I’m continuing to close out last year’s books this week, and as my online business grows, it may be useful for those of you who are also interested in making money online to understand how I do it.
In this post, I’ll break down exactly where and how I made money in 2012 and my plans for each area of online income for the coming year. In each area, you’ll see the percentage of my total business income that comes in through that source and the basics of how it’s done.
Let’s get started:
Direct Advertising: 60%
Direct advertising on my blog was new in 2012 and quickly became the biggest income generator on my site. Direct ads are nothing more than ads paid directly by an advertiser or their representatives. There are still often “middle men” that handle the transaction, but the difference between these ads and the ad networks I describe below is that the blogger must do a lot of the leg work to negotiate, close, and follow up on the sale of the ad.
At the close of 2012, I had successfully negotiated more than 30 of these deals for my blog and was rewarded for the effort. The ads themselves can come in many forms, depending on what bloggers want to run, including display ads, links, sponsored posts, various promotions, etc. The key is simply to agree on the terms of the deal based on what advertising you’re willing to entertain.
One additional tool that has helped immensely in this area was hiring the assistance of an advertising “agent.” Crystal from Budgeting in the Fun Stuff set up an advertising business a few years back that links together hundreds of personal finance bloggers. This leverages the power of community to negotiate great ad rates and bulk deals that benefit the blogger and Crystal (a percentage of each ad sale stays with Crystal as commission for her effort).
Ad Networks: 18%
Networks like Google AdSense, Chikita, and one I used more recently–Technorati Media, are all good options for making money on your blog through straightforward display ads.
The setup for most of these networks is the same–you get paid a certain amount for every click someone makes on an ad or for every view of the ad by a reader. The per-click model is the more common of the two. At the end of the month, you’re paid out if your account balance exceeds the minimum threshold, usually $50 or $100.
These ads are used by beginning and advanced bloggers alike to convert traffic into dollars, and traffic is one of the primary determinants of how much you can expect to make. The other is your content, or more specifically the keywords associated with your site. Some niches (personal finance, for example) are known for very high-payout keywords, known as “cost-per-click.” Niches where advertising is less competitive will make far less money even with the same amount of traffic.
Ad network income on Fiscal Fizzle has remained steady and in line with traffic numbers over the last four years, and I don’t anticipate any major changes in my approach in this area, other than working on increasing how much traffic arrives at my site.
Affiliate Commissions: 12%
While my year-end totals for affiliate income seem insignificant, this is an area where I see the most opportunity for growth in 2013. Several strategic affiliate partnerships near the end of the year actually mean that my November and December percentages for this category were closer to 40-50% of total income made.
Affiliate marketing takes many forms (including more spam-like marketing that many online personalities engage in), but for me it basically means reviewing products I’ve used and liked and making a small amount or percentage on a sale or lead for that product.
Here are two examples that have worked very well in 2012:
- When I upgraded to YNAB 4 earlier this year, a fantastic budgeting program, I shared my initial thoughts on the blog with screenshots and a $6 coupon for the purchase of the software. When the buyer uses my coupon code, I receive $6 directly for making the referral. So far, hundreds of people have benefited directly from the coupon code and helped me make money as well.
- When I switched from Progressive to Esurance earlier this year, I wrote a new post about it and also mentioned it in my review of Progressive’s Snapshot program. When a reader clicks on the link and completes a quote with Esurance, I’m paid out $10 for generating the lead.
While I’ve participated in other affiliate marketing programs over the last four years, these two have been the most successful. I think the reasons for successful affiliate marketing campaigns include:
- The reader’s action is free and free of obligation (e.g. getting a car insurance quote).
- The reader benefits in some way (e.g. getting $6 off the software program).
- The product or service is outstanding (these work but the ratio of people who end up making the purchase is much lower than with the first two examples above).
I’ll be focusing 80% or more of my energy on developing new affiliate relationships in 2013 to expand this income stream significantly.
Writing Services: 8%
During the first half of the year, I was writing regularly for a handful of other Internet blogs, which brought in a small but steady monthly income. I was paid on a per-post basis, so consistency and staying on top of generating new ideas and writing posts was important.
Halfway through the year, I decided to refocus my efforts back to my blog and other things going on in my life, but the work was enjoyable while it lasted.
Being paid to write was a good way to earn money. If you’re interested in making it a major part of your monthly income, I would focus on one of two approaches:
- Focus more on quantity and build a vast network of clients that need inexpensive, on-demand writing services.
- Focus more on quality and demand a big premium for extensive, high-research pieces.
I’m open to bringing back this income stream in the coming year, but as other areas of my business take off, the price paid for each piece or the exposure my business gets must be sufficient to make it worth my while.
Direct Sales: 2%
One of the smallest streams of income for my site, but perhaps the one I’m most proud of, are sales of my new eBook about selling your car on Craigslist.
I launched the book in August and have seen a steady but sparse stream of sales come in over the last four months.
The book came out of a perceived need for more in-depth information about Craigslist selling after the explosive popularity of my post about the same topic. Some weeks, the post was receiving 1,000 or more unique visitors every day, and I decided to market directly to this audience by integrating sales of the book into the post. The rationale was that most of the people who landed on this post would be interested in the book, but most of my other readers could care less.
I experimented with different pricing but eventually settled on $8 a copy, which seems fairly low for the amount of information I’m providing in the book but low enough for the average Internet user to be comfortable buying something they probably found while searching for information on Google.
The conversion rate I’m getting (the ratio of people who buy my book vs. the total number of people visiting the post) is much lower than I expected, but I’m pleased in the sense that I finally accomplished a long-standing goal of creating my own online product.
In the coming weeks, I will detail several lessons learned from my book launch and the tools I used to get the job done. And in the coming year, I hope to use my experience to put together yet another online product that focuses on a completely different market.
A World of Options
These are just a handful of the ways you can make money online, and they are probably some of the most common. There are a couple of key takeaways for me:
- There is no “best” way to make money online.
- Often, a combination of different methods produces the best results.
- Online income ebbs and flows.
- And yes, it can all still disappear in an instant if you upset somebody at Google.
I always refer people back to an awesome diagram at ProBlogger from several years back detailing the myriad of ways to make money online–it’s a great place to start if you’re looking for a business model for your new adventure.
Check out another way to make money online by selling your old media collections through musicMagpie.com.