which contributes slightly more than 50% of my blogging income, is the art of marrying consumers looking for a new bank account, credit card, or stock broker with those businesses looking for new customers.
It’s a little-known and, often, misunderstood form of advertising, but when done ethically and correctly is a win-win-win situation for publishers, advertisers, and readers. (As with anything, there are always people abusing ways to make money like those that pop windows and trick readers into clicking links—but the majority of sites working with affiliates (including most other personal finance blogs) today are ethical.
One way to think of affiliate advertising is that the Web site serves as an online broker for various financial products.
Here, I’ve selected a handful of brokerage accounts that I think are good offers for readers. In most cases, I’m able to partner with the company to link people directly to an application to open an account. When I do, I disclose the fact that the company is an affiliate. And in the event somebody clicks through my site and opens a new account, I’ll earn a referral commission.
Obviously, no one page like this can account for an entire income. But given that the site has over 1,000 pages and many older articles continue to draw dozens of readers from search queries a day, it adds up. Again, ideally this model is a win-win-win. I deliver the reader a product or service he or she is looking for, I give the advertiser a new customer, and I earn a fee for the transaction. As I do so, I’m extremely careful only to promote products I’ve used myself or thoroughly vetted.
How to get started with affiliate marketing.
If you already have a blog with at least some traffic, you can apply to affiliate marketing networks which will link you with advertisers. Two I use are Commission Junction and FlexOffers (FlexOffers has a lot of financial bloggers as publishers, and a lot of relevant advertiser offers).
Takeaway #3: Make yourself more valuable to others (your boss, clients, audience, etc.) by thinking in terms of how you can help them and make their lives easier.
Recurring Income, But Not Without Work
Perhaps the most beautiful thing about this business model (content-based advertising/affiliate marketing), is that it can be somewhat passive, at least now that the site is established.
That said, I dislike the term passive income because truly passive income is far more elusive than people think. Royalties a retired musician earns from music sales are an example of passive income. But even the touring musician is playing shows to drive song downloads, so that’s not entirely passive!
Same thing goes with blogging.
Yes, money comes into my accounts in the middle of the night, or on weeks I’m on vacation, but there’s still a lot of work required to sustain the business:
- Writing new content
- Moderating comments
- Monitoring technical issues
- Complying with advertiser requests
- Answering emails
- Keeping up with social media
- And lots more!
With another full-time job, new family, and now a home, my time for these activities is quickly dwindling—and that’s frustrating because I want to stay focused on creating new valuable content for you and steering the direction of the blog for the future.
But despite my time crunch, I have high hopes for Money Under 30. I want it to become a valuable and referenceable online compendium of financial information for starting out in life. I want to carry its message into other mediums like books and TV. And I want to grow our community from thousands to tens to hundreds of thousands.
Along these lines, I have an exciting announcement I’m going to make tomorrow—the first step in continuing to move Money Under 30 forward. I can’t wait to share it!
Until then, I hope this peek behind the scenes of blog-as-a-business was interesting. If you read all of this, I’m guessing you’re interested in the topic…I’ll take specific questions in the comments if I can, although there are some things I’m gonna keep close…every business has its trade secrets!
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