I recently went to a independent publishers only conference in San Francisco hosted by Sovrn (Lijit Networks). Sovrn is an ad network company that was purchased by the once mighty Federated Media. I remember trying to join Federated Media’s ad platform in 2010, but couldn’t get in because Financial Samurai didn’t have enough traffic at the time. I was looking for Google Adsense alternatives because Adsense wasn’t cutting it.
For the past several years, I’ve run a Sovrn skyscraper banner ad on the right side of Financial Samurai to help monetize some of the empty space. It’s below the fold, and I haven’t played around with the spot much since it first went on. It generates somewhere in the vicinity of $0.50 to $1 RPM, which is very low, but not to be unexpected for a banner ad below the fold. But I figured, making several hundred bucks a month to fill up white space is better than making nothing at all. Maybe I’m wrong, but I’ve been too lazy to test things out until now. We should always be testing!
One of the presentations at the Sovrn conference by Pagefair was about the rise of ad blocking. Supposedly, there are some 250 million people who’ve now installed ad blocking software to create a faster, better web browsing experience. The number is only going up with the new iOS mobile software allowing for more ad blocking functionality in Safari. In the world where everybody expects everything to be free online, this is another invention that might further push independent publishers out of business.
It’s very hard to survive off banner ads. Dooce.com, one of the original blogs that started 14 years ago has given up regularly publishing on her site. She doesn’t want to publish sponsored posts where she and her children pose in front of products because it just felt wrong to her. Instead, she’s turned towards consulting and speaking instead.
Ahead Of The Times
A lot of publishers and advertisers at the conference spoke to me about their fears of ad blocking software putting them out of business. They asked me whether I had any solutions during lunch. I tried to show interest in the subject, but it really wasn’t on the top of my mind because we in the Yakezie Network have long ago made moves to not depend on banner ads for income.
The solution to ad blocking software is to simply focus on affiliate income. Even better, focus on being an “authority affiliate” where you love the product so much that you also consult for them directly on their business as well. You won’t have to feel like Heather Armstrong for Dooce, because there’s congruency with what you recommend and what you write about. You will gain lots of credibility, and your conversion rates will soar.
The ideal situation for all of us is to choose 5 – 10 products across various categories that we use, build direct relationships, and then weave these products into our value-added content. There is a one-two punch of helping readers find answers with our deep knowledge content, and offering readers tools through helpful products.
You can’t block affiliate links because they are a natural part of your post. There is no script ad blocking software detects. There’s just the simple link to a product you use. And because the affiliate products are a natural part of your post, your posts will flow better and likely never be penalized in the search algorithms.
We’ve already witnessed so many blogs over the past four years get absolutely demolished by Google Panda and penguin updates for producing thin content, fake content, duplicate content, and content with do follow links to shady products. Writing your own content with solutions to problems and products that help solve problems is the best way to go.
DO A SIMPLE REVENUE CALCULATION
Going to conferences on occasion is good because it helps us realize the pain points in our respective industries. I’m not a very monetization focused blogger who writes credit card posts and product review posts on a constant basis. Those type of posts really are soul-sucking if written too often. But going to the Sovrn conference in San Francisco helped me do some simple calculations of how my online revenue is structured.
Ads based on impressions (CPM) or clicks (CPC) account for less than 9% of total revenue. Do a quick calculation and see what your calculation is. Back in 2010, my CPM/CPC revenue accounted for well over 50% of total revenue. In several years time, I expect CPM/CPC ads to account for 5% of my total revenue and stay there until some new innovation comes out that blocks ad blocking software, or when the quality of independent publishing goes so low b/c no money is being made that there is a turn of events. I don’t think banner ads based off impressions or clicks will ever fully go away.
Your goal as a publisher should be to try and get your CPM/CPC revenue to be no more than 25% of total revenue by growing your affiliate income business. Seek out those products you use, spend months testing them out so you can be an expert, and incorporate them in your best trafficked content.
There’s Always A Silver Lining
One of the best things to have ever happened to me was the rise and decline of the advertising network that grew out of the Yakezie Network between 2010-2011. I figured, why not leverage the relationships I made with clients, and introduce them to other bloggers who didn’t have the same access. They’d make money, and I’d make a commission fee. Unfortunately, several of the publishers decided to cut me out once they were introduced and then proceeded to replicate my exact business!
Although I was disappointed with their actions given it took so much of my time and effort to build Yakezie, I also understood that money can often trump camaraderie, especially if you’re not making a lot of money in the first place. I wasn’t focused on making money online because I had a healthy paying job already. I was focused on helping other newbie bloggers out so I moved on pretty quickly.
The inability to sustain a win-win business model forced me to focus on other ways to generate sustainable revenue online if I wanted to comfortably leave the work force in 2012. Having a business that could be easily replicated was not the way. As a result, I became intensely focused on trying to generate $200,000 a year in passive income from off-line activities like real estate, the stock market, and alternative lending. Furthermore, I researched better, more sustainable ways to generate online income that wouldn’t anger the Google gods, such as creating my own product on how to negotiate a severance package.
If I stuck with trying to earn money managing ad campaigns and selling links, I would have never been able to leave my job because that type of income dried up within a couple years. Actually, it would have been worse if I left my job in 2011 under the premise that such revenue would have lasted for a long time. That would have been a disaster! Some of them did quit their jobs, and their sites have little traffic and their income declined drastically.
Therefore, I have to give thanks to all the folks who forced me to pivot. Right now, blogging has never been more fun, because I’ve never had to worry LESS about making money online. Money continues to be just a side product that continues to grow because I’m focused on writing what I want to write about. There’s no more icky feeling of getting paid for something I don’t believe in, which is huge for happiness and blogging longevity.
Use The Rise Of Ad Blocking To Your Favor
The rise of ad blocking is great for the consumer because you’ll have less clutter and higher quality content that contains more congruent products. Every time I try and visit an online newspaper, it can barely load because there’s so many banner ads! The quality of content should improve from independent publishers because only the people who truly love what they do will survive. All the sites who host crappy review posts on products they’ve never used will go away.
From the publishers point of view, ad blocking software will help improve the reader experience on your site because it will load faster. Better experience means more stickiness. Furthermore, there will be more revenue to be made because you will be forced to find products you actually use and love – not just crap that is offering a good payout. Once you find such products, then it becomes extremely easy to incorporate them in your content because they are synergistic. When it becomes easier to write content, your site will logically grow.
Ad blocking disruption is great for everyone. Embrace it! Tinker with your valuable real estate by trying different sorts of ads above and below the fold. Once you’ve got everything optimized, you can do what you should like to do best, and that’s write great stuff!
To Recap Surviving Ad Blocking
1) Focus on affiliate revenue and become an authority affiliate.
2) Calculate your total CPM/CPC revenue to total revenue.
3) Shoot to make CPM/CPC revenue less than 25% of total by growing your affiliate revenue.
4) Reduce the amount of banner ads to no more than three on your home page.
5) Continue to always test different ad types around different areas of your website.
6) Focus on your community, and less on money. If you do, you will make more because your site will grow and your conversion rates will increase.
7) Build your brand to build credibility, recognition, and pricing power.
8) You’ve you’ve developed multiple income streams online that doesn’t depend on CPC and RPM advertising, you’ve got a greater chance to make a full-time living online.
START A PROFITABLE BLOG TODAY
It’s been seven years since I started Financial Samurai and I’m actually earning a good multiple six figure income stream online now. The top 1% of all posts on Financial Samurai generates 31% of all traffic, which makes much of my online earnings highly passive.
I never thought I’d be able to quit my job in 2012 just three years after starting Financial Samurai. But by starting one financial crisis day in 2009, Financial Samurai actually makes more than my entire passive income total that took 15 years to build. If you enjoy writing, creating, connecting with people online, and enjoying more freedom in your life, see how you can set up a WordPress blog in 15 minutes with Bluehost. Hosting costs less than $5 a month.
The actions you take today help create your future. You never know where the journey will take you!
Check out my step-by-step guide on how to start a blog. It’s one of the best things I did in 2009 to help earn extra money and break free from Corporate America!
I could be wrong, but it seems this trend will make it more difficult for beginning and some journeymen bloggers at least from a monetization standpoint. Affiliate income is a strategy that takes a while to successfully employ since you need a solid readership base to convert as well as enough traffic to even get approved by the affiliates in the first place. In the meantime, CPM and CPC income is a way for those starting out to earn a bit of money until they can make the leap to affiliate advertising. If ad blocking significantly reduces CPM/CPC income, then novices will have to be more patient and dedicated than their predecessors had to be when it comes to monetization.
I think that’s correct. And as a result, the content will just get better because only the people who truly love to write will survive.
The best blogs are personal and tell stories. The worst blogs are just all affiliate advertising posts. No thank you! Low conversion rates im sure.
Sounds like a great conference!
What a crazy graph. As a blogger it is frustrating that ad blocking software is becoming more prevalent. I agree with you that we have to start adapting and preparing for ad revenue to drop off more and more.
I was surprised to hear about Dooce, but at least she had a long run.
I’m not ready to give up on blogging yet myself! Gotta keep going while times are still good and I’m having fun. :)
Ad blocking is definitely a concern and a bummer for bloggers. How does everybody expect people to product value added content that’s high quality if one can’t even make some money?
Good tips on focusing on awesome products to partner with!
I would find it hard to be down on ad blocking, simply because I love it as a user (and have used them for years). When I load a page, such as a newspaper, on a friends browser, I can’t get over the amount of ads without a blocker installed – many sites are unusable.